TMI Blog2015 (11) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... t of them, 6 appeals are filed by the assessee and 4 appeals are filed by the Revenue involving the AYs 2001-02 to 2006-07. Since, the issues raised in all these appeals are inter-connected, as such there are cross appeals for the AYs 2001-02; 2002-03; 2003-04 and 2005-06, therefore, for the sake of convenience, they are clubbed, heard together and disposed-of in this consolidated order. Appeal wise adjudication is given in the following paragraphs of this order. Firstly, we shall take up assessee s appeal for the AY 2001-02 as a lead appeal for adjudication. I ITA No.8628/M/2010 (AY 2001-2002) (By assessee) 2. This appeal filed by the assessee on 10.12.2010 is against the order of the CIT (A)-36, Mumbai dated 27.1.2009 for the AY 2001-02. In this appeal, assessee raised the following grounds which read as under: 1. The Ld CIT (A) has erred in law and facts in passing the order u/s 250 of the Act. 2. The Ld CIT (A) has erred in law and in facts in not holding that the assessment proceeding and consequential assessment order u/s 143(3) r.w.s 153C is without jurisdiction in the absence of issuance of issuance of mandatory legal notice u/s 143(2) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure action in the case of M/s. Rohan Group of cases related to the assessee company, notice u/s 153C of the Act was issued on 5.9.2008 and served on the assessee. In response, assessee filed the return of income declaring the total income of Rs. NIL. Subsequently, notice u/s 143(2) was issued on 20.10.2008 and the same was served on the assessee. Accordingly, AO completed the assessment u/s 143(3) r.w.s 153C of the Act and the assessed income was determined at ₹ 31,99,519/-, which include the addition of ₹ 32 lakhs u/s 68 of the Act on account of share application money received by the assessee. Aggrieved with the above decision of the AO, assessee is in appeal before the first appellate authority. 5. During the proceedings before the first appellate authority, after considering the submissions of the assessee, CIT (A) partly allowed the appeal and confirmed the addition to the extent of ₹ 7 lakhs. Again aggrieved and not satisfied with the said decision of the CIT (A), assessee is in further appeal before the Tribunal by raising the abovementioned Grounds and also raised a legal ground that the addition made by the AO is not based on the incriminating materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chart, it is clearly evident that all assessment years ie. AY 01-02 to 06-07 are non - abated years. As stated above, all the additions made by the Assessing Officer are on account of share application and are not based on any seized material found during the course of search. Reliance is also placed on the order of the Hon'ble Tribunal in the case of Shri Govind Agarwal v. ACIT being ITA No: 3389/Mum/2011 dated 10.01.2014 wherein the Hon'ble Tribunal held that in case of non-abated years, addition can only be made with respect to seized material found during the course of search. While arriving at this conclusion, the Hon'ble Tribunal has relied upon the order of the Hon'ble Tribunal in the case of All Cargo Global Logistics v. Addl.CIT 137 ITD 287(Mum)(SB) which has now been upheld by the Hon'ble Bombay High Court referred above. 8. In view of the above, it is humbly submitted that on the basis of the legal propositions, the additions made by the Assessing Officer are bad in law and hence are to be deleted. 9. We would like to bring to Your Honours kind attention the following points:- a. The additions made by the Ld. AO on account of Share app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the judgment of the Hon ble Bombay High Court in the cases of CIT v. All Cargo Global Logistic (374 ITR 645) (supra), copies of which are placed on record. On perusal of the said decisions, we find they are relevant for the proposition that when no assessment has abated, the question of making any addition or making disallowance which are not based on only material found during the search is bad in law . In this regard, we find it relevant to extract the relevant paras from the decision of the Tribunal in the case of Shri Govind Agarwal (supra) and the same is as follows: 12. We have heard the parties and their divergent stands on the legal issue and the validity of the instant assessment/reassessment with the routine additions u/s 68 and section 14A of the Act based on the accounted transactions. The instant case for the AY 2002-03 deals with the case of disturbing the completed assessment . Earlier the assessment was completed u/s 143(1) of the Act. Completeness of the summary assessment is considered and held in favour of the assessee vide many judgments cited above. In the assessment u/s 153A, the AO made (i) Addition u/s 68 on account of artificially inflate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. B. [2012] 28 Taxmann.com 328 (Mumbai Trib.) in the case of Gurinder Singh Bava vs. DCIT . Whether since assessment under section 153A was passed by Assessing Officer on basis of material available in return of income and there was no reference to any incriminating material found during search and since no assessment was abated, assessment under section 153A was to be quashed being made without jurisdiction available under section 153A - Held, yes [Para 6.2] [In favour of assessee] Para 6.1 of the Order: The Special bench in the case of Alcargo Global Logistics Ltd. (supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the search action. Statutory notice u/s 153A of the Act can also be issued to reiterate the returned income or for making additions based on the incriminating material or unproduced books of account. Otherwise, additions made in routine matter as in the present appeal are not sustainable. Further, for the sake completeness of the order, we have perused the orders/judgments relied upon by Ld DR for the revenue and found they are distinguishable on facts for one reason or other. To start with, we have perused the judgment of Honble Hon ble Delhi High Court in the case of Madugula Venu (supra) and find that, though explained the provisions in plain language, it does not dealt with the relevance or factum of incriminating material. Further, the judgment of Andhra Pradesh High Court in the case of Gopal Lal Bhadruka (supra) is not on the notices issued u/s 153A of the Act and the same is pronounced in the context of the notice u/s 153C of the Act. Further, also, the Coordinate Bench decision in the case of Scope (P) Ltd (supra) has granted relief to the assessee though the notice issued u/s 153A of the Act was upheld. However, this order has not considered the then existing decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othing incriminating is found on account of search or requisition, then the question of reassessment of the concluded assessments does not arise, which would more reiteration . . Thus, the judgment of Hon ble High court in the case of Jai Steel Ltd, supra and above decisions of the Tribunal are categorical in concluding that, in case of the concluded assessments like the present one, the additions are made only based on the incriminating material discovered during the search action. The facts of the Jai Steel Ltd (supra) are identical to the present one ie AO made additions by reassessing u/s 153A on the completed assessment u/s 143(1) of the Act. Thus, considering the judgment in the case of the Jai Steel Ltd (supra), the arguments on the legal issue raised before us stands covered. Therefore, considering the Rajasthan High Court s judgment in the case of Jai Steels Ltd, supra, we have no difficulty in (i) upholding the issue of notice u/s 153A of the Act and (2) in disapproving the making of the impugned additions u/s 68 and 14A of the Act, which are not backed by the incriminating materials. In the absence of incriminating material, the role of the AO is only to reitera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001-2002) (By Revenue) ITA No.9118/M/2010 (AY 2002-2003) (By Revenue) ITA No.9119/M/2010 (AY 2003-2004) (By Revenue) ITA No.9120/M/2010 (AY 2005-2006) (By Revenue) 14. All these appeals (4) are filed by the Revenue against the different orders of the CIT (A)- 36, Mumbai commonly dated 13.10.2010. As such, these are the cross appeals for the AYs 2001-02; 2002-03; 2003-04 and 2005-06. In all these appeals, Revenue raised the common grounds, and the only difference, is in figures. Considering the commonality of the grounds raised by the Revenue, we take up the grounds raised by the Revenue for the AY 2001-2002 for the sake of adjudication and the same read as under: 1. On the facts and in the circumstances of the case and in law, whether the CIT (A) was justified in restricting the addition made u/s 68 of ₹ 32,00,000/- to ₹ 7,00,000/- by holding that the addition made u/s 68 in respect of parties wherein complete details were furnished was not sustainable ignoring that the alleged subscribers to share capital were found to be non-existent at the address given in the bank statements and thus, before the Assessing Officer their identity and creditworthines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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