9911796707
TMI Blog2014 (11) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and on facts in placing reliance on the decision of the Hon'ble Supreme Court in the case of M/s. Lovely Exports (P) Ltd. without appreciating that the facts of this case are different from the facts of the case of M/s. Lovely Exports (P) Ltd. 4. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in law and on facts in holding that no interest can be charged u/s. 234A of the Income-tax Act, 1961 if return of income is filed late due to non receipt of copies of the seized material. 5. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in law and on facts in holding that no interest can be charged u/s. 234A of the Income-tax Act, 1961 if the addition has been made in the order u/s. 153A in the absence of any incriminating material found during the search u/s. 132 of the Income-tax Act, 1961. 6. The order of the Learned CIT(Appeals) is erroneous and is not tenable on facts and in law". 2. At the outset of hearing, both the parties were directed to advance their respective arguments on ground No.2 which involves a legal issue going to the root of the matter regarding the validity of invocation of provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble of sec. 263 of the Act under the facts of that case. The Hon'ble Delhi High Court in the case of Filatex India Ltd. (supra) the ratio laid down by the Hon'ble High Court is that in s. 153A proceedings other additions can also be made besides the addition based on the incriminating material found during the course of the search proceedings conducted u/s 132 of the Act. The other decisions are on the validity of application of the provisions laid down u/s 68 of the Act. 6.1 Above submissions have been considered and the decisions relied upon have been gone through. We find that the relevant facts of the present case are that the assessee and its group were subjected to search operations under sec. 132 of the Act. The Assessing Officer was not satisfied with the explanation of the assessee regarding the receipt of share capital of Rs. 89 lacs and added the amount under sec. 68 of the Act treating the claimed share capital as bogus. The same was questioned before the Learned CIT(Appeals) on the merits of the addition as well as the validity of proceedings initiated under sec. 153A of the Act on several basis. The assessee succeeded in its appeal before the Learned CIT(Appeals) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment year separately : (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." 8. The issue raised before the special bench was as to whether scope of assessment u/s 153A encompasses additions not based on any incriminating material found during the course of search? 9. In the case of Kusum Gupta (supra) also the return was processed u/s 143(1) of the Act and time limit for issuance of notice u/s 143(2) had expired on the date of search and it was held that no assessment was pending in that case and thus there was no question of abatement of assessment. Therefore addition in the assessment u/s 153A would be made only on the basis of incriminating material found during the search. The Delhi Bench of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six assessment years, then also the A.O is duty bound to reopen those proceedings and reassess the total income but by 'taking note of the undisclosed income if any, unearthed during the search'. The expression 'unearthed during the search' is quite significant to denote that in respect of completed or non-pending assessments, the Assessing Officer is albeit duty bound to assess or reassess the total income 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 Assessing Officer has no option but to determine the total income of the assessee in respect of the relevant six assessment years. However, the scope of such determination of total income is different in respect of the years for which the assessments are pending vis a vis the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that recomputation of book profit, dehors any material found during the course of search in the order passed u/s 153A of the Act was without jurisdiction, being outside the scope of proceedings under that section?" The other question was, "whether on the facts and circumstances of the case, the Tribunal erred in law in upholding the action of the AO in denying set off, of book loss unabsorbed depreciation relatable to earlier assessment year in terms of clause (III) of Explanation 1 to section 115JB of the Act?" The relevant facts of that case noted in para no. 2 of the decision are that the AO in the proceedings u/s 153A of the Act, had made several additions, relying upon the incriminating material found in the course of search, which was conducted on 18.1.2006 and subsequent dates. In this paragraph of the decision it has been perused from the impugned order of the Tribunal that incriminating material including statement of Sanjay Agarwal, GM (Marketing) have resulted in additions, which have been upheld. The Hon'ble High Court has been pleased to note in this paragraph as "it is not the case of the appellant - assessee that initiation of proceedings u/s 153A was bad or unwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search incriminating material including statements were found and resulted in additions and the addition made u/s 115JB of the Act was not based upon any incriminating material. Thus, the question raised before the Hon'ble High Court was as to whether the Tribunal has erred in law in not upholding that recomputation of book profit, dehors any material found during the course of search in the order based u/s 153A of the Act was without jurisdiction, being outside the scope of proceedings under that section. The Hon'ble High Court after discussing the issue in detail has been pleased to decide the question against the assessee and has upheld the addition made u/s 115JB of the Act. Thus, having distinguishable facts this cited the decision in the case of Filatax India Ltd. (supra) is not helpful to the revenue. 11.2 So far as, the decision of Hon'ble Karnataka High Court in the case of Canara Housing Development Company (supra) relied upon by the ld. CIT DR is concerned, the issue raised before the Hon'ble High Court was regarding validity of revisional order passed u/s 263 of the Act by the ld. CIT partly upheld by the Tribunal and during that course the Hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, find that the ratio laid down by the Hon'ble Delhi High Court and Hon'ble Rajasthan High Court in the above cited and discussed decisions supports the case of the assessee that in absence of incriminating material found during the course of search no addition can be made u/s 153A of the Act where the original assessment was already framed on the date of search. The Hon'ble Karnataka High Court in the case of Canara Housing Development Company (supra) has, however, been pleased to express different view however, as per the established proposition of law, we are bound to follow the decision of Hon'ble Jurisdictional Delhi High Court and since, the Hon'ble Karnataka High Court and the Hon'ble Rajasthan High Cout have expressed different views on the issue, the view favourable to the assessee is to be followed. We, thus, reiterate that in absence of incriminating material found during the course of search no addition can be made in a case where original assessment was already framed on the date when search took place. 14. We thus find that the first appellate order on the issue is fully supported by the above discussed decisions relied upon by the learned AR especially when it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
