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2015 (7) TMI 240 - ITAT DELHI

2015 (7) TMI 240 - ITAT DELHI - TMI - Validity of ssessment u/s 153 - Addition u/s 68 - Held that:- No addition can be made for this assessment year u/s 153A since no incriminating material was unearthed during the course of search and admittedly original assessment has not abated as on date of search. So we are inclined to follow the view of the Coordinate Bench in the assessee‟s group company M/s Aggarwal Plaza Pvt. Ltd Vs. DCIT. [2014 (7) TMI 1133 - ITAT DELHI]

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Jain, CA ORDER PER A. T. Varkey JM These appeals filed by the Revenue and Cross Objection filed by the Assessee are directed against the order dated 26.11.2012 passed by the Ld. CIT(A)-III, New Delhi pertaining to the assessment year 2006-07. 2. The grounds raised in Revenue‟s Appeal in ITA No. 241/Del/2013 (A.Y. 2006-07):- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 20,00,000/- made by the AO u/s 68 of the Income Tax Act, .....

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g found during the course of search. 2 That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the validate of impugned assessment order dated 27.12.2011 u/s 153A of the Income Tax as framed by the Assessing officer in respect of closed assessment for which no incriminating material seized during the course of search and seizure action. 3 That on the facts and circumstances of the case, the Commissioner of Income .....

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red both in law and on facts in confirming the charging of interest u/s 234B(3) from 25.10.2007 where as in the present case the original assessment was completed on 09.04.2008 hence the interest u/s 234B(3) should have been charged from 10.04.2008 till 27.12.2011 i.e. for 44 months as against 51 months charged by the AO. 4. The facts in brief are that the original return in this case was filed on 06-01-2007 declaring net taxable income ₹ 5,95,233/-. The return was processed u/s. 143(1) of .....

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ng it to file the return of income. In response thereto, the assessee filed his reply dated 18.08.2011 and has requested to treat the original return of income filed u/s 139(1) as the return filed u/s. 153A of the Act. In this case regular proceedings were initiated and notice u/s. 143(2) and 142(1) of the Act, along with the questionnaire was issued and duly served upon the assessee. 4.1 The aforesaid group is engaged in the real estate projects. The group is involved mainly in business of prom .....

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ell as group companies related to the Unity Group itself and are assessed in the same Circle. The AO himself acknowledges in para 5 of the assessment order that the sources of fund of these persons / companies have been verified in their respective cases. And then he proceeds to verify the fresh share capital / share application money received by the assessee and for that summons were issued u/s. 131(1) of the Act, and information was called u/s. 133(6) of the Act. In the assessment order the AO .....

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the assessee is under the garb of share application money/ share capital/ share premium‟ and therefore treated it as income of the assessee from undisclosed sources within the meaning of section 68 of the Act and the additions of ₹ 20,00,000/- was made while completing the assessment u/s. 153A/145(3) of the Act vide his order dated 27.12.2011. 5. Against the aforesaid order of the Assessing Officer, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 26.11.201 .....

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the same stands dismissed. 8. Coming to the Ground Nos.3 the ld AR for assessee Shri A.K. Jain, has vehemently assailed the decision of the ld CIT(A) in respect to confirming the impugned reassessment order passed u/s 153A of the Income Tax Act, 1961 (herein after the Act‟). According to him, without any incriminating material seized during the course of search and seizure conducted on 20.08.2009, the re-assessment and the impugned addition made u/s 153A is invalid in the eyes of law. The .....

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m the search in the possession of the AO, according to the Ld. AR, he could not have fastened the impugned addition. The Ld AR pointed out that original assessment for the year under consideration i.e. AY 2006-07 was itself a scrutiny assessment u/s 143(3) of the Act, and investigation was done by the AO at that time and after satisfying himself of the identity, creditworthiness and genuineness of the share transactions made a conscious decision not to make any additions during the original scru .....

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ials found during the search. In the case in hand according to the ld AR the AO did not have a single piece of incriminating material collected during search to impose the addition, therefore according to him, addition thus made without incriminating material found during search and seizure was clearly illegal in the eyes of law and therefore is invalid and cited the Special Bench decision of the Tribunal in All Cargo and also brought to our notice the Coordinate Bench decision of this Tribunal .....

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ears, the AO has to assess/reassess the assessee even though the original assessment was concluded u/s 143(3) of the Act and placed his reliance on the order of the Hon‟ble Delhi High Court in the case of Filatex India Ltd. In ITA No.269/2014and CM No.10077/2014 dated 14.07.2014. And also relied upon the decision on the following orders:-  Anil Kumar Bhatia 24 Taxmann.com 98 dated 07.08.2012 of Hon'ble Delhi High Court  Raj Kumar Arora, ITA No. 56/2011 dated 11.07.2014 .....

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ase, and have gone through the case laws cited before us. Before we adjudicate this issue we were wondering whether an addition can be made without the support of any material leave alone incriminating material, which can be termed as the basis of such an addition whether it be during Sec. 143, 147, 153A proceedings. Even during best judgment assessment u/s. 144, 145 of the Act, the AO cannot arbitrarily make any additions based on surmises and conjectures. There are well settled guidelines for .....

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answer has to be in the negative. But then the question is what is the scope of assessment and reassessment envisaged u/s 153A of the Act and what evidence can be taken by the AO during the 153A proceedings. The AO while exercising his jurisdiction u/s 153A, can assess/ reassess based on (a) evidences unearthed during the search, (b) evidences already on record during the original assessment u/s 143(1) or 143(1)(a) or 143(3) but not taken notice by the AO for whatever reason or if the view of th .....

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vious year in which search has been conducted. The parliament has given a mandate to the AO, unbridled by any fetters to compute the Total Income based on evidence on record which has escaped notice of the AO during original assessment or the evidence adduced during original assessment has been found to be bogus by virtue of material unearthed during search and the fresh evidence unearthed during the search proceedings; and any other evidence which is brought to the notice of the AO by CIT u/s 2 .....

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ch held that the de-hors any incriminating material, no additions can be sustained has been upheld by the Hon‟ble Bombay High court in Income Tax Appeal No. 1969 of 2013 filed by the Revenue against the said decision of the Special Bench i.e. ALL Cargo, wherein the Hon‟ble High Court in para 14 (Page 9) has specifically adjudicated the issue raised before their Lordships that to interpret not only the legal provisions but consider the correctness of the view taken in the Special Benc .....

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i) Whether on the facts and in the circumstances of the case, the Hon ble ITAT is correct in law in holding that the scope of Section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO? iii) Whether on the facts and in the circumstance of the case, the Hon ble ITAT was right in limiting the scope of Section 153A only to undisclosed income when as per the section the AO has to assess t .....

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ovision is not perverse nor does it suffer from any error of law apparent on the face of the record. 12. And finally in para 49 after concurring with the view of the Hon‟ble Delhi High Court order in Anil Kumar Bhatia‟s case held as follows:- We, therefore, dismiss the Revenue appeals and answer the substantial questions of law against the Revenue and in favor of the assessee. 13. In the present case, the Ld CIT(A), while allowing the assessee‟s appeal on merit‟s made a c .....

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search proceedings doubting the creditworthiness or genuineness of transactions, specifically in view of the fact that in original 143(3) proceedings both these entities have duly responded to the notices issued by the Department and their identity, creditworthiness and genuineness have been accepted. 14. Also we find that ld CIT(A) has made a finding that no incriminating material has been found during search in para 9.14 at Pg.37 of the impugned order as under:- Thus, in view of the factual p .....

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tities and when their balance sheet speaks otherwise. 15. The Ld DR could not controvert this factual finding of the Ld CIT(A) as to whether any evidence adverse to the assessee was found during the search which could have been the basis for addition while computing the total income as envisaged u/s 153A of the Act. 16. In Filatex India Ltd. case and other cases relied and cited by the Ld. DR, we find that on facts there was incriminating material on record, so those case laws cannot be applied .....

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t is valid, however the additions made has no basis and is not based on any evidence to support the same collected during the search conducted against it and so the same has been rightly deleted by the ld CIT(A). 18. We take note of the 'A' Bench decision of ITAT, Delhi, in the assessee‟s group company M/s Aggarwal Plaza Pvt. Ltd Vs. DCIT, in ITA No. 1605/Del/2013, for the AY 2005-06, vide order dated 18/07/2014 considered identical grounds in the case of Sanjay Aggarwal Vs. DCIT i .....

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