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TMI Blog2013 (12) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... er letter dated 25.11.2013 are as follows: "1. On the facts and circumstances of the case, the learned CIT(A) has erred in affirming the action of the AO in making the following additions under Sec. 143(3) r.w.s. 153C of the Act in absence of any incriminating seized material found during the course of search and the additions are bad in law: a) Rs. 3,85,393/- being Other Income in addition to 5% of the Sales b) Rs. 17,46,853/- being unsecured loans u/s 68 of the IT Act, 1961 c) Rs. 19,00,334/- being Long Term Capital Gains on sale of Land d) Rs. 2,40,000/- being Capitalization of Building e) Rs. 7,44,400/- being Capitalization of Plant and Machinery f) Rs. 5,63,033/- being expenditure of Capital Work in Progress on Land. 3. The assessee is a company engaged in manufacture of machine tools. The shares of the company were taken over by M/s Bombay Rayon Fashions Ltd. (BRFL), a division of Raynolds Shirting Limited (RSL) vide agreement dated 02.04.2007, wherein RSL purchased 99.75% shares of the assessee company. 4. The facts emanating from the assessment order are that there was a search and seizure operation on the premises of Bombay Rayon Fashions Limited and its di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Andhra Pradesh in the case of Gopal Lal Bhadruka vs. Dy. Commissioner of Income-tax reported in (2012) 346 ITR 106 (AP) in which it has been held by the Hon'ble High Court that for the purposes of section 153A/153C, AO can take into consideration material other than what was available during search and seizure operation for making an assessment of undisclosed income of assessee. In the case of the said assessee, the Hon'ble ITAT Hyderabad Bench 'A', Hyderabad in ITA Nos. 354 to 357/Hyd/2010 dated 26.11.2010, while deciding the first contention of the Ld. AR of the assessee that for the purpose of computing the income u/s. 153A/153C of the I.T. Act, the Assessing Officer had to confine only to the incriminating material found during the course of search operation held as follows :- In other words, the Assessing Officer is not required to confine himself to the material found during the course of search operation or the in formation which is relatable to the search material. In our opinion, the Assessing Officer is well within his powers to compute the taxable income on the basis of the material on record even though such material was not found during the course of search operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment by the Finance Act, 2010 to the provisions of Sec. 40(a)(ia) of the Act is retrospective and not retrospective from 1.4.2005 or the decision of the Hon'ble Calcutta High Court taking a contrary view. On the above question, the learned counsel for the Assessee brought to our notice the decision of the ITAT Delhi in the case of Tej International (P) Ltd. v. Dy. CIT, (2000) 69 ITD 777 (Del) 650, wherein it was held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the Court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on a an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a non jurisdictional High court does not really alter this position,, as laid down by the Hon'ble Bombay High Court in the case of CIT V. Godavaridevi Saraf 113 ITR 589(Bom)' 2.5 In the case of Rajamahendri Shipping & Oil Field Services Ltd., in ITA 352/Vizag/2008 dated 13.04.2012, the Hon'ble Tribunal has held as follows: "7. We have heard the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court is the lone decision available on the issue under consideration as on date. Accordingly, we are inclined to follow the same in the instant case in preference to the decision rendered by the Special bench of ITAT in the case of Bharti Shipyard Ltd, referred (Supra). Accordingly, by following the decision of Hon'ble Calcutta High Court, we hold that the assessee herein is entitled to claim deduction of expenses if the TDS deducted there on is remitted before the due date for filing the return of income' 2.6 In view of the judgment of the Hon'ble Andhra Pradesh High Court in the case of Gopal Lal Bhadruka (supra), no fault can be found with the action of the Assessing Officer of calling for the returns of the assessee as provided in section 153C of the I. T. Act, 1961 and completing the assessment determining the total income of the assessee. I also find that in the case of All Cargo Global Logistics Ltd., the Hon'ble Special Bench of the Mumbai Tribunal has, in para 48 of its order, held as follows :- "The provision under section 153A is applicable where a search or requisition is initiated after 31.05.2003. In such a case the AO is obliged to issue notice u/s. 153A in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the basis of his arguments and the decisions relied upon, the AR finally concluded that since there was no incriminating material found in the course of search on the new management, against the assessee, the initiation of proceedings u/s 153C against the assessee, based only on the notings and results arising from the Balance Sheet of the new management, the additions made/disallowance were legally incorrect. 13. The DR in response to the submissions made by AR, submitted that the AO did not do any roving or fishing enquiries and the addition have been based on incriminating material. The DR placed reliance on the decision of ITAT Mumbai Bench decision in the case of ACIT vs Pratibha Industries Ltd., reported in 141 ITD 151 (Mum). He also submitted that intimation u/s 143(1) cannot be construed to be assessment as it does not fall in the definition of assessment. 14. The DR, therefore, submitted that the AO had correctly initiated the proceedings and had correctly made the addition. 15. We have heard the arguments of both the sides and have perused the orders of the revenue authorities and have also perused the Xerox copies of panchnama and other documents relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in which notice u/s 153C is pending. If the answer to both these questions are in the negative then the assessment to be framed shall be as per the ratio laid down in the case of Special Bench decision in the All Cargo and Delhi High Court in the case of Anil Kumar Bhatia. 20. It would be worth mentioning that even in the case of Pratibha Industries (supra), as quoted by the DR, the ratio laid down is the validity of issue of notice u/s 153A and assessment to be framed u/s 143(3)/153A but it has also been specified therein, that if there is no incriminating material found the assessment to be framed shall be at the figure which stands finalized. This decision cannot aid the DR, because, the decision is on the issue of framing of the assessment under section 143(3)/153A, which has been accepted by the AR. The decision in Pratibha Industries, was on the issue whether the assessment framed u/s 143(3)/153C is legally correct, in case, there is no incriminating material against the assessee. 21. Since there is no material indicating income not forming part of the regular assessment, no further addition can be made, as held in the case of Pratibha Industries, the assessment under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Income in addition to 5% of the Sales b) Rs. 8,32,973/- being Capitalization of Land 29. The above additional grounds are, in effect the concise grounds of appeal. Since the basis of Additional Grounds has already been decided by us in ITA No. 4174/Mum/2013, we shall follow the same order and hold that the additions made u/s 153C are sustainable. As there are no indications of any incriminating material having been found in the course of search to be used against the assessee, the same are deleted, as per our observations in para 21 above. 23. On both the counts, i.e. on legality as well as on merits, the case developed by the department cannot be sustained. 24. In the result, the appeal filed by the assessee is allowed. ITA No.: 4177 of 2013, AY 2007-08; Assessee's appeal: 31. The assessee has filed Additional Grounds of appeal, which are as follows: "1. On the facts and circumstances of the case, the learned CIT(A) has erred in affirming the action of the AO in making the following additions under Sec. 143(3) r.w.s. 153C of the Act in absence of any incriminating seized material found during the course of search and the additions are bad in law: a) Rs. 8,08, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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