TMI Blog2015 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made under section 68 of the Act. - Decided against revenue. Violation of Rule 46A of the Income Tax Rules, 1962 - Held that:- No new evidence was adduced before the Ld. CIT(A). He only took note of the already existing documents in the public domain. i.e. the remand report of the AO in a sister concern’s case of assessee wherein, the AO candidly accepts the identity, creditworthiness and genuineness of the share holders company (M/s Caplin For AY 2006-07 i.e. in the same assessment year under consideration). Therefore, question of admission of additional evidence does not arise. The Ld. CIT(A) while discharging his appellate jurisdiction can take judicial notice of these documents and found the contention of the assessee was right and so there is nothing illegal or perverse in it and so there is no violation of Rule 46A. Moreover, the learned DR could not point out any additional evidence which has been adduced before the ld. CIT(A) for the first time to invoke Rule 46A. Hence, the contention raised by the Department regarding violation of Rule 46A, has no merits, therefore, we reject the ground - Decided against revenue. Taking note that the Hon'ble Bombay High Court [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, taken by the AO and the failing to appreciate the fact that there was no search and seizure action initiated on the assessee therefore the assessment order passed by the ld. AO deserves to be annulled. 2. That on the facts and circumstances of the case, the proceedings initiated under section 153A of the I.T. Act and order passed by the Ld. AO under Section 153A/143(3) of I.T. Act, is without jurisdiction. 3. That on the facts and circumstance of the case, the CIT(A) has erred both in law and on facts in confirming the proceedings initiated under section 153A of the I.T. Act, which is bad in law in the absence of any incriminating material belonging to the assessee being found during the course of search. 4. That on the facts and circumstances of the case, the CIT(A) has erred both in law and on facts in confirming the validate of impugned assessment order dated 30.12.2011 u/s. 153A of I.T. Act as framed by the AO in respect of closed assessment for which no incriminating material seized during the course of search and seizure action. 5. That on the facts and circumstance of the case, the CIT(A) has erred both in law and on facts in confirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder the AO observes that the requirement of Section 68 of the Act is that the onus to prove the credit entry in the books of accounts is primarily on the assessee and not on the department. According to him, the assessee has not fully discharged its onus to prove the creditworthiness of the creditors companies. He further observed that merely establishing the identity of the creditor is not enough. In this regard, he placed reliance on various judicial pronouncements and held that the amount introduced by 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 ₹ 26,00,000/- was made while completing the assessment u/s. 153A/145(3) of the Act vide his order dated 30.12.2011. 5. Against the aforesaid order of the Assessing Officer, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 11.2.2013 has partly allowed the appeal of the assessee and deleted the addition of ₹ 26,00,000/- made by the AO u/s. 68 of the Act. 6. Aggrieved by the order of the Ld. CIT(A), now t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ld AR contended that for the instant year under consideration no incriminating material whatsoever has been seized during search which could have been the basis of any addition to be made u/s 153A of the Act. According to the ld AR since no incriminating material were seized, the AO could not have made the impugned addition in reassessment order without any incriminating material seized during the search proceedings which took place on 20.08.2009. In the absence of any incriminating material from 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 2007-08 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 scrutiny assessment; and now the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard both the parties and have perused the records of the case, 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 making even best judgment assessments. Settled position of law is that surmises and conjectures cannot be the base of any additions whether during scrutiny assessment u/s 143(3), u/s 147/148 or u/s 153A of the Act. Section 153A, no doubt is an overriding provisions which takes away the fetters found u/s 147/148 of the Act, which AO has to face while reopening assessment in case of escapement of income, etc. However the moot question is whether the AO can make additions based on no evidence, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals on the above questions. 15. The grounds raised by the Revenue before the Hon'ble High Court of Bombay in that case (ALL Cargo) were the following:- (i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment under section 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax? ii) 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 the total income of the six assessment years? iv) Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal erred in holding that the assessee was entitled to deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner, then, that becomes binding on all the division benches across the country unless there is a contrary judgment of the Hon'ble Supreme Court or that of some High Court. As the ld. DR failed to point out any specific and direct judgment rendered by the Hon'ble High Court on the issue which is obtaining in the present appeal, we are disinclined to deviate from the Special Bench order in the case of All Cargo (supra). We, therefore, hold in principle that no addition can be made for any assessment year u/s I53A, the assessment for which is not pending on the date of search, unless any incriminating material is found in the course of search. 21. Consistent with a view taken therein and taking note that the Hon'ble Bombay High Court has upheld the Special Bench decision of the Tribunal, in ALL Cargo (supra) we uphold the contention of the assessee 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 as stated above. 22. In the result, the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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