TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 1276
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....at this addition was deleted by the Ld.CIT(A) in the absence of any incriminating material found in the course of search in the case of the assessee following the decision of the Hon'ble Delhi High Court in the case of CIT vs. M/s Kabul Chawla [126 DTR 130] (Del) which decision has been affirmed by the Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. [454 ITR 212] a copy of which is placed on record. Therefore, the Ld. Counsel submits that the issue in hand is squarely covered by the decision of the Hon'ble Supreme Court in the case of PCIT vs. Abhisar Builwell Pvt. Ltd. (supra). 3. On the other hand, the Ld. DR strongly placed reliance on the order of the Assessing Officer. Further referring to para 3 of the assessment order the Ld. DR submits that in the course of search operation and post search enquiries it was revealed that the assessee received share capital amounting to Rs. 5,30,62,000/- and since the assessee could not prove the genuineness and creditworthiness of the investor the Assessing Officer has rightly made addition on protective basis in the hands of the assessee. 4. Heard rival contentions, perused the orders of the authorities below. Sear....
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....he year under consideration nor any addition has been made emanating out of the search proceedings and no proceedings were pending nor abated in terms of the provision of section 153A of the Act. The addition has been made on account of unexplained credit u/s 68 as discussed in the assessment order. 5.6 The appellant has relied upon various judicial pronouncements of various appellate authorities on the similar issues: 1. Continental Warehousing Corporations Ltd vs CIT [2015] 58 taxmann.com 78 (Mumbai]. 2. Commissioner of Income Tax (Central)-III versus Kabul Chawla dated 28.08.2015 (Delhi High Court]126 DTR 130 (Del) 3. Pr. CIT vs Kurele Paper Mills Pvt Ltd 380 ITR 571 (Delhi) It has been stated by the appellant that keeping in view the facts of the case and above mentioned judicial pronouncements, assessment made u/s 153A by the Ld. Deputy Commissioner of Income Tax is bad in law, therefore no addition can be made to the income of the assessee and the same may please be deleted and the order u/s 153A may please be annulled. 5.7 The jurisdictional Hon'ble ITAT, Chandigarh Bench in case of M/s Mala Builders Pvt Ltd u/s ACIT-CC-II in the case of Mala Builders Pvt Ltd....
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....ng Officer had only determined the undisclosed income and not the total income which is the mandate of section 153A. The Hon'ble High Court, while adjudicating the issue, dealt at length with the purpose of introduction of the new search assessment procedures, as against the earlier block assessment procedures and then went on to interpret the proviso to section 153A(l), and held that it is only pending proceedings which are abated on initiation of proceedings under section 153A of the Act while the assessments which have attained finality cannot be disturbed unless materials gathered in the course of proceedings under section 153A of the Act established otherwise. 18. Thereafter, the Delhi High Court in the case of CIT Ks. Anil Kumar Bhatia 352 ITR 493, interpreted the provisions of section 153A of the Act at length, and held that as against the earlier block assessment procedure which roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments, under the present assessment procedures prescribed under section 153A/B/C of the Act, only one assessment order in respect of each of the six assessment years had to b....
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.... that even as per that judgment, the scope of enquiry in search carried under section 153A had to essentially revolve around search or requisition under section 132A of the Act. 20. In the case of Kabul Chawla (supra), the Delhi High Court after considering various decisions of High Courts, summarized the legal position in paragraph 37, which is reproduced below: "37. On a conspectus of Section 153A (1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought ....
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....ucial words "search" and "requisition" appear in the substantive provision and the proviso, which throws light on the issue of applicability of the provision .Such assessments have a vital link with the initiation and conduct of search .Since search can be authorized only on the fulfillment of conditions enumerated in section 132, those conditions will have to be taken into account while interpreting section 153A and the interpretation arrived at is that in respect of unabated proceedings assessment has to be made on the basis of books of accounts or other documents not produced in the course of original assessment but found in the course of search and undisclosed income/property discovered in the course of search. Section 153A being enacted to a search and requisition, its construction would have to be made accordingly. 2. The second proviso to section 153A (1) states that on initiation of proceedings u/s 153A ,the assessment/reassessment proceedings pending on the date of conducting search or making requisition u/s 132A of the Act, shall stand abated. The CBDT Circular no. 8 of 2003 dt. 18-09-03, clarifies that proceedings in appeal, revision or rectification against finalized ....
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....erial. Though we do agree that there are decisions of High courts which hold otherwise and state that u/s 153A , addition in case of completed assessments need not be restricted to incriminating material, but in view of the Apex court decision in CIT vs Vegetable Products Ltd.(1973) 88 ITR 192 which states that where there are two reasonable constructions of a statute, the construction favouring the assessee should be adopted, we hold that in case of completed assessments under section 143(3)/143(1) of the Act, in the absence of any incriminating material found during the course of search, the Assessing Officer has no jurisdiction to make any addition under section 153A of the Act. 5.8 The facts of the above referred case are similar to the present case of the appellant. As mentioned earlier, the addition made in present case is not emanating out of any incriminating material found during the search proceedings nor any proceedings were pending or abated on the date of search, in this case. 5.9 In view of the ratio laid down by the Hon'ble High Court of Delhi in the case of CIT vs Kabul Chawla and also other judgments as discussed in order of Hon'ble ITAT reproduced above, t....