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Jay Infrastructure and Properties Pvt. Ltd. Versus ACIT, Central Circle 1 (1) , Ahmedabad

2016 (3) TMI 1057 - ITAT AHMEDABAD

Deemed dividend addition u/s 2(22)(e) - assessment under Section 153A - Held that:- Revenue has not placed any material on record to demonstrate that incriminating material with respect to deemed dividend (which has been added in the impugned assessment) was found during the course of search at the premises of the assessee. In such a situation, we are of the view that no addition u/s. 2(22)(e) of the Act could have been made in the present case. We, therefore, direct the deletion of addition. - .....

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er: 3. The Assessee is an investment company. A search u/s.132 of the Act was conducted in the case of Gujarat Ambuja Group on 01.09.2008 and subsequent dates and warrant of authorization u/s.132 of the Act was also issued in the case of company. Subsequently, notice u/s.153A was issued on 25.05.2009 and in response to which assessee filed its return of income for A.Y. 2007-08 on 29.06.2009, declaring total income at Rs. Nil. The case was selected for scrutiny and thereafter assessment was frame .....

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provisions of section 153A of the Act that is bad in law. Ld. CIT (A) ought to have quashed the impugned assessment order since no income could have been taxed u/s 153A of the Act. 2. Ld. CIT (A) has erred in law in and on facts in not appreciating that even the assessment u/s 153A of the Act is restricted to the materials and evidences found during the course of the search and the same cannot go beyond the same. In the facts of the present case, all the additions which are made are very much pa .....

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. AO in making addition of ₹ 1,99,02,409/- u/s 2(22)(e) of the Act. 5. The ld. CIT(A) has erred in law and on the facts in not appreciating that the shareholders have not derived any benefit from the funds so received by the appellant company. 6. Both the lower authorities have failed to appreciate that the amount received are in the nature of business advances and not in the nature of loan or advance and therefore the very provisions of S. 2(22)(e) of the Act would not apply. 7. In any ca .....

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n considered before passing the impugned order. This action of both the authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 9. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s 234B/C of the Act. 10. The learned CIT(A) has erred in law and on facts of the case in confirming the initiation of penalty proceedings u/s 271(1)(c) of the Act. 4. Before us, at the outset, ld. .....

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ing Officer while framing assessment orders u/s.153A only on the basis of some incriminating materials unearthed during search and in absence of any incriminating material no assessment can be framed u/s.153A and for the aforesaid proposition, he placed reliance on the decision of Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (2015) 61 taxmann.com 412 (Del) and the decision of Ahmedabad Tribunal in case of Intas Pharmaceuticals Ltd. vs. DCIT in IT(SS)A Nos. 807-809/Ahd/2010. He al .....

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d. and he was therefore of the view that provisions of Section 2(22)(e) were applicable. He accordingly treated the amount received by the assessee as deemed dividend u/s. 2(22)(e) of the Act. Before us, ld. A.R. submitted that assessee is not registered share holder of Jupiter Corporate Service Ltd. and therefore, no addition can be made u/s. 2(22)(e) of the Act and for this proposition, he relied on the decision in case of ACIT vs. Bhaumik Colors P. Ltd. 118 ITD 1 (Mum)(SB), CIT vs. Ankitech ( .....

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ment could be framed and moreover no addition u/s. 2(22)(e) of the Act can be made. Before us, Revenue has not placed any material on record to demonstrate that during course of search any undisclosed material with respect to deemed dividend, which was the basis of addition, was found. We find that the Co-ordinate Bench of Tribunal in case of Intas Pharmaceuticals Ltd. vs. DCIT (supra) after relying on the decision of Special Bench in the case of All India Cargo Logistics (supra) has held that i .....

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t assessment orders in all these four assessment years stood passed on 27.12.2002, 02.01.2006, 29.12.2006 and 29.03.2007 i.e. much before the date of search falling on 23.10.2007. The assessee s case has through out been that there is no incriminating material; whatsoever as prescribed u/s.153A so as to give rise to the proceedings in question. In these facts, we notice that the Special bench of the tribunal in All India Cargo Logistics (supra) answered the very reference and held in para 58 tha .....

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ed in the course of original assessment but found in the course of search and undisclosed income or property discovered in the course of search. This is not the Revenue s case; or for that no such material is placed on record that the search in question unearthed any such undisclosed material in assessee s case. We are inferring in these facts that there does not exist any such material not produced in the course of regular assessment but found in search. Parties inform us very fairly that hon b .....

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out any incriminating material discovered in search of the corresponding regular assessments stood finalized. Their lordships discussion about the hon ble Karnataka high court is that the same pertains to an instance of exercise of Section 263 jurisdiction vis-à-vis 153A proceedings. We take into account all these circumstances and hold that initiation of impugned Section 153A proceedings in this set of four assessment years in absence of any incriminating material found in search conduct .....

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ex India Ltd. (supra). The case law of Bangalore and Chennai benches of the Tribunal holding that an Assessing Officer gets jurisdiction for passing orders u/s.153A after search even in absence of any incriminating material in case of assessments already finalized; go against the special bench decision hereinabove. The same are no longer valid precedents. The Revenue s arguments relying on the above stated decision are accordingly rejected. We accept the assessee s arguments challenging validity .....

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Delhi High Court after considering the various decisions cited in the order has concluded as under: 37. On a conspectus of Section 153A(1) of the Act. read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately p .....

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e assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that t .....

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