TaxTMI 
TaxTMI 
2023 (3) TMI 963
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....fertility Clinic Private Limited. Since pursuant to the search/survey action conducted on 26/11/2015 in the case of M/s Malpani Infertility Clinic Private Limited, proceedings under section 153C of the Act were initiated in case of the present assessees, therefore, these cross appeals were taken for hearing together as they involve identical issues arising from the common factual matrix and are, thus, being disposed of by way of the present consolidated order. With the consent of the parties, the cross appeal in the case of Shri Aniruddha N. Malpani is taken up as the lead case, and the decision rendered therein shall apply mutatis mutandis to the cross appeal in the case of Smt. Anjali A. Malpani. ITA no.3929/Mum./2019 - Shri Aniruddha N. Malpani Assessee's Appeal - A.Y. 2015-16 3. In this appeal, the assessee has raised following grounds:- "Being aggrieved by the order of the Learned Commissioner of Income-tax Appeals - 51, Mumbai, ('Ld. CIT(A)) this appeal petition is being submitted on the following grounds, which it is prayed may be considered independently without prejudice to one another. 1. In the facts and the circumstances of the case and in....
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....record are: The assessee is a doctor by profession. For the year under consideration, the assessee originally filed its return of income on 31/08/2015 declaring a total income of Rs.3,98,26,750. A search action under section 132 of the Act was carried out at the premises of M/s Malpani Infertility Clinic Private Limited. During the course of search proceedings, jewellery was found from the residential premises and locker of the directors of M/s Malpani Infertility Clinic Private Limited i.e the assessee and his wife (Smt. Anjali A. Malpani). Since the jewellery belongs to a person other than the person referred to in section 153A of the Act, proceedings under section 153C of the Act were initiated, inter-alia, in the case of the assessee. Further, notice under section 153C dated 03/10/2017 was issued and served on the assessee. In response to the aforesaid notice, the assessee filed a letter and requested that the return originally filed be treated as a return filed in response to notice issued under section 153C of the Act. Thereafter, statutory notices under sections 143(2) and 142(1) along with a detailed questionnaire were issued and duly served on the assessee. On the basis of....
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.... on sale of shares. These investigations were initiated on the basis of incriminating material unearthed at the time of the search action. Accordingly, the AO in the remand report submitted that the contention of the assessee that the said additions were made without the basis of any incriminating material unearthed at the time of the search action, is not correct. In the rejoinder to the remand report, the assessee submitted that the issues of Long Term Capital Gain on sale of Pune plot, Capital Gains on sale of shares etc. were examined after the conclusion of the search action which cannot be said that to be incriminating material unearthed at the time of the search action. It was further submitted that in the assessment order there is no reference to any incriminatingmaterial while making the said additions/disallowances. 6.3 I have considered the submissions and contentions of the appellant as well as the assessment order of the AO. The assessee submits that the assessment for the relevant year had already attained finality and was a non-abated assessment. Therefore, the assessee contends that the assessment for the relevant year could not have been disturbed by the A....
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....terial Obviously an assessment has to be made under this section only on the basis of seized material. v. In absence of any incriminating material, the completed assessmentcan he reiterated and the abated assessment or reassessment can be made. The word 'assess' in section 153A/C is relatable to abated proceedings (i.e.those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. In so far as pending assessments are concerned, the jurisdiction tomake the original assessment and the assessment under section 153A/C merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under section 153A/C only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 6.5 From t....
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....ing material was unearthed during the search proceedings. In his short rebuttal, the learned AR submitted that long-term capital gain on the sale of the Pune plot was in respect of the assessment year 2013-14 and therefore the same is not relevant for the year under consideration and in any case, no addition has been made in respect of the gain arising from the sale of aforesaid Pune plot. 8. We have considered the rival submission and perused the material available on record. As noted above, pursuant to the search/survey action conducted on 26/11/2015, in the case of M/s Malpani Infertility Clinic Private Limited, wherein the assessee along with his wife are directors, proceedings under section 153C of the Act were initiated. As per the satisfaction note dated 03/10/2017 for passing of information for issuance of notice under section 153C of the Act, forming part of the paper book on page no.1, it is evident that during the aforesaid search proceedings, jewellery from the residential premises and locker in the name of assessee and his wife was found. Since the jewellery found during the course of the search belongs to a person other than the person referred to in section 153A o....
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.... from the end of the financial year in which the return was furnished. Since no proceedings under section 143(2) of the Act were initiated, therefore, the scrutiny proceedings for the year under consideration were already time-barred when the satisfaction note was recorded on 03/10/2017. As there was no pending assessment proceeding, which could have abated on 03/10/2017, therefore, the assessment year under consideration is an unabated year. 11. Therefore, now it needs to be examined whether there was any incriminating material found during the course of the search, which lead to the addition made in the assessment order. In the present case, the AO passed the assessment order assessing the total income of the assessee at Rs.19,19,37,040, after treating the short-term capital gain and long-term capital gain earned by the assessee during the year as business income. As noted above, in the satisfaction note recorded under section 153C of the Act, it is mentioned that during the course of search proceedings, jewellery was found from the residential premises and locker of the assessee and his wife, consequent to which proceedings under section 153C of the Act was initiated, inter-a....
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....pertaining to the initiation of penalty proceedings, which is premature in nature and therefore is dismissed. 16. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA no.4124/Mum./2019 - Shri Aniruddha N. Malpani Revenue's Appeal - A.Y. 2015-16 17. In its appeal, the Revenue has raised the following grounds:- "On the facts and circumstances of the case and in the law, the Ld CIT(A) erred in holding the gain from sales of shares and securities which were held for more than a year as Long term capital gain instead of business income by relying on the CBDT circular No 06/2016 dated 29.02.2016 even though the AO, in the assessment order, had clearly pointed out that the above circular is not applicable in assessee's case." 18. In view of our findings rendered in assessee's appeal, the question of taxability of income as long-term/short-term capital gain or business income is rendered infructuous. Accordingly, the sole ground raised by the Revenue is dismissed. 19. In the result, the appeal by the Revenue is dismissed. ITA no.3922/Mum./2019 - Smt. Anjali A. Malpani Assessee's Appeal - A.Y. 2015-16 20. In its ap....
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....of appeal on or before the final hearing." 21. In the hands of Smt. Anjali A. Malpani, the addition was made by the AO on an identical factual basis and even the satisfaction note dated 03/10/2017 is also identically worded, therefore, in absence of any incriminating material found during the course of the search, the AO is directed to delete the addition made in the assessment order passed under section 153C r/w section 143(3) of the Act, in view of the decision of the Hon'ble jurisdictional High Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). As a result, ground no. 3, raised in assessee's appeal is allowed. 22. Grounds no. 1, 1.1, and 2 were not pressed during the course of the hearing. Therefore, these grounds are dismissed as not pressed. 23. Grounds no. 4, 4.1, and 4.2 are rendered infructuous, in view of our findings in respect of ground no. 3. 24. Ground no.5, raised in assessee's appeal, is pertaining to the levy of interest under sections 234B and 234C of the Act, which is consequential in nature. Therefore, ground no.5 is allowed for statistical purposes. 25. Ground no.6 is pertaining to the initiation of penalty proceedings, which....