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2014 (2) TMI 1131 - AT - Income TaxEstimation of net profit - Whether the action of the CIT(A) in directing the AO to rework the net profit of the assessee at the lower rate of 0.14% as against the 0.99% estimated by the AO is correct – Held that:- Powers of the AO to re-open an assessment u/s. 147 is subject to limitation of time period as prescribed u/s. 149 of the Act - whether the return was processed u/s. 143(1) or u/s. 143(3), if the AO has a reason to believe that any income chargeable to tax has escaped assessment, he can re-open the assessment u/s. 147 by issuing notice u/s. 148 but within the time limit as prescribed u/s. 149 of the Act - The return was processed u/s. 143(1) of the Act but it has attained finality due to the expiry of limitation period of twelve months from the end of the month in which the return was filed - the assessment is deemed to be completed and not pending on the date of search on 14.08.2008 - no incriminating material was found from the premises of the assessee during the search u/s. 132 of the Act. Assessment u/s. 153A can be made on the basis of incriminating material found during the search – Relying upon Jai Steel (India) v. ACIT [2013 (6) TMI 161 - RAJASTHAN HIGH COURT] - in case nothing incriminating is found on account of search or requisition, the question of reassessment of the concluded assessment does not arise - Once assessment u/s. 143(3) had been annulled by higher authorities on the ground of legality of notice u/s. 143(2) of the Act, re-opening u/s. 147 on that very ground would mean nothing else but the abuse of process of law - the contention of the Revenue cannot be accepted that as the return was processed u/s. 143(1) and it was a mere intimation, the AO had reason to believe that income had escaped assessment and it was open to the AO to re-assess the income u/s. 153A, even without any incriminating material found during the search action – decided against Revenue. Validity of assessment proceedings u/s 153A of the Act – Held that:- There is no condition in section153A that additions should be strictly made on the basis of evidence found during the course of search or other post search material or information available with the AO which can be related to the evidence found and that the seized material can be relied upon to also draw inference that there can be similar transactions throughout the relevant period, yet, at the same time it has been further observed that this however, does not mean that assessment u/s 153 A can be arbitrarily made without any relevance or nexus with the seized material. The reassessments made by the AO under section 153A, without any incriminating material being found during the search action conducted u/s. 132 of the Act, were not in accordance with law - the same are hereby set aside and the consequential result is that the return/original assessments which have acquired finality are to be reiterated. Since the cross-objections of the assessee have been allowed, the dispute relating to the additions made in consequence of the reassessments made u/s. 153A does not survive – Decided in favour of Assessee.
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