TaxTMI 
TaxTMI 
2022 (6) TMI 1480
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion u/s 132 of the Act was conducted at the residence and business premises of Cygnus group on 23.12.2014 and the assessee has also covered in the search during the course of search and seizure operation. The books of account and incriminating documents having identical marks CG/1 to CG11 & CG/HD/1 and KKS/1 have been seized. During the said search only KKS/1 was recovered from the assessee's premises. The assessee contention is that since the addition has made by the AO in respect to long term capital gain and undisclosed cash income was not arising out of the said incriminating material and therefore the addition made in the assessment framed u/s 143(3) read with Section 153A of the Act is without jurisdiction and has to be deleted. 4. At the outset the ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench of Kolkata Tribunal in the case of Shri Krishna Kumar Singhania & Ors. In IT(SS)A Nos. 109 to 110/Kol/2017 for AY 2009-10 & 2012-13 dated 06.12.2017 which were covered into the same search and Co-ordinate bench has allowed the appeal in favour of the assessee by holding that no addition can be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT vs Pinaki Misra and Sangeeta Misra reported in (2017) 392 ITR 347 (Del) dated 3.3.2017, wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of the Act against the assessee. This opinion is given without going into the merits and veracity of the said seized documents implicating the assessee herein. 10.1. Hence now the only issue which is left to be addressed is the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is found during the course of search with respect to the relevant assessment year. (d) Pursuant to the search u/s. 132 of the Act, the pending proceedings would get abated. In respect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be - (i)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153A 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 LD 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 complete 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in 380 ITR 573 (Del), the revenue preferred Special Leave Petition before the Hon'ble Supreme Court and the same was dismissed by the Hon'ble Apex Court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon'ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon'ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 10.6. We also find that the Hon'ble Jurisdictional High Court recently in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A. No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid view of Hon'ble Delhi High Court in Kabul Chawla's case and also placed reliance on its own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC). 10.7. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and ini....