TaxTMI 
TaxTMI 
2021 (11) TMI 1163
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.... case of Shri Jayantilal Dalsukhbhai Panchal. The grounds of appeal taken by both the assessees are descriptive and argumentative in nature. In brief, they have raised two fold of grievances. Under the first fold of grievance, the assessee have challenged the validity of assessment order passed under Section 153A of the Income Tax Act, 1961 ("the Act" in short) in their cases for both the assessment years. Under the second fold of grievance, they have challenged the addition made on account of alleged allegation of payment of "on-money" for purchase of land. 3. The learned Counsel for the assessee, at the outset, argued only the first fold of contention, i.e. validity of assessment order passed under Section 153A of the Act. We have heard these appeals on 12th October 2021 and passed an interim order whereby we took cognizance of the submissions made by the learned Counsel for the assessee and the stand of the Revenue. The order dated 12th October 2021 reads as under:- "The present four appeals are directed at the instance of two assessees, i.e. father and son namely Jayantibhai Dalsukhbhai Panchal & Pranav Jayantibhai Panchal for Assessment Years 2012-13 and 2013-14. 2. The l....
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....ing; therefore, that would abate and assessments in these two years would be passed as if a regular assessments. The learned Counsel for the assessee took us through the findings of the learned CIT(A) in paragraph No. 5 to 5.3 which read as under:- "5. I have perused the assessment orders and the appellant's submissions. 5.1 In the facts and circumstances of the case it appears appropriate that the grounds No. 1 and 2 are taken up together wherein the additions made to the total income in the impugned assessment u/s 153A have been challenged on the ground that there was no incriminating material found during the course of search and that as the AO has relied upon the documents found during the course of search in the case of other party, the assessment ought to have been done invoking the provisions of section 153C. 5.2 In these regards, no doubt that as of now it is the law (as laid down by various Courts and Tribunals including the jurisdictional High Court of Gujarat and jurisdictional ITAT Ahmedabad, some of which are relied upon by the appellant and are mentioned in the submissions) that pursuant to a search, additions to the total income for the elapsed assessment y....
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.... I see no justification in the grounds of the appellant disputing the additions made by the AO based on the incriminating material found during the course of earlier survey. The appellant is not at all protected by -the case laws relied upon by him. The appellant is not at all justified in raising the bogey that the AO has erred in making additions to the return income for the A.Y. 2012-13. The related grounds taken by the appellant are dismissed." 3. He pointed out that, in paragraph No.5.2, the learned First Appellate Authority has rightly construed and highlighted the position of law on the points raised by the assessee; but somehow failed to apply this position of law on the facts of the present appeals. 4. At this stage, learned CIT-DR submitted that the Revenue be given an opportunity to verify as to whether the notice issued under Section 148 dated 27.04.2015 is the only notice or prior to that, i.e. even prior to the date of search i.e. 13.11.2014, any notice under Section 148 was issued and served upon the assessee. The learned Counsel for the assessee emphasised that copy of the notice has been placed in the paper-book and this specific issue was brought to the notice....
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....n the Narayan Reality Group of cases, including the case of the assessees, on 13.11.2014. Consequently, the cases of both the assessees were centralized and proceedings under Section 147 of the Act were dropped and proceedings under Section 153A of the Act were initiated. Ultimately, the assessment orders were passed under Section 153A r.w.s. 143(3) of the Act on 22.12.2016 in the cases of both the assessees. The additions have been made on account of unexplained onmoney paid by them for purchase of land at Block No. 81-85 and 87, Village Kotali, Waghodia, admeasuring 49547 sq. mtrs. This on-money has been worked out on the basis of loose papers impounded from Samarpan Infrastructure Pvt. Ltd. as Annexure-BF16. The learned Assessing Officer has made reference to various pages of these seized material and tabulated them on page Nos. 3 & 4 of the assessment order. Before the learned First Appellate Authority, it was contended by both the assessees that the time limit to issue notice under Section 143(2) of the Act in both these years was over before the search was carried out upon both the assessees. It was also contended that the notice issued under Section 148 of the Act is dated 2....
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..... DCIT in IT(SS) Nos. 118 to 123/Ahd/2019, decided on 12.11.2020. 7. On the other hand, learned CIT-DR was unable to controvert the contentions raised by the learned Counsel for the assessee. He requested that the Department be given time to find out as to whether any other notice, except the notice dated 27.04.2015, was issued under Section 148 of the Act or not. In other words, he wanted to verify as to whether any reassessment notice was issued prior to the date of search. We have noticed this fact categorically in paragraph No.4 of the interim order extracted supra. In spite of sufficient time provided by us, nothing has been placed on record by the Revenue. 8. One of the decisions relied upon by the learned Counsel for the assessee is the case of Hitesh Ashok Vaswani (supra). It has been authored by the "JM/VP" and by this very Bench. In this judgment, we have discussed the scope of Section 153A of the Act on the strength of judgment of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del) as well as on the strength of the judgment of Hon'ble jurisdictional High Court in the case of Pr. CIT vs. Saumya Construction, 387 ITR 529 (Guj.). We have also t....
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....AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. 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 assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A 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 reco....
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....Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person." 31. Order of the ITAT Delhi Bench in other cases viz. Asha Rani Lakhotia vs. ACIT and Subhag Khattar Vs. ACIT are on the same line. 32. Hon'ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No.60 of 2017 has considered the following question of law: "Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law?" 33. After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: "6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th Nov....
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....l erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 35. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When t....
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....rded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Omfficer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made....
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.... held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed." 9. It is also pertinent to note that, in the case of Kabul Chawla (supra), the Hon'ble Delhi High Court in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted under Section 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon'ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon'ble Delhi ....