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M/s DMA Investment Pvt. Ltd., ACIT Versus DCIT, M/s DMA Investment Pvt. Ltd.

2016 (4) TMI 352 - ITAT DELHI

Validity of the order passed by the AO u/s. 153A - Held that:- AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted and the ground raised by the assessee in the appeal is allowed.

Share transactions - STCG or business income - Held that:- CIT(A) rightly directe .....

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ember And Shri H. S. Sidhu, Judicial Member For the Petitioner : Sh. Dr. Rakesh Gupta, Adv. For the Petitioner : Sh. Sunil Chander Sharma, CIT(DR) ORDER Per H. S. Sidhu : JM These are the Cross Appeals by the Assessee and Revenue emanating from the common order of the Ld. CIT(A) dated 05.7.2013 relevant to ITA NOS. 5688-5691 & 6326-6329/Del/2013 2 assessment year 2006-07 to 2009-10. Since the issues involved in these cross appeals are common and identical, hence, these appeals were heard tog .....

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rred in holding that gain/ loss on account of share transaction where the holding period is less than 30 days constitutes business income / loss, as against the capital gain / loss claimed by the appellant. 3. The ld. CIT(A) further erred in not following the order of his predecessor for assessment year 2008-09, dated 1.6.2012, wherein the issue had been decided in favor of the appellant. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the disallowance of .....

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the period of holding the shares by the assessee company was more than 30 days and gain on shares as business income, if the holding period is upto 30 days. 2. The order of CIT(A) is erroneous and is not tenable on facts in the law. 3. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of hearing of the appeal. Assessee s Appeal No. 5688/Del/2013 - Assessment Year 2006-07 4. The brief facts of the case are that a search and seizure o .....

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s filed on 9.11.2011. Notices u/s. 143(2) and 142(1) of Income Tax Act, 1961 were issued alongwith a questionnaire dated 16.2.2012 and case was fixed for hearing on 29.2.2012. In response to various statutory notices, necessary details were filed by the Assessee s Authorised Representative from time to time. Thereafter, the AO completed the assessment at ₹ 50,000/- for making the disallowance u/s. 14A of the I.T. Act, 1961 vide Order dated 29.10.2012 passed u/s. 153A/143(3) of the I.T. Act .....

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ly covered in favor of the assessee by the decision dated 28.8.2015 of the Hon ble Delhi High Court passed in the case CIT(Central)-III vs. Kabul Chawla in 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. He further stated that the additions have no relation with any incriminating material found and undisclos .....

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The Search and Seizure operation u/s. 132 of the I.T. Act was conducted by the Investigation Wing of the Department on 22.3.2011 in the case of Amtek Group of cases and the assesse was also covered under the search which is a group Company of Amtek Group. He further stated that during the year under consideration the Company has not conducted any business in real estate, but engaged in sale / purchase of shares. During the course of assessment proceedings, the AO found that assessee has made the .....

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assessment proceedings u/s. 153A of the Act. He finally stated that the additions in dispute has been made without any incriminating material, hence, this issue is squarely covered by the decision dated 28.8.2015 of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla (Supra) and draw our attention towards the para 17 of the said judgment wherein decision in the case of CIT vs. Anil Kumar Bhatia has also been discussed. He also draw our attention towards the ITAT, C Bench decision i .....

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ble Supreme Court of India in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. in Appeal (Civil) No. 2830 of 2007 reported in 291 ITR 500 (SC). He further stated that in the case of CIT vs. Kabul Chawla (Supra) the assessment was completed u/s. 143(3) of the I.T. Act and not under section 143(1) of the I.T. Act, because on the date of search the said assessment has already been stood completed. 8. We have heard both the counsel and perused the relevant records available with us, espec .....

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ted accordingly. Admittedly in the present case, no incriminating material was found or seized during the course of search and seizure operation u/s. 132 of the Act in the case of the assessee. Under the circumstances, we find that the issue is covered in favour of the assesee and against the Revenue by the decision dated 28.8.2015 of the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla passed in ITA No. 707, 709 and 713/2014 wherein the Hon ble High Court has held has under:- 37. On .....

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akes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there .....

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e seized material. Obviously an ITA Nos. 707, 709 and 713 of 2014 of assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as .....

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h or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 9. Respectfully following the p .....

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t year 2006-07 in Appeal no. 5688/Del/2013, as aforesaid, the other Appeals of the Assessee being ITA No. 5689, 5690 & 5691/Del/2013 (AYrs 2007-08, 2008-09 & 2009-10) stand allowed. 11. Revenue s Appeal No.6326/Del/2013 - Assessment Year 2006-07 The only issue raised in the Appeal of the Revenue is that Ld. CIT(A) has erred in directing the AO to treat the gain on shares as short term capital gain, if the period of holding the shares by the assessee company was more than 30 days and gain .....

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