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2016 (4) TMI 517 - ITAT DELHI

2016 (4) TMI 517 - ITAT DELHI - TMI - Assessment u/s. 153 - AAddition on account of excess depreciation - 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.

As per record, of this case the depreciation claim restricted by the AO is not based upon incriminating material/ documents found in the search operations. Therefore, the additions made b .....

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5/7/2013 passed by the Ld. Commissioner of Income Tax (Central), Gurgaon for the assessment year 2005-06 on the following ground:- Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in deleting the addition of ₹ 50,19,494/- made by the AO on account of excess depreciation claimed by the assessee without considering the merit of the case and merely taking into account the facts that original assessment was already completed u/s. 143(3) of the Income Tax Act, .....

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laim of depreciation vide Order dated 31.12.2012 passed u/s. 153A(1)(b)/143(3) of the Income Tax Act, 1961. 3. Against the aforesaid assessment order dated 31.12.2012, assessee preferred an appeal before the Ld. CIT(A), who vide impugned order dated 25.7.2013 has partly allowed the appeal of the assesee. 4. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before us. 5. At the time of hearing, Ld. DR relied upon the order of the AO and reiterated the contentions raised in the .....

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law. He further stated that recently the Hon ble High Court in the case of CIT vs. Jakson Engineers Ltd. vide order dated 7.12.2015 reported in 2015-TIOL-2789-HC-DEL-IT has dealt the similar issue wherein the decision of the Hon ble High Court in the case of CIT vs. Kabul Chawla (Supra) was discussed and followed. In this behalf, he filed the copies of the aforesaid orders. 6. We have heard both the counsel and perused the relevant records available with us, especially the orders of the revenue .....

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cannot be disturbed. The assessee has relied on the Hon ble ITAT, Special Bench, Mumbai in the case of All Cargo Global Logistics Ltd. vs. DIT, 2012-TIOL-391- ITAT-Mum-SB; Hon ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia, ITA No. 1626/2010; Hon ble ITATMumbai dated 19.12.2012 in the case of ACIT vs. M/s Pratibha Industries Ltd., ITA No. 2197 to 2199/Mum/2008; Hon ble ITAT Mumbai in the case of Shri Gurinder Singh Bawa vs. DCIT, ITA No. 2075/Mum/2010; LMJ International Ltd. vs. D .....

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ated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other partic .....

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such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending81 on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reasse .....

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roceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the [Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.-For the removal of doubts, it is hereby d .....

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ition u/s 132A. The word 'incriminating' document/material has not been mentionod. The said section facilitates assessment/reassessment for six financial years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. In other words, the AO is bound to issue notice to the assessee for each assessment year falling within six assessment year reckoned from the date of search. AO is also empowered to assess or reassess t .....

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s left the issue open. Not without reason, the Hon'ble Andhra Pradesh High Court in Gopal Lal Bhadruka & Ors (2012) 77 DTR 146 has observed that Section 15BBI was introduced by the Finance Act, 2003. The said provision also stated that Chapter XIVB did not apply after 315.2003. It has categorically held in para 17 that while the provisions of Charter XIV-B of the Act limit the enquiry by the AO to those materials found in the course of search and seizure operations, no such limitation is .....

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he same. There could be times when some material maybe found but not seized. So can the same be declared as non-incriminating? For instance jewellery found but not seized. Will that be outside the scope of 'incriminating'? The search party may only inventorise and not seize any of the jewellery. Would that imply the source of acquisition stood explained? Instruction No. 1916 dared 11.05.1994 of the CBDT, relates to exemptions from seizure of jewellery to some extent but it does not howev .....

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minating materials collected during a search operation in determining the total income of the assessee for the year. 6.3. However, I am bound by judicial discipline as held by a catena of judicial decisions. There is no decision of the jurisdictional High Court. Decisions in Union of India vs. Kamalakshi Finance Corporation Ltd. (1991) 55 ELT 433 (SC); CIT vs. Ralsons Industries Ltd. (2007) 288 ITR 322 (SC); Triveni Chemicals v UOI (2007) 2SCC 503 (SC); Nokia Corporation v DC IT (International T .....

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behalf of the assessee that as the first proviso provides for assessment for reassessment of the total income in respect of each assessment year foiling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'as .....

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le Rajasthan High Court has held that the assessment/reassessment can only be based on incriminating material. Same is tile stand taken by the jurisdictional Tribunal in MGF Automobiles Ltd. v JCJT, ITA No: 4212/Del/2011 in an order dated 28.6.2013 as well as others viz. Hon ble ITAT Mumbai in ACIT v M/s Pratibha Industries Ltd in ITA No. 2197 to 2199/Mum/2000 and in the case of Gurinder Singh Bawa v DCIT in ITA No. 2075/Mum/2010. These decisions have also been relied upon by the assessee . 6.4. .....

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sessment u/s. 153A of the I.T. Act. Even otherwise, we find force in the Ld. Counsel s submissions that the issue in dispute is also covered by the decision of the Hon ble High Court in the case of 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 were not sustainable in the eyes of law. For the sake of clarity, .....

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ix Ays immediately preceding the previous year relevant to the AY in which the search takes 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 .....

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ean that the assessment can be arbitrary or made without any relevance or nexus with the 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 searc .....

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A only on the basis of some incriminating material unearthed during the course of search 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 additio .....

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