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2015 (8) TMI 773 - DELHI HIGH COURT

2015 (8) TMI 773 - DELHI HIGH COURT - TMI - Assessments under Section 153A - Did the ITAT fall into an error in deleting the additions made in the case of the Respondent Assessee for AYs 2004-05 and 2005-06 on the ground that no incriminating material was found during the search conducted in Assessee's premises on 12th September 2007, in respect of its claims? - Held that:- The Court is unable to appreciate on what basis the AO has in the assessment orders for the AYs in question proceeded to di .....

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ation obtained during the search. Mr. Sahni candidly answered in the negative.

The inescapable conclusion is that the AO proceeded to frame assessments under Section 153 A of the Act relying on some information not unearthed during the search. Further, whatever was recovered during the search having been destroyed in a fire was not available with the AO when he framed the assessments. Consequently, the assessment orders passed with reference to Section 153 A (1) of the Act were unsust .....

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by the Income Tax Appellate Tribunal (ITAT) in ITA Nos. 4212 and 4213/DEL/2011 for the Assessment Years (AYs) 2004-05 and 2005-06. 2. The Respondent Assessee is a company dealing in the business of car dealership and service station. During the AY 2004-2005 it entered into amalgamation agreement with Compact Motors Limited (CML). Pursuant to an order passed by the High Court on 27th September 2004, the amalgamation of CML with the Assessee was made effective from 1st April, 2003. 3. In terms of .....

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rths of the book value of fixed assets of the amalgamating company acquired in a scheme of amalgamation." 4. For AY 2004-05 returns were to be filed on or before 30th October 2004. The Assessee filed its return on 30th October 2004 under Section 139 (1) of the Act declaring Nil income. For the AY 2005-06, it filed its return on 27th October 2005 declaring an income of ₹ 50,04,700. The last dates by which the Revenue could resort to Section 143(3) of the Act were 31st March, 2007 and 3 .....

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N.P. Sahni, learned Senior Standing counsel for the Revenue, a photocopy of the panchnama and the inventory prepared at the time of search. The inventory prepared includes books of accounts, some bunch of loose papers, an external hard disk, a computer server etc. 6. It is not in dispute that on 6th October, 2007 a major fire took place at Mayur Bhawan which houses the offices of the Income Tax Department. It is stated by Mr. Sahni that in the said fire whatever was seized by the Department in .....

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see for the AYs in question on two grounds. One, since neither the Assessee nor CML was an 'industrial undertaking' within the meaning of Section 72 A (7) (aa) of the Act. Secondly, the Assessee failed to retain three-fourths of the book value of the fixed assets as required by Section 72 A (2) (b) (i) of the Act since it had during AY 2007-2008 sold the land of CML valued at ₹ 37,93,375. 8. The Commissioner of Income Tax (Appeals) [CIT (A)], by orders dated 18th July 2011 for each .....

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ing search." The ITAT recorded in its order that: "In the present case it is apparent that on the date of search on 12/09/07, the assessments for assessment year 2004-05 & 2005-06 were already completed. There was no incriminating material found during search for these years as is apparent from arguments of Ld. AR and from records and Ld. Departmental Representative did not bring to our notice regarding any incriminating material having been found during search." The ITAT also .....

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r could conclude that there was some undisclosed income then that statement can be considered as incriminating material." 10. By order dated 12th May 2014 the following two questions were framed by the Court: (i) Did the ITAT fall into an error in deleting the additions made in the case of the Respondent Assessee for AYs 2004-05 and 2005-06 on the ground that no incriminating material was found during the search conducted in Assessee's premises on 12th September 2007, in respect of its .....

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ted the stark fact that the material purportedly seized by the Revenue during the search was completely and irretrievably destroyed in a fire that took place on 6th October 2007 in Mayur Bhawan. While a photocopy of the panchnama showing what was seized is available, the material itself is not and in fact was not available with the AO when the assessment proceedings, consequent upon the search, took place. Further, as noted by the ITAT, no statement under Section 132(4) was recorded during the s .....

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