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2015 (11) TMI 1060 - ITAT DELHI

2015 (11) TMI 1060 - ITAT DELHI - TMI - 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. Ka .....

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.P. SAHU, ACCOUNTANT MEMBER For The Department : 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 additi .....

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conveyance expenses. 4. 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 ₹ 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 er .....

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7; 20,000/- made by the Assessing Officer 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 / .....

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emises of the assessee company and, notice 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 allo .....

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ITA No. 707, 709, 713/Del/2014 wherein the 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 .....

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9 TTJ 214, which is as under:- "Where 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 secti .....

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ents can be reopened under Section 153, 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 t .....

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me unearthed during search and the same 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 .....

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ruction gets all the more pronounced when 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 Co .....

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ibunal in the case of Anil Kumar Bhatia 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 Tribuna .....

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s" while the second proviso state that 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 addit .....

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iso, the AO is empowered to frame assessment 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 requi .....

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eedings. (iv) On facts, s the returns had 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 .....

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otices to the searched person requiring 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 .....

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section 132 will not abate. In other words, 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 s .....

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ion 80HHC cannot be considered afresh in 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 .....

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there is some fresh material found during 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 .....

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leged unexplained investment in flat has 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 adva .....

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ade for ₹ 14,98,653/- is not tenable 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 ha .....

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iance in this regard has been placed on 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 pr .....

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