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ACIT, CC-2, NEW DELHI Versus M/s DELHI HOSPITAL SUPPLY PVT. LTD.

2015 (11) TMI 1060 - ITAT DELHI

Validity of assessment u/s. 153A - CIT(A) deleted the addition - Held that:- CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance / additions can be made in the assessment u/s. 153A of the I.T. Act. Even otherwise, we find force in the Ld. Counselís submissions that the issue in dispute is also covered by the decision of the Honíble Jurisdictional High Court in the case of CIT(Central)-III vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH .....

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rtment : Md. Mohsin Alam, CIT(DR) For The Assessee : S h. Salil Aggarwal, Adv. and Sh. Shailesh Gupta, Adv. ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned Order dated 06/6/2011 passed by the Ld. Commissioner of Income Tax (Appeals)-III, New Delhi for the asstt. year 2003-04 on the following grounds:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 14,98,653/- made by the As .....

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d in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 50,611/- made by the Assessing Officer out of travelling expenses. 5. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 15,250/- made by the Assessing Officer out of miscellaneous expenses. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in, law and on facts in deleting the .....

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r out of vehicle depreciation expenses. 9. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that no disallowance can be made to the income of the appellant u/s 153A of the Act which is not based on any incriminating material found and seized during the search. 10. The order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 11. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or d .....

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ce u/s. 153A of the Act was issued on 15.1.2009. In compliance, a return of income was filed by the assessee company on 9.2.2009 declaring income of ₹ 15,30,710/-. The AO however, vide order u/s. 143(3)/153A dated 29.12.2009 determined the income of the assessee company at ₹ 31,91,924/-. 3. Against the aforesaid assessment order dated 29.12.2009, assessee preferred an appeal before the Ld. CIT(A), who vide impugned order dated 6.6.2001 has allowed the appeal of the assesee. 4. Aggrie .....

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he Hon ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions are not sustainable in the eyes of law. 6. We have heard both the counsel and perused the relevant records available with us, especially the orders of the revenue authorities. We find that Ld. CIT(A) had adjudicated the legal issue as well as the issues on merits vide para no. 7 to 7.5 at pages 9 to 15. For the sake of convenience, we are .....

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re nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed; items of regular assessment cannot be added back in the proceeding under s. l53C when no indiscriminating documents were found in respect of the disallowed amounts in the search proceedings." Also, Visakhapatnarn Bench in the case of KGR Exports vs. JCIT in ITA No. 494IV /2007 held as under:- "Since section 153A overrides provisions of section .....

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the issues which have already been concluded in the earlier assessments should not be subject matter of reassessment unless some incriminating material concerning those issues were found during the course of search. Otherwise, in the concluded assessments which have been reopened u/s 153A, the assessing officer should restrict himself with the additions arising out of the incriminating materials found during the course of search." Ahmadabad bench in the case of Meghmani Organics Ltd. has he .....

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is to be added with the regular income assessed under s. 143(3) or computed under s. 143(1) for each of the six preceding assessment years. Where any prepaid taxes are there, the same are required to be given credit, for computing the further tax payable by the assessee. The assessee is also required to pay interest under ss. 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments .....

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n say, no incriminating material is found relating to the 'other person' but the material found indicates disclosed income. Suppose, loan confirmations relating to loans duly disclosed in the return of income of A are found at the time of search in the premises of B, Should the assessments of A be reopened for all the six preceding years merely because search action has been initiated against B? In selecting out of different interpretations, the Courts shall adopt that which is just, rea .....

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vs. ACIT, it has been held by Murnbai Bench in the case of Anil P. Khemani as under: "13. A perusal of the assessment orders in all these cases, clearly demonstrate that the sole addition in question is on account of low withdrawals. This had not been made, based on any material found either during the course of search or during the course of assessment proceedings. Under the circumstances, we examine the legal position. The Delhi Bench of the Tribunal in the case of Anil Kurnar Bhatia vs. .....

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hat the assessment or reassessment relating to the said six assessment years "pending" on the date of initiation of the search under section 132 shall "abate". In the assessee's case, search action was initiated and assessments under s. 153A were framed for six assessment years making various additions. The assessee claimed that the additions were not tenable regular returns had been filed where the particulars relating to the additions had been disclosed and the and the .....

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ment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that complete assessments do not abate. There can be two assessments for the same assessment year. Assessments which are not pending before the AO on the date of search but are pending before an appellate authority will survive. (ii) An assessment can be said to be "pending" only if the AO is statutorily required to do something further. If a s.143( .....

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d been processed u/s 143(I), the assessments were not "pending" and as no material was found during the search, the additions could not be sustained. " Respectfully following the same, we delete all the additions made and allow the appeals of the assessee." Finally, Mumbai Bench in the case of Guruprerna Enterprises vs. Asstt. CIT in ITA No. 255, 256 and 257/Mum/20 I 0 for Assessment Years 2003-04, 2004-05 and 2005-06 dated 07.01.20 11 after noticing the case of M/s Viraj For .....

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him to furnish the return of income in, respect of each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Further the second proviso to section 153A also provides that assessment or reassessment relating to any assessment year falling within the period of six assessment years referred to above pending on the date of initiation of search under section 132 or making of .....

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rds, only the assessments pending before the Assessing Officer for completion shall abate. In this case there is no dispute that on the date of search, the assessment in the case of assessee had already been completed by the AO and in terms of the Circular of the CBDT, the regular assessment made in the case of the assessee will not abate. Therefore, in our view the points/ issues decided in the assessment cannot be re-considered in the proceedings under section 153A unless there is some fresh m .....

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the proceedings under section 153A. The Learned DR has relied on the decision of the Tribunal in case of Shivnathrai Harnarayan India (Pvt) Ltd. (supra) but the said case in our view is distinguishable. In that case, the Tribunal held that any assessment or reassessment proceedings initiated by the AO which are pending on the date of initiation of search, the same shall abate and AO cannot proceed with such pending assessment. Thus as per the decision of the Tribunal, only the assessment/reasse .....

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ng the course of search in relation to such points. As in this case, the undisputed fact is that, there is no incriminating material found or seized in the search, the ground of the assessee has to be accepted by respectfully following the order of the Coordinate Bench. Though on the legal issue, we have decided in favour of the assessee, as the case was heard at length on merits we adjudicate the same." 7.1 From the aforesaid decision, it is evident that, it has been consistently held that .....

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been made without referring to any material found as a result of search and as such even the same is without jurisdiction. Apart from the above, event otherwise, the same is based on factual misconception, as would be evident from the tabular chart hereunder: Sr. No. Particulars Amount (In Rs.) i) Transfer from factory building as cost debited the factory building account in the preceding year. 4,74,950/- (page 16 of the Paper) ii) Transfer from head advance for flat as cost debited in advance .....

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le and therefore is directed to be deleted. Regarding the disallowances made totaling to ₹ 1,62,561/- under the head medical allowance, conveyance expenses, travelling expenses, miscellaneous expenses, telephone and telex expenses, vehicle running and maintenance expenses and vehicle depreciation is concerned, the appellant has submitted that the AO has made all these disallowances holding that no proof in form of vouchers in support of such claim has been produced with respect to these ex .....

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the decision in case of State of Orissa vs. Maharaja Shri BP Singh Deo 76 ITR 690 (SC); Goodyear India Ltd. vs. ITO 73 ITD 189 (Del.); Hughes Escorts Communications Ltd. vs. JCIT 106 TTJ 1065 (Del.) among other cases. The appellant has placed a comparative chart to establish that expenditure has been incurred for the purpose of business of the appellant company in each of the year under consideration and no disallowance has been made in the past that is prior to framing of the impugned assessmen .....

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