TaxTMI 
TaxTMI 
2023 (1) TMI 1550
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....n Diagnostic Pvt. Ltd.). 2. Since, the entire set of appeals are arising out of the common search, and issues are identical, these are heard analogously and are being disposed of by a common order. IT(SS)A No. 224/Ind/2016 (Revenue's appeal in case of M/s. Shriniwas Education Society for A.Y. 2006-07) 3. The brief facts leading to this case is this that as per the assessment order are that search under Section 132 of the Act was conducted on the business premises of the appellate society as well as on the premises of other concerns / business associates in June 2011. Since the various concerns and individuals are inter connected and have business associations, they have been clubbed under the overall name Bansal Group. The appellate society is a member of Bansal group of Bhopal. The group is engaged in the business of civil construction, real estate, manufacturing and export of soya oil, manufacturing of steel, news channel etc. The group is also running various educational institutions at Bhopal and Indore under this appellate society. The flagship concern of the group is Bansal Construction Works is engaged in the business of civil construction. The main persons of the g....
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....hensive authorities dealing with this controversy is Hon'ble Delhi High Court judgment in the case of Kabul Chawla. ... 11. Coming back to the facts of the case it is undisputed that no material, leave alone incriminating material, found and seized during the course of search has been referred by the A.O in the assessment order. This leads to the inescapable conclusion that the additions made by the A.O are not based on the incriminating documents. 12. Considering the aforesaid judicial view on the scope of search assessments in the unabated cases which is consistently followed by jurisdictional Tribunal and several other High Courts and Tribunals, I have no option but to respectfully follow the view that in search cases where assessments have not abated, scope of assessments is confined to only incriminating documents found and seized during the course of the search. 13. In the aforesaid backdrop the additions made by the A.O have to be necessarily analyzed vis a vis the incriminating material found and seized as the return of income in this case was originally filed on 31.10.2006 for A.Y. 2006-07, on 31.10.2007 for A.Y. 2007-08, on 29.09.20....
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....ht of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. 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 a fresh 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 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 ....
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....hould be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal 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. CITIV (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?" 10. 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 s....
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....he financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded 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 Officer 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 i....
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....reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been 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." 11. Apart from that the Hon'ble Delhi High Courtin the case of PCIT vs. Meeta Gutgutia, reported in (2017) 395 ITR 526 (Delhi) on the identical....
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.... for six previous years is found that the invocation of s. 153A qua each of the assessment years would be justified; if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under s. 153A." 12. Recently, ITAT, Mumbai Bench in the case of Jasmin K. Ajmera Vs. DCIT, in ITA No. 983/Mum/2020 in its order dated 02.11.2021 has considered the scope of section 153A of the Act wherein the Tribunal discussed proposition of law laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra), and decision of Hon'ble Gujarat High Court in the case of CIT vs. Saumya Construction (supra)and finally since no incriminating material was unearthed during the search, no additions could have been made to income already assessed and concluded was of the finding of the Bench. The relevant discussion in this regard is as follows: "7. We have carefully heard the rival submissions and perused relevant material on record including the documents seized by the department from the assessee group during the course of search operations. We find that the assessee had filed ori....
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....s issued under Section 148 of the IT Act on the ground that the claim of bad debts as expenditure was not acceptable. On 12th May, 2004, a return of income declaring the loss at the same figure as declared in the original return was filed by the respondent-assessee under protest. A copy of the reasons recorded was furnished by the Revenue on the request of the assessee sometime in November, 2004. The assessee raised various objections, both on jurisdiction and the merits of the subject matter recorded in the reasons. The Revenue disposed of these objections on 4th February, 2005 holding that the initiation of reassessment proceedings was valid and it had jurisdiction to undertake such an exercise. The notice under Section 148 of the IT Act dated 12th May, 2004 was challenged by the respondent-assessee. 23. That Writ Petition was allowed and hence, the Revenue was in Appeal. 24. Mr. Ahuja's argument overlooks this factual aspect and when he relies upon the observations of the Hon'ble Supreme Court, and particularly in paragraph 13, he forgets that they were made in the context of a challenge to the notice under Section 148 of the IT Act. The Supreme Court, ....
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....anner. The documents seized from the assessee are in the nature of Shareholding, holding stock summary, Ledger extracts etc. which are already part of assessee's regular books of accounts and have not been referred to by Ld. AO while making impugned additions in the hands of the assessee. In the assessment order, the long-term capital gains earned by the assessee have been held to be bogus in nature, however the same are not corroborated, in any manner, by the seized material. The allegations of Ld. AO are primarily based on the search findings in the case of Shri Shirish C. Shah and his group entities whereas no incriminating material has been seized from the assessee. In fact, in the remand report dated 09/01/2017 (page nos. 196 to 199) filed by Ld. AO during first appellate proceedings, it has categorically been admitted by Ld. AO that there was no incriminating material in the case of the assessee. Nothing has been shown to us to controvert these findings of Ld. AO. Therefore, the ratio of cited decisions as referred to in para-6 is quite applicable to the facts of the case. 9. So far as the admission in the form of assessee's own statement is concerned, we fin....
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....d u/s 132(4) may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to sustain additions on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT V/s Sunil Aggarwal ( 379 ITR 367; 2016) and also the decision of Hon'ble Andhra Pradesh High Court in CIT v. Shri Ramdas Motor Transport (238 ITR 177) wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during....
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....nbsp; ***** **** 16. In all the above decisions of various Hon'ble High Court's, the legal position is that no addition can be made in case of an unabated assessment if no incriminating material is found in the course of search. On a perusal of the Assessment Order, I noticed that there was no reference to any of the incriminating material found and seized in the premises of the assessee in the course of the search proceedings. The Assessing Officer in the Assessment Order refers to the seized incriminating material in the case of one Shri Shirish C. shah and the post search enquiries made in his case to make an addition in the hands of the assessee denying the long-term capital gain claimed by the assessee. I also noticed from the remand report dated 09.01.2017 furnished by the Dy....
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....al grounds raised in all these appeals stand allowed and the impugned additions as made therein stand deleted. All these appeals stand allowed." Considering the ratio laid down in the judgments cited above and the facts of the case, we find substance in the case made out by the assessee. In the absence of incriminating material found during the course of course the addition is not found to be justified. 13. After careful reading of the order passed by the Ld. CIT(A) we find that the assessee's main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment has been addressed properly. In addition to that addition has been made without due process of law has also been taken into consideration in its proper perspective. We further note that the ratio laid down in the judgment passed by the Hon'ble Gujarat High Court in the case of Saumya construction (supra) and the judgment passed by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) found to be rightly applicable under the facts and circ....
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....arned A.O. erred in using the advisory report of DVO as bindingon him without addressing several objections raised before him time to time. 10. That the learned A.O. erred in applying PAR rates of CPWD in preference to published rates of State PWD in determining cost of construction of College Buildings referred for valuation. 11. That in the facts and circumstances of the case, the learned A.O. erred in allowing rebate for self-supervision only @2.5% as against standard practice to allow rebate @7.5%. 12. That the learned A.O. erred in estimating cost of extra items on merely adhoc basis. 13. That in the facts and circumstances of the case, the learned A.O. erred in further loading the cost of construction by consultancy charges and external service charges without evidence of any actual payment. 14. That the learned A.O. erred in not computing depreciation on extra cost of construction added by him as per report of DVO calculated at Rs 10,52,165/-. 15. That the learned A.O. erred in not allowing deduction u/s 11 & 12 of the extra cost of construction of Rs. 2.10.43.300. - as the same is utilized for the objects of the Society.....