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Income Tax - Case Laws
Showing 41 to 60 of 777 Records
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2022 (11) TMI 1391
TP Adjustment - ALP of the transaction involving Advertising, Marketing and Promotion (AMP) expenses - HELD THAT:- This Court in Bausch & Lomb Eyecare (India) Pvt. Ltd [2015 (12) TMI 1332 - DELHI HIGH COURT], Sony Ericsson Mobile Communications India Pvt. Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT] and Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] has held that merely because there is an incidental benefit to the foreign AE would not mean that AMP expenses have been incurred by the assessee for promoting the brand of the foreign AE. The Court further held that provisions of Chapter X cannot be invoked in cases wherein the existence of an international transaction is unable to be shown. No substantial question of law arises for consideration in the present appeal
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2022 (11) TMI 1390
Income taxable in India - Taxability of short term capital gain arising on sale of shares - Gains derived by a resident of one of the States from the alienation of shares (other than shares quoted on an approved stock exchange) - HELD THAT:- A careful reading of Article 13(4) makes it clear that the source State has the authority to tax the capital gain, only if, the value of shares sold is derived principally from immovable property situated in the source State, other than, property in which the business of the company whose shares were sold was carried out.
In case of JCIT Vs. Merrill Lynch Capital Market Espana SA SV [2019 (10) TMI 1163 - ITAT MUMBAI] while dealing with an identical provision under India – Spain DTAA has held that the onus is entirely on the AO to prove that the value of shares is derived principally from immovable property situated in the source country. In other words, it has to be proved that the Indian company in which the assessee had invested the money towards equity was principally holding immovable property. Neither any such allegation has been made by the Assessing Officer in the assessment order before invoking Article 13(4) of India – Netherlands Tax Treaty, nor in course of the proceeding before DRP or even the Tribunal any material has been brought on record by Revenue to demonstrate that the condition of Article 13(4) of India – Netherlands Tax Treaty is satisfied.
Thus the short term capital gain will not be taxable even under Article 13(4) of the India – Netherlands Tax Treaty. Thus, seen from any angle, the short-term capital gain arising on sale of shares is not taxable in India. In view of the aforesaid, we delete the addition made by the AO. Appeal of assessee allowed.
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2022 (11) TMI 1389
Assessment u/s 153A - incriminating material of document has been found at the time of search or not? - HELD THAT:- Upon a perusal of the paper book, this Court finds that both CIT(A) and the ITAT have given concurrent findings of fact that no incriminating material has been found during the search. The ITAT also recorded that the present case of the respondent was of non-abated assessment. In fact, the AO in his remand report filed before the CIT(A) admitted that no documents were found or seized during the course of search nor there was any admission by the Assessee.
This Court in Shiv Kumar Agarwal [2022 (8) TMI 268 - DELHI HIGH COURT] has held where assessment of the respondent had attained finality prior to the date of search and no incriminating material of document has been found at the time of search, no addition could be made u/s 153A as the case of the respondent was of non-abated assessment.
Though the judgment in Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has been challenged by Revenue in connected matters and is pending before the Hon’ble Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgment passed by the Hon’ble Supreme Court in Kunhayammed and Others. Vs. State of Kerala and Another[2000 (7) TMI 67 - SUPREME COURT] the present appeal is covered by the judgment of this court in Kabul Chawla (supra) and Shiv Kumar Agarwal (supra). Decided in favour of assessee.
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2022 (11) TMI 1388
Validity of reopening of assessment u/s 147 - reopening beyond period of four years - HELD THAT:- In the present special leave petition, the reopening was post four years and therefore, we are not inclined to issue notice as full facts had been disclosed by the assessee. The assessee is not required to state the law, which the Revenue feels may be attracted.
Accordingly, the special leave petition is dismissed.
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2022 (11) TMI 1386
Assessment orders liable to be annulled being passed beyond the period of limitation - HELD THAT:- Admittedly, a perusal of the assessment orders in the present case clearly shows that DNCR, which is to be clearly hand written on the assessment orders is absent in the present case. It is also an admitted fact that DNCR original which has been produced by CIT DR does contain the entry in respect of the date of assessment order. DNCR also does mention the date of the assessment order as 30.12.2016.
DNCR does not contain the date of the entry made in respect of the assessment order. It only mentions the date of the assessment order as 30.12.2016. Therefore, we are of the view that DNCR register does not help the case of the revenue.
CIT DR has placed before us the file of the JCIT, wherein, he has granted the approval u/s.153D in respect of the assessment order on 30.12.2016. Again, this does not help the revenue insofar as it is only in respect of the approval u/s.153D from the JCIT. It does not prove that the order has been passed on 30.12.2016.
A perusal of the order of M/s. Nidan [2018 (5) TMI 1024 - ITAT CUTTACK] clearly shows that this issue has been considered by the Tribunal, wherein, it is held that the assessment order therein is barred by limitation, as upheld by the Hon’ble Jurisdictional High Court [2022 (7) TMI 1444 - ORISSA HIGH COURT] - The assessee, herein, is a partner in M/s. Nidan (supra).
Thus, the facts in the case of M/s. Nidan (supra) most specifically in respect of period of limitation would apply paripasu in respect of the assessee also. In these circumstances, we are of the view that the assessment orders passed in assessee’s case purported to have been passed on 30.12.2016 is barred by limitation and, therefore, quashed. Appeal of assessee allowed.
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2022 (11) TMI 1384
Reopening of assessment u/s 147 - new scheme u/s 148A - faceless assessment - Whether notice is wholly without jurisdiction as it has been issued in violation of the notification dated 29.03.2022, issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes? - HELD THAT:- The submission proceeds that by the said notification, a scheme has been formulated whereunder issuance of notice u/s 148 has to be through automated allocation and in a faceless manner, whereas in the instant case, the aforesaid procedure has not been followed, rather the notice has been issued by a particular person and not in a face less manner.
Respondent prays for and is allowed one month’s time for filling counter affidavit. Two weeks thereafter is allowed to learned counsel for the petitioner to file rejoinder affidavit.
List for admission/final disposal immediately after six weeks - Till the next date of listing, further proceedings pursuant to the impugned notice dated 29.07.2022 (Annexure-8) shall remain stayed.
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2022 (11) TMI 1383
Revision u/s 263 - validity of order passed by AO - Lack of jurisdiction - Whether the order passed by AO/ITO Ward-5 (III), Kolkata in pursuance of the direction issued u/s 263 is devoid of jurisdiction? - HELD THAT:- When it is an admitted fact that the Assessing Officer, namely, the Income Tax Officer, Ward 5(III) was divested of the jurisdiction on or after 28th August, 2012, the order passed under Section 263 of the Act could not have been given effect to.
Tribunal has assigned the following reason which, in our opinion, is both factually and legally correct which says once the order u/s 127(2) was passed by the Ld. CIT-II, Kolkata unconditionally transferring the jurisdiction over the appellant’s case to the charge of DCIT/ACIT, Central Circle-XVII, Kolkata; then by virtue of such an order, the jurisdiction enjoyed by ITO, Ward-5(3), Kolkata in terms of Section 124 read with Section 120(1) & (2) stood abrogated.No substantial question of law arising for consideration in this appeal.
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2022 (11) TMI 1382
Validity of CIT order u/s 251 - dismissal of appeal for non prosecution - denial of natural justice - no opportunity was allowed to the appellant - None appeared on behalf of the assessee - HELD THAT:- We find that the Ld. CIT(A) has passed a laconic and non-speaking order and has dismissed the appeal for non prosecution. Section 251 of the Income Tax Act, does not empower the Ld. CIT(A) to dismiss the appeal for non-prosecution. Accordingly, in the interest of justice, we remit the issue to the file of the Ld. CIT(A). The Ld. CIT(A) is directed to pass the order on merits of the appeal before him after giving the assessee an opportunity of being heard.
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2022 (11) TMI 1379
Validity of revision order passed by CIT w/o mentioning DIN - no Document Identification Number (DIN) has been mentioned in the body of the impugned order which was in violation of Circular No.19 of 2019 of CBDT - HELD THAT:- The Coordinate Bench of the Kolkata Tribunal in the case of “Smt. Sunita Agarwal vs. ITO” [2022 (11) TMI 1348 - ITAT KOLKATA] taking note of the directions/observations made in the case of “Pradeep Goyel vs. UOI” [2022 (8) TMI 216 - SUPREME COURT] has quashed the order of PCIT issued without on the ground of non-mentioning of DIN in the said order.
So far as the contention of the Ld. DR that the DIN has been duly mentioned in the intimation letter for order u/s 263 of the even date, is concerned, we note that as per para 2 of the CBDT Circular No.19/2019, the DIN should be duly quoted in the body of such communication or order. Therefore, the mentioning of DIN on intimation letter does not validate the order issued without DIN being mentioned in the body of the order, and hence the same is liable to be treated as non-est.
Thus in the light of the decisions of “Tata Medical Centre Trust” [2022 (7) TMI 1334 - ITAT KOLKATA] and “Smt. Sunita Agarwal vs. ITO” [2022 (11) TMI 1348 - ITAT KOLKATA] the impugned order of ld. CIT(Exemption) is, hereby, quashed.
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2022 (11) TMI 1378
Validity of Revision u/s 263 - order of PCIT on the ground of non-mentioning of DIN - HELD THAT:- The Coordinate Bench of the Kolkata Tribunal in the case of “Smt. Sunita Agarwal vs. ITO” [2022 (11) TMI 1348 - ITAT KOLKATA] taking note of the aforesaid directions/observations made by in the case of “Pradeep Goyal vs. UOI” [2022 (8) TMI 216 - SUPREME COURT] has quashed the order of PCIT on the ground of non-mentioning of DIN in the said order.
In view of the discussion made above and in the light of the decisions of the Coordinate Kolkata Bench of the Tribunal in the cases of “Tata Medical Centre Trust” [2022 (7) TMI 1334 - ITAT KOLKATA] and “Smt. Sunita Agarwal vs. ITO” [2022 (11) TMI 1348 - ITAT KOLKATA] the impugned order of ld. CIT(Exemption) is, hereby, quashed.
Since, we have quashed the impugned revision order on the aforesaid legal ground.
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2022 (11) TMI 1376
Validity of order passed by MSME Council - Fee payable to CA Firms, for Special Audits directed u/s 142(2A) - HELD THAT:- Prima facie, and for the reasons which stand recorded in the order of the Court passed in [2023 (7) TMI 382 - DELHI HIGH COURT] the Court finds itself unable to sustain the impugned order passed by the Micro Small & Medium Enterprises Facilitation Council [“MSME Council”].Matter requires consideration.
Till the next date of listing, there shall be stay of all further proceedings initiated pursuant to the impugned order passed by the Micro & Small Enterprises Facilitation Council.
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2022 (11) TMI 1370
Exemption u/s 11 - Filing of belated Form No.10B - As per revenue necessary statutory conditions were not made and the Trust is not eligible for exemption - HELD THAT:- It is pertinent to note that except filing of belated Form No.10B, all the relevant conditions were fulfilled by the assessee as the Trust is registered under Section 12AA of the Act w.e.f. 26.03.2010.
The Tribunal, in the case of Audyogik Shikshan Mandal [2022 (3) TMI 470 - ITAT PUNE] clearly observed that if Form No.10B is available on record, the same should be taken into account and exemption cannot be denied to the assessee under Section 11 of the Act. In the present case also the assessee has fulfilled all the relevant conditions which are required for claiming exemption except filing Form No.10B and Audit Report at the relevant time but the same was filed at a later stage and was available with the CIT(A) as well as before the Assessing officer. Therefore, AO as well as the CIT(A) was not right in making addition and denying the exemption under Section 11 of the Act. Appeal of the assessee allowed.
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2022 (11) TMI 1368
Addition made enhancement of capital gain u/s 50C - adjustment u/s 143(1) - as argued addition made u/s 50C(1) of the Act can not fall within the ambit of adjustment provided u/s 143(1)(a) - HELD THAT:- Sub-section (1) to section 50C cannot be considered in isolation. By making an adjustment of the nature contemplated under subsection (1) to section 50C, that too, by CPC, the Department takes away a valuable statutory right given to the assessee to object to the value determined by stamp valuation authority.
Therefore, such type of adjustment, in my considered opinion, cannot be made u/s 143(1)(a) of the Act. This is so because, at the stage of processing of return u/s 143(1)(a), if such an adjustment is made, the assessee does not get an opportunity to object, as per section 50C(2) of the Act. More so, when conditions of the 1st and 2nd proviso to section 143(1)(a) are not complied. Therefore, hold that the addition made by CPC under section 50C(1) of the Act by way of adjustment u/s 143(1)(a)(ii) is unsustainable. Accordingly, delete the addition.
Disallowance of benefit of brought forward losses of earlier years - assessee’s claim of set off and carry forward of loss was rejected by Commissioner (Appeals), since, he did not find merit in assessee’s ground contesting the addition made u/s 50C(1) - HELD THAT:- While deciding ground No. 1 and 2 of assessee’s appeal I have deleted the addition made under section 50C(1) of the Act. Therefore, the reasoning of learned Commissioner (Appeals) in disallowing assessee’s claim of loss has become redundant. Hence, Assessing Officer is directed to allow assessee’s claim of loss in accordance with law.
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2022 (11) TMI 1367
TP Adjustment - comparable selection - A.R. submitted regarding exclusion of comparable companies as they fail the higher threshold limit of Rs. 200 crores for turnover filter - HELD THAT:- The turnover of Infosys Ltd. is at Rs.59,289 crores as against the turnover of the assessee at Rs.75.43 crores. In our opinion, this issue is covered by the judgement of the coordinate bench in the case of Mindteck India Ltd. [2022 (6) TMI 1334 - ITAT BANGALORE] Tribunal consistently holding that when the turnover exceeding Rs.200 crores is to be excluded from the list of comparable to determine the ALP of International transaction with the A.E. In view of the above, we direct the AO/TPO to exclude Infosys Ltd. from the list of comparables.
Great Software Laboratory Pvt. Ltd. - As the functionality details was not considered by the AO/TPO and also by Ld. DRP and hence, the issue is remitted to the file of AO/TPO for reconsideration. Accordingly, the issue is remitted back to the file of AO/TPO to examine the issue in the light of above details of functions furnished by the assessee before us.
Mind Tree Ltd. - A.R. furnished the details of functionality before us. These facts are not at all commented by the AO/TPO or by Ld. DRP. Hence, the issue is remitted back to the file of AO/TPO for fresh consideration in the light of above functionality of Mind Tree Ltd. company.
Persistent Systems Ltd. - This issue is infructuous in view of our findings on the basis of turnover filter of this company.
Aptus Software Labs Pvt. Ltd. - Main contention of assessee is that the employee cost filter applied by AO/TPO is 20%, whereas in this case, employee cost filter is less than 20%. Hence, it should be excluded - In our opinion, these facts are to be examined by AO/TPO in the relevant assessment year 2016-17. Accordingly, the issue is remitted back o the file of AO/TPO only in respect of assessment year 2016-17.
Consilient Technologies Pvt. Ltd. - As it is appropriate to remit this issue to the file of AO/TPO to consider it afresh in the light of submissions made by the Ld. A.R. with regard to functionality of the comparable. This issue is accordingly remitted to the file of AO/TPO for fresh consideration.
L&T Infotech Ltd. to be rejected on turnover filter.
Sagarsoft (India) Limited satisfies all the contents related to the functionality test.
Exclusion of Inteq BPO from the final set of comparable companies for ITES segment - We are of the opinion that this comparable came for consideration in the case of Vee Technologies Pvt. Ltd .[2022 (3) TMI 1533 - ITAT BANGALORE] wherein held that this company is involved in business process management services and cannot be considered as a comparable to a company providing ITeS such as the assessee. Being so, we direct the AO/TPO to exclude Inteq BPO Services Pvt. Ltd. from the list of comparables. Directed accordingly.
ISN Global Solutions Pvt. Ltd. - In this case, the AO/TPO has applied filter that minimum 75% of operating revenue should be from exports. However, this comparable fails this test. Hence, in our opinion, the AO/TPO is justified excluding this company ISN Global Solutions Pvt. Ltd. (ISN Global) from the list of comparables in ITeS segment. Accordingly, rejection of this company in the list of comparables by the Ld. AO/TPO is justified.
R Systems International Ltd. - This company has not included in the search matrix conducted by the AO/TPO. Being so, at this stage, it is not possible to include this company in the list of comparables.Hence, it is rejected for exclusion from the list of comparables.
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2022 (11) TMI 1365
TP adjustment - IT and Management Support Charges - HELD THAT:- We hold that the issue of administrative and marketing support services is part of the operating cost and no separate adjustment is warranted.
Interest charged on outstanding receivable - HELD THAT:- As relying on own case [2022 (7) TMI 1417 - ITAT BANGALORE] for the purpose of interest on delayed receivables, it would be appropriate to direct the AO to consider LIBOR + 3%. For this purpose, we place reliance on case of Xchanging Solutions Ltd. [2022 (8) TMI 1388 - ITAT BANGALORE]
Non-consideration of setoff of brought forward depreciation loss from prior year - HELD THAT:- AO is directed to verify and allow the same in accordance with law.
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2022 (11) TMI 1363
Delayed Employees’ Contribution to PF / ESI u/s 43B r.w.s. 36(1)(va) as well as Sec.2(24)(x) - Adjustment u/s 143(1)(a)(iv) - CPC power of adjustment as Auditor had indicated the default in the Tax Audit Report - HELD THAT:- The amendment made w.e.f. 01.04.2021 by insertion of words ‘increase in income’ would have no impact on such disallowance since it is only a disallowance of expenditure and the revenue is very well entitled to make such an adjustment u/s 143(1)(a)(iv).
The impugned adjustment,would also fall u/s 143(1)(a)(ii) since it is an incorrect claim which is apparent from any information in the return. The adjustment made by CPC flows from reporting made by Tax Auditor in Tax Audit Report in Form 3CD.
As per statutory mandate, the assessee is required by law to get its accounts audited u/s 44AB if its turnover crosses threshold turnover. Purpose of the audit is to enable the revenue to make correct computation of assessee’s income.
A proper audit would, inter-alia, ensure that the claims for deduction are correctly made. Report is required to be furnished by the assessee along with return of income to enable revenue to make correct computation of income. The reporting made therein could certainly be available to CPC to make the adjustment of defaults reported therein since the same would be apparent from information contained in the return.
As contribution is first treated as income of the assessee and thereafter, the deduction of the same has to be claimed by the assessee. Therefore, the columns in the Profit & Loss Account in the return of income has to be filled in this manner only i.e., the contribution is to be first added to the income of the assessee and thereafter, the deduction of the same would be claimed by the assessee. In other words, the assessee would first add the same to its income and thereafter, it would claim deduction after crossing the hurdle of Sec.36(1)(va). Since the claim made by the assessee is inconsistent with the reporting made by Tax Auditor, it was an incorrect claim which CPC has rightly disallowed.
Another argument is that the debatable issues could not be subject matter of adjustment u/s 143(1). However, so far as the revenue is concerned, this issue is not debatable for the revenue. The revenue has always maintained a position that the claim is allowable to assessee only when the contribution is deposited as per the mandate of Sec.36(1)(va) otherwise not. Therefore, it is incorrect to say that the issue is debatable one. The CHECKMATE SERVICES PVT LTD VS CIT-1 [2022 (10) TMI 617 - SUPREME COURT] held that allowability/treatment of ‘delayed’ Employee PF Contribution payment to be taxable in hands of assessee under provisions of Income Tax Act. Decided against assessee.
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2022 (11) TMI 1362
Addition u/s 56(2)(viib) - determination of FMV of the shares - allotment of shares at premium - HELD THAT:- On a reading of Explanation to section 56(2)(viib) it is very much clear that the FMV of shares shall be either the value determined u/r 11UA or based on the value of its assets, including, intangible assets on the date of issue of shares, whichever is higher. Assessee can determine the FMV by adopting either of the two methods as provided under the Statute.
The expression “substantiated by the company to the satisfaction of the AO” as used in clause (a)(ii) of Explanation to section 52(b)(viib) does not speak of any subjective satisfaction but has to be considered objectively, keeping in view the value of the assets on the date of issue of shares. Assessee has proved that the value of the asset, i.e., the land at Delhi as per circle rate is more than Rs. 26.75 crores determined by the registered valuer. That being the factual position emerging on record, allotment of shares at Rs. 1,500/- per share must be considered to be the FMV on the date of sale and not high and excessive compared to the FMV.
Assessee had entered into similar transaction with its holding company in assessment year 2014-15 wherein, shares having face value of Rs. 100 per share were allotted to the holding company for a premium of Rs. 1799 per share. While considering the issue relating to similar addition made by the AO u/s 56(2)(viib) first appellate authority has deleted the addition taking note of the fact that the value of land held by the assessee as per the circle rate is Rs. 42 crores. - No reason to sustain the addition - Appeal of assessee allowed.
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2022 (11) TMI 1359
Levy of fees u/s. 234E - Intimation u/s 200A - period of tax deduction prior to 01.06.2015 - HELD THAT:- We find that it is undisputed fact that the assessee has been charged late fee u/s. 234E for various returns filed in the Form-26Q for late filing of the statements. These cases relate to Assessment Year 2014-15. The various Hon'ble High Courts including the Hon'ble Karnataka High Court and Hon'ble Kerala High Court have held that the provisions of Section 234E are applicable w.e.f. 01.06.2015. See case of ‘Fatheraj Singhvi Vs. Union of India’ [2016 (9) TMI 964 - KARNATAKA HIGH COURT] as held since the impugned intimation given by the respondent-Department against all the appellants under Section 200A are so far as they are for the period prior to 1.6.2015 can be said as without any authority under law. Also see M/S. UNITED METALS [2021 (12) TMI 1349 - KERALA HIGH COURT] - Decided in favour of assessee.
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2022 (11) TMI 1357
Reopening notice u/s 148A(b) - validity of order passed u/s 148A(d) and u/s 148 - petitioner states that there is no information on record which suggests that the income chargeable to tax has escaped assessment - allegation that income has escaped assessment is factually incorrect as petitioner has had no transaction with the said party and it is impossible for the petitioner to prove the negative. He also emphasises that the petitioner had not been furnished any documents/material along with the notice issued u/s 148A(b)
HELD THAT:- As on instructions, admits that the relevant documents/material has not been furnished to the petitioner along with the notice issued under Section 148A(b) - On instructions, states that the respondents have no objection if the present matter is remanded back for a fresh decision by the AO.
Keeping in view the aforesaid, the impugned order passed u/s 148A(d) of the Act and the notice issued under Section 148 of the Act both dated 26th July, 2022 are set aside and the AO is directed to furnish the documents/material to the petitioner in support of the notice issued u/s 148A(b) within two weeks. Petitioner shall be at liberty to file a response thereto within four weeks thereafter. AO is also directed to pass a fresh order u/s 148A(d) of the Act within six weeks thereafter.
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2022 (11) TMI 1356
Assessment u/s 153A - completed assessment/unabated assessment in absence of any incriminating material - contention raised by assessee that addition made in Assessment Order is not based upon incriminating material found during the course of search - HELD THAT:- AO has not made additions in the impugned assessment year based upon any incriminating material found during the course of search. Even before us the Ld. DR has not pointed out to any specific incriminating document unearthed during the course of search which formed the basis of additions made in the assessments for the years before us.
Therefore, in view of well settled proposition of law that completed / unabated assessment can be interfered by the AO while making assessment u/s. 153A / 153C of the Act only on the basis of some incriminating material unearthed during the course of search documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made in the course of original assessment, we are of the considered view that in the instant facts, the Ld. CIT(A) has not erred in facts and in law in deleting the additions Decided in favour of assessee.
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