AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 486
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....he Act on 30.11.2014 admitting total income of Rs. 13,49,557/-. Assessment proceeding was completed under section 143(3) r.w.s. 153A of the Act on 29.12.2017 assessing income at Rs. 5,14,90,650/-. Subsequently in 154 proceeding Order dated 06.03.2018, demand was reduced to Rs. 2,60,93,360/- on account of reconciliation of TDS mismatch. A search under section 132 of the Act was conducted on 15.03.2016 at the residence Shri. C. R. Manohar at G. L. Residency, Near Sri Rama Temple, Sarjapura Ward No.1, Bengaluru District, Anekal Taluk and premise at No.385, 17th C Main, Sector - 4, HSR Layout, Bangalore. Consequent to search a notice, dated 21.11.2016 under section153Aof the Act was issued and served on the assessee on 23.11.2016. In response of notice under section153A of the Act assessee has submitted his return of income on 22.10.2017 admitting the same particulars of income as admitted in return filed under section 139(1) of the Act. During the course of search and seizure proceedings various documents were found and there was cash payments were found and 20% was accepted and 20% of admitted amount towards cash payments were offered as income. In the first search proceedings conduc....
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.... incriminating material, or whether the earlier additions had any bearing on the second round of proceedings. The CIT(A), by order dated 28.02.2025, dismissed the appeal by relying on the decision of the Hon'ble Supreme Court in CIT v. Sun Engineering Works (P.) Ltd., without appreciating that the appellant was not attempting to reopen or revise an earlier concluded assessment but was merely seeking to correct an inadvertent and bona fide error while filing the return in response to the second search. The present appeal is against this erroneous conclusion, supported by documentary records and factual narration contained in the paper book filed before this Hon'ble Tribunal. II. Legal Scheme of Section 153A and the Requirement of Incriminating Material The legal position is now well-settled that an assessment under section 153A cannot be sustained in the absence of incriminating material found during the relevant search, particularly where the assessment for the relevant year has already reached finality before the date of search. The Hon'ble Supreme Court in Sinhgad Technical Education Society and other High Courts including Delhi High Court in Kabul Chawla and Me....
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.... the legal position. In the present case, the appellant mistakenly included certain items of income which had been previously disputed and which did not arise from the second search. The Assessing Officer, despite being fully aware of the history of earlier assessments and appeals, failed to guide the assessee or even to verify whether the income offered was legally taxable in the second 153A proceeding. The revenue authorities not only failed to discharge the obligation imposed by the circular but also derived an unintended advantage from the assessee's inadvertent error. This conduct is contrary to the spirit and letter of the Circular, which has consistently been held by courts, including the Supreme Court in K.P. Varghese and UCO Bank, to be binding on the Department. V. Bona Fide Error, Reasonable Cause and the Principle Underlying Section 271BB Though section 271BB specifically relates to subscription to eligible issues, the jurisprudence behind this section, as consistently interpreted, establishes that where a taxpayer demonstrates reasonable cause for a procedural or bona fide mistake, no adverse consequence should follow. The present case presents a text....
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....ee's Mistake The Hon'ble Supreme Court in Price Waterhouse Coopers Pvt Ltd v CIT and multiple High Courts, including Gujarat High Court in Koshti, have held that the Revenue cannot take advantage of inadvertent or technical mistakes committed by the assessee. Taxation must be founded on law, not on accidental or mistaken disclosures. In the present case, the income offered by the assessee under the second 153A return was not legally taxable; the Revenue was fully aware of the prior assessment history and the absence of fresh material yet proceeded to assess the income solely because the assessee mistakenly offered it. Such an approach undermines fairness, equity and the statutory duty of the Department. IX. Prayer In view of the factual background, the statutory framework under section 153A, the settled judicial principles requiring incriminating material for sustaining additions, the binding nature of CBDT Circular No. 14 of 1955, the bona fide and innocent error committed by the assessee, and the violation of principles of natural justice in the assessment process, the appellant most respectfully prays that this Hon'ble Tribunal be pleased to delete the....
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....pen court on the date mentioned on the caption page. ============= Document 1 7 Sri.C.R.Manohar Order u/s. 143(3) r.w.s 153A A.Y. 2014-15 C.R MANOHAR 88/89, M C HALLI, CHIKKA TIRUPATI ROAD SARJAPURA, ANEKAL TALUK, BANGALORE - 562125 December 22,2017 To, The ACIT, Central Circle - 2(3) Room No 316, 3rd Floor C R Building, Queen's Road Bangalore - 560001 Sir, Sub: Submission of details / documents relating to Expenditure incurred on production of feature films. Ref: C R Manohar PAN :- AJZPM9900D As you are aware, I am in the business of production of feature films. During the Financial years between 2013-14 to 2015-16, I have produced 2 feature films by name "Shivam" and "Vajrakaya". The total expenditure incurred in these two films are Rs.13,83,22,314 and Rs.9,06,76,404 respectively. For these expenditure incurred in cash are as under: SI. No. F.Year Name of the Film Expenditure in cash 1 2013-14 SHIVAM 3.63 Cr 2 2014-15 SHIVAM 0.32 Cr 3 2014-15 VAJRAKAYA 4.97 Cr 4 2015-16 VAJRAKAYA 0.05 Cr Document 2 Sri.C.R.Manohar Order u/s. 143(3) r.w.s 153A A.Y. 2014-15 As you are aware, the production of the film comprises of several activitie....