TMI Blog2013 (11) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Therefore, addition in the assessment u/s 153A could be made only on the basis of incriminating material found during search – Reliance has been placed on the judgment in the case of Alcargo Global Logistic Ltd. [2012 (7) TMI 222 - ITAT MUMBAI(SB)] In absence of incriminating material recovered or statement recorded during the search, showing non-genuineness of gifts was beyond jurisdiction, hence addition so made at ₹ 20,00,000/- on account of non-genuineness of the gift which was not made in the original assessment u/s 143(3) of the Act, was rightly deleted by the Ld. CIT(A) – Decided in favor of Assessee. - ITA Nos.4873/Del/2009, 2510, 3312, 2833/Del/2011 ITA NO- 3647/2\Del/2013, ITA NO- 510/Del/2010, ITA NO- 3343/Del/2011 - - - Dated:- 28-3-2013 - Shri I. C. Sudhir And Shri J. S. Reddy,JJ. For the Petitioner : Shri Salil Agrawal, Adv, Shailesh Gupta, CA, M. M. Gupta, C.A For the Respondent : Shri D. K. Mishra, D. R ORDER Per I. C. Sudhir, Judicial Member: At the out set of hearing the parties pointed out that in the appeal for the assessment year 2002-03 preferred by the department the common issue on the validity of addition made u/s 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition on its merits, the assessee also raised an additional ground to be allowed for the adjudication involving the issue as to whether u/s 153 A proceedings addition can be made without reference to any incriminating material found during the course of search or not. The reasons shown for raising this additional ground for the first time before the Ld. CIT(A) was that subsequently the Delhi Bench of the Tribunal vide its order dated 1/1/2010 reported in 1 ITR (TRIB) 484 (Delhi) in the case of Shri Anil Kumar Bhatia vs. ACIT and Shri Sanjay Bhatia Vs. ACIT has decided the issue in favour of the assessee that without reference to any material found during the course of search, addition cannot be made in Section 153 A assessment. Discussing the circumstances under which the additional ground involving the legal issue was raised, the Ld. CIT(A) following the decisions of Hon ble Supreme Court in the cases of Jute Corporation of India Ltd. Vs. CIT, 187 ITR 688 (SC) and NTPC Vs. CIT, 229 ITR 383 (SC). The Ld. CIT(A) admitted the additional ground for his adjudication. On this issue raised in the additional ground, the Ld. CIT(A) following its earlier order dated 17/5/2010 in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Commissioner of Wealth Tax Vs. Sanghi Bros. India ) Ltd.301 ITR 129 (P H) (iv) Maharaj Kumar Kamal Singh ,35 ITR 1 (S.C). 4. The Ld. A.R tried to justify the first appellate order on the issue. He submitted that the issue raised before the Ld. CIT(A) in the additional ground on the validity of addition made in Section 153 A proceedings in absence of any material found or statements recorded during the course of search has been decided by the Hon ble Delhi High Court in the case of Anil Bhatia (Supra) which squarely covers the issue raised in the present case. He pointed out further that the revenue has not questioned the allowability of adjudication of additional ground sought by the assessee before the Ld. CIT(A). There is no dispute in the present case that no incriminating material pertaining six preceding years was found during the course of search proceedings in the present case and on the date of search the regular assessment u/s 143 (3) for these assessments years was already framed by the A.O. He placed reliance on the following decisions:- (i) CIT VS . Anil Kumar Bhatia 2011 Taxman 453 (Delhi) (ii) All Cargo Global Logistics Ltd. Vs CIT 137 ITD 287 (Mum) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. It was answered by the Hon ble High Court in affirmative and in favour of the revenue. In that case, the Hon ble High Court has been pleased to hold that the Assessing Officer has the power u/s 153A to make assessment for all the prescribed six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee had filed return before the date of search which stood processed u/s 143(1) (a) of the Act. The Tribunal had held that since the returns of income by the assessee for all the six years under consideration before the search took place were processed u/s 143 (1) (a) of the Act, the provisions of Section 153 A cannot be invoked. The Hon ble High Court did not agree with this, nor it agreed with the finding of the Tribunal that no material was found during the search. The Hon ble High Court observed in that case, that in the entire case and arguments before the departmental authorities as well as the Tribunal it was contended by the assessee that no document embodying the transaction with Mohni Sharma was recovered fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Besides the above addition an addition of Rs. 22.80 lakhs was also made on account of unexplained credit entry appearing in the books of the proprietory concern of the assessee. The Ld. CIT(A) deleted these additions, which has been approved by the Tribunal. The Tribunal in absence of any material found during the course of search or statement pertaining to the undisclosed income has deleted the addition made on account of non-genuineness of the gift as undisclosed income. Against this order of the Tribunal the revenue did not prefer appeal before the Hon ble High Court. We thus find that in the case of Anil Bhatia (Supra) decided by the Hon ble High Court no any clear ratio has been laid down by the Hon ble High Court in absence of any material found during the course of search, no addition can be made u/s 153 A of the Act where assessment has already been framed u/s 143 (3) or returned filed u/s 139 of the Act has been processed u/s 143(1) (a) of the Act. The decision of the Hon ble High Court in the case of assessee for asstt. year 2001-02 is against the assessment framed u/s 143(3) before the search, hence not helpful to the assessee. Having gone through the other decisions re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 132 but at least we find that there is no dispute that provisions u/s 153A can be invoked only taking note of undisclosed income, if any, unearthed during search. We find that the issue as to whether in a case where no incriminating material was found A.O had no jurisdiction to make addition in assessment or reassessment u/s 153A, has been dealt with and adjudicated upon by the Special Bench of the Tribunal in the case of Alcargo Global Logistics Ltd. Vs. Dy. CIT (2012) 137 ITO 287 (Mum) (SB), which has been followed by the Bombay Bench of the Tribunal in the case of Gurinder Singh Bawa Vs. CIT (Supra) relied upon by the Ld. AR. The issue was referred to the Special Bench on which it has reached to the conclusion that in case where assessment has abated A.O retains original as well as Section 153 A jurisdiction and when no assessment has been abated, assessment u/s 153 A can be made only on the basis of incriminating material recovered during search. The Special Bench held in that case that Provisions of Section 153 A come into operation if a search or requisition is initiated after 31/5/2003 and on satisfaction of this condition, the AO is under obligation to issue notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that in search assessment pertaining to six immediately preceding assessment years which abet due to pendency, Assessing Officer can make additions even if no incriminating materials is found during search, but when all assessments are complete and no assessment has abated, Assessing Officer can make addition only on the basis of either incriminating material found during search or undisclosed income/property disclosed during search. In that case the addition made in the assessment framed u/s 153A was deleted as being made without jurisdiction since the said assessment u/s 153A was made on the basis of material available in return of income and there was no reference to any incriminating material found during the search and since no assessment was abated. 8. The Bombay Bench of the Tribunal in the case of ACIT vs. Pratibha Industries Ltd. (supra) has held that proceedings u/s 153A are linked to the search having been initiated on the person, not with the documents found and seized. The documents so found and seized, may become useful to the AO for making an assessment of total income u/s 153A read with section 143(3), held the Tribunal. In other words as per this decision whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal is dismissed. ITA NOS. 4873/deL/2009, 2510, 3312, 510/Del/2010, 3343 2833/Del/2011. 12. Identical issue has been raised under all most similar set of facts in the A.Ys. 2004-05 and 2006-07 in the appeals of the assessee. In the appeals for the A.Ys. 2003-04, 2005-06 preferred by the assessee, the assessee/appellant has sought permission of the Bench to allow the issue questioning the validity of addition in the assessment framed u/s 153A in absence of incriminating material found or statement recorded during the search, raised by way of additional ground. In support of the application reliance has been placed don the decision of the Hon ble Supreme Court in the case of N.T.P.C Ltd. Vs. CIT, 229 ITR 383 (SC). It was submitted by the Ld AR that the issue involved is legal in nature and adjudication of which does not require consideration of fresh material outside the record. He submitted further that the issues raised goes to the root of the matter questioning jurisdiction of the A.O. The Ld. DR opposed the same. We however, found substance in the submission of the Ld. AR that the issue involved in the additional ground is legal in nature, it goes to the root of the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the A.O. in the assessment framed u/s 153A of the Act in absence of any incriminating material recovered or statement recorded during the course of search, where original assessments were not abated. 14. Similar argument as made in A.Y 2002-03 has been advanced by the parties on the validity of addition made in the assessment u/s 153A in these years. The Ld. AR asserted that in these years also there was no incriminating material recovered or statements recorded during the search suggesting the non-genuineness of the gifts or expenses claimed which was not remained the subject matter of the addition made in the original assessment which were not abated. He pointed out that except A.Y 2004-05 in all the A.Ys original assessment was framed u/s 143(3) of the Act, whereas in the A.Y 2004-05 return filed was processed u/s 143(1) and no notice u/s 143(2) was issued within the prescribed time limit hence it reached finality. 15. Since there is no change on this material fact that during all these assessment years no incriminating material was recovered or statement was recorded during the course of search suggesting non-genuineness of the claimed gifts or expenses etc. and no su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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