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2015 (9) TMI 188 - ITAT AHMEDABAD

2015 (9) TMI 188 - ITAT AHMEDABAD - TMI - Assessment under section 153A - additions or disallowances other than on the basis of incriminating material found during search operations challenged by assessee - Held that:- No addition can be made for any assessment year u/s 153A, the assessment for which is not pending on the date of search, unless any incriminating material is found in the course of search. See Sanjay Aggarwal vs. DCIT [2014 (7) TMI 254 - ITAT DELHI] - Decided in favour of assessee .....

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hen this appeal was called out for hearing, learned counsel for the assessee submitted that, with the benefit of finding judicial precedents non available, this appeal can be disposed of on the short legal ground that when no incriminating material is found during search operations, assessment framed earlier cannot be disturbed in the course of proceedings under section 153A. It is submitted that if this plea of the assessee is upheld, all other issues raised in the appeal will be rendered acade .....

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under section 153A was issued on 4th August 2010. The assessee filed return of income declaring total income of ₹ 3,44,00,130/-. The assessee is engaged in the business of construction and development of properties, trading in fabric and earns business income as also income from other sources. During the course of scrutiny assessment proceeding, details, as requisitioned, were filed from time to time and taken to record. In the assessment order, there is no reference to incriminating mate .....

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mination could not be offered of the assessee. There was no incriminating material found during the search which was used in the assessment proceeding for the making the additions in impugned assessment. Aggrieved by the assessment so framed, assessee carried the matter in appeal before the CIT(A) who confirmed the action of the Assessing Officer, on the jurisdictional issue, by observing as under: 4.4 In the instant case, it is not denied that a search has taken place. In view of the above, it .....

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voking the provisions of section 153C it is incumbent on him to receive information from the AO of the person who has been searched that certain documents or money, bullion, jewellery or valuable article or thing have been found from the custody of the person searched which belong to the other person and then the AO of such other person would initiate proceedings u/s 153C in the case of such other person. In the case of Meghmani Organics Ltd. the Gujarat High Court held that the documents which .....

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case of 153C documents or money, bullion, jewellery or valuable article or thing have been found from the custody of the person searched which belong to the other person, before the AO of such other person can invoke the provisions of section 153C. Most of the other cases relied by the AR of the appellant are also related to section 153C and not 153A. Only a few cases have been cited in respect of cases where search was conducted. The decision in these cases is that of the ITAT benches. Such cas .....

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aming of the assessment under section 153A but is confined to making of any additions or disallowances other than on the basis of incriminating material found during search operations. In effect thus, additions cannot be made other than on the basis of incriminating material found during search operations. That plea stands approved by a coordinate bench of the tribunal, in the case of Sanjay Aggarwal vs. DCIT [(2014) 47 taxmann.com 210 (Del)], by observing as follows: 12. The next judgment relie .....

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lt with a situation in which some incriminating material was found in respect of a non-pending assessment. It was in that background that the Hon'ble High Court held that sec. 153A applies if incriminating material is found even if assessments are completed. The question as to whether any addition can be made in respect of completed assessments when no incriminating material was found, was apparently left open. However, we find that there are sufficient in direct hints given by the Hon'b .....

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ars, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. ..." 13. The above extracted observations of the Hon'ble High Court, which are though obiter dicta, make the point clear that where a .....

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ncome but there is a cap on the scope of additions in such assessment, being the items of income 'unearthed during the search'. In other words, the determination of 'total income' in respect of the assessment years for which the assessments are already completed on the date of search, shall not be influenced by the items of income other than those based on the material unearthed during the course of search. There is not and cannot be any quarrel over the proposition that the Asse .....

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nly to those which flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the proceedings u/s 153A shall be computed by considering the originally determined income. If some incriminating material is found in, respect of such assessment years for which the assessment is not pending, then the 'total income' would be determined by considering the originally determined income .....

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o the special bench order in the case of All Cargo Global Logistics Ltd.(supra). 14. Since the Special Bench has decided this issue in this manner, it is not possible for us to deviate from the same. There has to be some consistency in the view taken by the Tribunal. Once a Special Bench has decided a particular issue in a particular 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 so .....

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