TMI Blog2014 (1) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the disallowances which is not based on seized material or any incriminating material found during the course of search - Decided in favour of assessee. - ITA Nos. 1011/Del/2013 to 1015/Del/2013 - - - Dated:- 20-12-2013 - Shri B. R. Mittal, JJ. For the Appellant : Shri Rajiv Saxena and Shri Abhishek Verma, Advocates. For the Respondent : Shri Ramesh Chander, CIT-DR. ORDER The assessee has filed all these appeals for assessment years 2003-04 to 2007-08 against separate orders of learned CIT(A), all dated 24th December, 2012 on common grounds (save and except the amount disallowed by the authorities below varies). 2. Since the facts and the issue involved in all these appeals are common, I heard all these appeals together and dispose them of by a common order for the sake of convenience. 3. I consider it relevant to state the grounds of appeal taken by the assessee for AY 2003-04 which are as under:- "1. On the facts and the circumstances of the case whether the ld. CIT(A)-XXXI is correct in dismissing the grounds of appeal that the assessment has not been framed on the material seized pursuant to an action taken u/s 132 of the Act but the reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee incurred the expenses comprising mainly security expenses, legal and professional expenses, interest paid, telephone expenses and electricity expenses. For all the assessment years under consideration, the assessee capitalized the said expenses in the value of fixed assets and shown the same in the original returns filed under Section 139 of the Act for all the assessment years under consideration. The assessee also stated that during all the assessment years under consideration, no business activity was carried out by the assessee company. 8. However, the Assessing Officer, while making the assessments for the assessment years under consideration, disallowed the expenses on the ground that the nature of expenses capitalized in the cost of above building were meant for keeping the company or assets in existence and accordingly completed the assessment. Being aggrieved, the assessee filed appeals before the first appellate authority. One of the legal grounds taken by the assessee was that the assessments framed by the Assessing Officer are bad in law as the assessments have not been framed on the material seized pursuant to search action taken under Section 132 of the Act. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears under consideration was pending on the date of search. He further submitted that the expenses which the assessee capitalized were shown in the balance sheet and it was also stated that the expenses had been capitalized by the assessee at the time of filing of the returns under Section 139 of the Act and, therefore, the said expenses which were capitalized cannot be disallowed while making the assessments under Section 153C read with Section 143(3) of the Act. The learned AR referred to the decision of the Hon'ble Delhi High Court dated 29th March, 2012 in WPC No.309/2011 in the case of SSP Aviation Ltd. Vs. DCIT and submitted that the Hon'ble High Court in paragraph 17 observed that if the returns filed by the other persons for the period of six years do not show that the income reflected in the document has been account for, addition will be accordingly made after following the procedure prescribed by law and after giving adequate opportunity of being heard. However, if there is no such material found, the proceedings have to be closed irrespective of the fact that the Assessing Officer is bound to obtain the returns from such other person for six assessment years as per prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded issues. The learned AR submitted that since no incriminating material or seized material was found against the assessee in respect of which the additions have been made for the assessments which have already been completed as they were not pending on the date of search, the additions made by the Assessing Officer which are not based on the searched material have to be deleted. 12. On the other hand, the learned DR strongly supported the orders of the Assessing Officer. He referred to the provisions of Section 153A of the IT Act and submitted that there is no requirement in law that addition should be made only on seized material or incriminating material in respect of the assessment years which have been subjected to assessment as per Section153A of the Act i.e. six preceding assessment years prior to the assessment year in which the search had taken place and the addition could be made as if the Assessing Officer is making fresh assessment. To substantiate his submission, the learned DR referred to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar Bhatia - [2012] 24 taxmann.com 98 and specifically referred to paragraph 23 which reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly when the Hon'ble Delhi High Court has held that while making the assessment under Section 153A/153C of the Act and also the provisions of the Act provide that there is no requirement that the addition should be based only on seized material or incriminating material. The learned DR filed a detailed note and while relying on the decision of Hon'ble Apex Court in the case of Distributors Baroda P. Ltd. Vs. Union of India - 155 ITR 120 (SC) stated that the Tribunal can apply its mind afresh to the matter irrespective of the earlier decision because to perpetuate the mistake is no heroism. Learned DR also in the said note referred to the decision of Hon'ble Apex Court in the case of Omar Salay Mohmed Sait - 37 ITR 151 (SC) and the decision reported in 66 ITR 710 and stated that for the cause of substantial justice, even if the issues are already covered by the Tribunal's own decisions, the same could be re-examined if they have not been considered properly. The learned DR also referred to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Chetan Dass Lachhman Dass - 25 taxmann.com 227 and submitted that the Hon'ble High Court also stated that while making the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Lordships discussed the scheme of the Section stating that pursuant to the search, the Assessing Officer is empowered to reopen the assessment for six assessment years preceding the assessment year in which the search had taken place. I also observed that the Tribunal while deciding the case of PACL Ltd. (supra) had also considered at length the said decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra). In the said case, it was observed that where an assessment for any assessment year is pending relating to six assessment years preceding the assessment year in which the search had taken place, the proceedings shall abate and the Assessing Officer will make the assessment not based on incriminating material but will have the power to go outside the scope of incriminating materials. That is the scope of assessment will cover the issues which can arise from the original pending proceedings. I observed that the case of Chetan Dass Lachhman Dass (supra) relied upon by the learned DR has also no relevance to the facts of the case of the assessee before me because, in that case, the seized material was found and on the basis of the seized material, their Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will be closed. If the returns filed by the other person for the period of six years do not show that the income reflected in the document has been accounted for, addition will be accordingly made after following the procedure prescribed by law and after giving adequate opportunity of being heard to such other person. In view of the above, I do not find merit in the contention of the learned DR that in the said decision, their Lordships have held that while framing the assessments for the six assessment years, the Assessing Officer has to make the fresh assessment and can make additions/disallowances even not relating to the searched documents or incriminating material found during the course of search where the assessment proceedings are not pending with reference to the date when the Assessing Officer received the requisition from the Assessing Officer of the searched person to set in motion the proceedings under Section 153A of the Act. I am of the considered view that where the assessment for any of the six assessment years is not pending on the date when the proced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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