TaxTMI 
TaxTMI 
2025 (8) TMI 541
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....and residential premises of the assessee on 26/09/2012. During the course of such search and seizure operations, certain incriminating material stated to have been found and seized. The material, so seized, is revealed that assessee had earned huge income from the sale of Indian made foreign liquor (IMFL), sale of beverages. Based on this information, the Assessing Officer (for short, 'AO') issued notices u/sec. 153A of the Act to the assessee on 21/06/2013. In response to the notices issued u/s. 153A, assessee filed return of income on 05/08/2013 declaring loss of Rs. 66,78,238/-. 5. Against the said return of income, assessment was completed by the AO vide order dated 30/03/2015passed u/s. 153A of the Actat a total income at Rs. 90,25,062/-. While doing so, the AO made the addition on account of undisclosed income from sale of IMFL of Rs. 6,26,636/-, sale of beverages of Rs. 916/- and made addition of Rs. 60,25,062/- u/sec. 69C of the Act, based on the seized material found during the course of search and seizure operations. The material, so seized was confronted to Shri Shine B. Nair, who was the software developer, during the course of statement recorded u/s. 131 of the Act ....
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....erial brought on record to show that JCIT had given mechanical approval. 9. We have heard the rival submissions and perused the material on record. The issue that arises for our consideration in these grounds of appeal is whether the JCIT had accorded mechanical approval u/s 153D of the Act or not. It is settled position of law that the approval of the superior officer should not be done mechanically, without application of mind. Where the approval is granted mechanically, it would vitiate the assessment order itself. Reliance, in this regard, can be placed in the case of Rajesh Kumar vs. DCIT (2006) 287 ITR 91 (SC) and also Sahara India (Firm) vs. CIT [2008] 300 ITR 403 (SC). The issue whether the JCIT had accorded the approval mechanically or not has to be judged based on the material on the basis of which the JCIT formed the opinion and accorded the approval. In the present case, no material was produced before us to show that JCIT had accorded approval u/sec. 153D mechanically except by filing the following communication received by the AO from JCIT:- 10. The above communication is nothing but a covering letter forwarding approval from JCIT to AO. It is not copy of act....
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.... mind. Merely because information was received at 5.47 p.m. and the notice was issued by 10.49 p.m. would not mean that there has been non-application of mind. If we hold that it would be merely speculative and based on conjecture." The decision of Hon'ble Orissa High Court in the case of M/s. Serajuddin& Co. (supra) based on the fact that the assessment orders were totally silent about the AO having written to the ACIT seeking his approval or Addl. CIT having granted such approval. Whereas, in the present case, the assessment orders the AO clearly mentioned that the assessment order is after getting approval as per section 153D of the Act from JCIT, Central Range, Kochi. In the absence of any material to the contrary, it is presumed that the statutory authorities have acted bonafide and lawfully. Therefore, the ratio of the decision of Hon'ble Orissa High Court in the case of M/s Serajuddin & Co. (supra) cannot be applied to the facts of the present case. We are of the considered opinion that the ratio of the Hon'ble Bombay High Court is squarely applicable to the facts of the case. In these circumstances, we do not find any merit in the grounds of appeal. Accordingly, these gr....
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.... material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be reopened by the Assessing Officer in exercise of powers under section 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under section 147/148 of the Act and those powers are saved." 15. As regards, the addition made based on extrapolation in the search assessment, the issue stands settled by the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. Hotel Meriya (332 ITR 537). The relevant portion of the judgment is as follows:- "9. ........... It cannot be expected that the assessee would retain documents regarding the concealment of income. If documents for every concealment are insisted to be searched, practically the provision for block assessment would be defeated. We cannot shut our eyes to the legislative intent. Here, what was disclos....
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....f the judgment of Hon'ble Supreme Court in Abhisar Builwell P. Ltd (supra), wherein it was held that once the AO assumes jurisdiction u/s. 153A, in case any incriminating material is found/unearthed, even in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the "total income" taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns of income. 17. On merits of the addition, on mere perusal of the assessment order, it is evident that the AO made the addition based on the contents of the seized material. When the seized material was confronted to the assessee, the same was admitted by the assessee during the course of recording statement u/s. 132(4) of the Act. Thus, the AO brought a clinching evidence on record to show that the assessee is deriving income from sale of liquor, food etc. As regards the allowance of expenditure incurred to earn the income, the same cannot be allowed in view of the proviso inserted to section 69C of the Act which expressly prohibits the allowance of expenditure as a deduction in case of ....