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2015 (9) TMI 961 - AT - Income TaxAddition on unsecured creditors - Validity of proceedings u/s 153C - Held that:- Second Proviso to section 153A clearly says that the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s 132 shall abate. In other words, if the assessment is completed or terminated by operation of law on the basis of the return of income filed in the regular course, the assessment proceeding shall not be abated. Therefore, in respect of pending assessment proceedings on the date of the search, the assessment shall be made on the basis of the seized material and other material found on record. However, in respect of the assessment proceeding which is not pending on the date of search has to be made only on the basis of the material found during the course of search operation. The completed proceedings on the date of search cannot be reopened by the assessing officer. In the case before us, admittedly, the assessee has filed the return of income on 27-03-2006. The period of 12 months for issuing notice u/s 143(2) expires on 31-03-2007. It is also not disputed that the Commissioner of Income-tax by an order dated 27-11- 2007, in exercise of his powers u/s 127(2) transferred the jurisdiction from Ward.1, Ernakulam to DyCIT / ACIT, Central Circle.1, Ernakulam. Therefore, the assessing officer of the assessee, the DyCIT / ACIT Central Circle, Ernakulam might have received the records on or after 27-11-2007 only and certainly not before that. Therefore, the assessment proceedings on the basis of the return of income filed in the regular course on 27-03- 2006 got terminated by operation of law on 31-03-2007. Assessment proceedings on the basis of the return of income filed on 27-03-2006 is not pending as on 27-11-2007 when the assessing officer is supposed to have received the seized document of the assessee. Hence, the income disclosed in the return filed in regular course on 27-03-2006 on the basis of the balance-sheet as on 31-03-2005 cannot be disturbed by the assessing officer unless there is a specific material found during the course of search operation. In this case, it is not in dispute that there is no material found during the course of search operation for the assessment year 2005-06. The assessing officer made the addition only on the basis of the balance-sheet as on 31-03-2005 which was filed by the assessee originally alongwith the return of income filed on 27-03-2006 itself. Therefore, even if the copy of the said document was found on the date of search still, that document cannot be treated as seized material. In other words, the copy of the balance-sheet s on 31-03-2005 is very much available with the revenue authorities along with the return of income filed on 27-03-2006. Therefore, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, the assessing officer cannot reopen the assessment completed on the basis of the return filed by the assessee on 27-03-2006 wherein the unsecured creditors of ₹ 12,42,000 was disclosed. Hence, the CIT(A) has rightly deleted the addition. - Decided against revenue. CROSS Objection - AR now submitted before us that the framing of assessment u/s 153C r.w.s 153A/143(3) of the Act is bad in law - Held that:- Since there was a document found in the case of search action which belongs to the assessee and on that basis, notice us 153A was issued so as to frame assessment u/s 153C of the Act and the conditions precedent for issuance of notice is fulfilled ; therefore, the AO has taken action u/s 153C of the Act, which is valid. Accordingly, the Cross Objection filed by the assessee is dismissed. - Decided against assessee.
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