TMI Blog2015 (5) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... ome in the assessment u/s 153A irrespective of the fact that earlier in proceedings u/s 143(3), the same was not considered. - Decided against assessee. Addition made in the absence of such incriminating material - Held that:- There are different views of different high courts in this respect and in such a situation; the view favourable to the assessee is to be followed. In the absence of incriminating documents, no addition can be made. - Decided in favour of assessee. - I.T.A. No. 2140, 2141/Del/2008 & C.O. No. 159 and 239/Del/2009 - - - Dated:- 29-5-2015 - SHRI G. C. GUPTA, HON BLE VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER For the Appellant by: Ms. Sulekha Verma, CIT, DR For the Respondent by: Shri Rajesh Jain, CA ORDER PER T.S. KAPOOR, AM: These are two appeals filed by revenue against two separate orders of Ld. CIT(A) both dated 07.03.2008. The grounds of appeals taken by revenue in these appeals are reproduced as under: (i) I.T.A. No. 2140/Del/2013: 1. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in holding Gold/Silver utensil as Capital Assets instead of Personal Effects by observing tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) vide valid Order dated 9th August, 2000, without bringing any incriminating document found in consequence to Search u/s- 132(1) of the Act on 9th December, 2003. 4. That there was no justification for levying of interest u/s- 234B, 234C of the Act on the facts of the case and as per law. 5. Without prejudice to the ground no. 6, interest charged u/s- 234B is excessive and the same is not calculated as per law. 6. That the assessment has not been made in accordance with law and the addition made by DCIT are also unsustainable on the facts of the case and as per law. (iii) C.O.No.239/Del/2009: 1. That the learned CIT(Appeal) erred in not disposing ground no.2, in respect of assessing of income from business at Rs.l,20,5711 - against NIL income returned by the appellant under the said head of income, without discussing in the Assessment Order. 2. That the learned CIT(Appeal) erred in holding that interest u/s-234D is leviable in the assessment of income u/s-153A I 143(3) in relation to any assessment framed after 1st June, 2003. 3. That the contention of learned CIT(Appeal) in respect of interest u/s-234D has been decided against the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were apparently acquired by inheritance way back in the year 1966-67 to 68-69) that the items so!9- were Plate, Thali, Glasses etc. made of gold and silver. These items are quite similar to the items held to be 'personal effects' u/s 2 (14) of the LT. Act, 1961 by the High Courts in their decisions referred to above. Thus, factually and legally no doubt is left that the impugned were 'personal effects'. Simply because the assessee does not show them as personal effect it will take them out of the purview of the personal effects . Utensils are in almost all the cases are personal effects'. Even otherwise the assessee has not advanced any evidence to rebut that they were 'personal effects' except advancing the self serving averment that she has not treated it as personal effects . In the light of the facts circumstances discussed above, very clearly the assessee's attempt to treat the same as capital asset' fails. I hold the utensils made of gold/silver as personal effects'. After holding so the claim for indexation also would be required to be disallowed. Net result of it would be disallowance of ₹ 3,77,58,105/ -crores on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles sold during the year. All these items are made of gold and silver which were declared under VDIS 1997. Since these articles are made of precious metals like gold and silver, it is difficult to exclude them from the category of capital asset. It is immaterial whether the articles, made of gold or silver, are in the shape of utensils or in the form of furniture; they do fall in the definition of capital asset. The AO is not correct to deny the benefit of cost inflation indexation to the sale proceeds of these items in the computation of capital gains. Consequently the order of the AO cannot be sustained in view of the above reasons. Accordingly he is directed to delete the addition made and recompute the capital gains on sale of these articles made of gold and silver after allowing the benefit of indexation. While doing so he should work out correct amount of capital gain on sale of diamonds where the assessee has taken the market value as on 01.04.1987 as against 01.04.1981 for the purpose of cost of diamonds for indexation. For the purpose of VDIS declaration the value as on 1.4.87 is to be adopted, whereas for capital gains the base year should be 1.4.1981. The market v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Kumari Mundra Vs CIT 228 ITR 548 and submitted that in this case, the Hon ble Tribunal had held that silver utensils sold by assessee were not personal effects against which the Hon'ble High Court held that utensils were personal effects. In view of above, Ld. D.R. strongly argued that the utensils were meant for personal purposes and are quite different from jewellery and therefore no capital gain or loss was allowable on the sale of such personal effects. She argued that Ld. CIT(A) has wrongly held that the items of utensils as jewellery for the purpose of classifying these as capital assets. 7. Ld. A.R. on the other hand submitted that the utensils were not personal effects of assessee and in this respect, he invited our attention to paper book page 24 where an affidavit signed and sworn by assessee was placed wherein assessee had claimed that assessee had not used the utensils for her personal purposes. Ld. A.R. further relied upon the case law of M K Jajodia Vs ITO decided by Kolkata Bench of ITAT reported at 20 TTJ 167. He argued that the Hon ble Tribunal in this case has held that in order to constitute items of personal effects, mere possibility that articles a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d well within time, which Ld. D.R. also acceded. However, Ld. D.R. submitted that C.O. 239 for Assessment Year 1999- 2000 was not within time as the same was filed on 11.08.2009 whereas notice was received by assessee on 21.06.2009 and therefore, C.O. was filed beyond the mandatory period of 30 days. Ld. A.R. could not explain the delay in C.O. for Assessment Year 1999-2000. Ld. A.R. was however allowed to argue on C.O. 159/del/2009 In C.O. 159, the assessee has submitted that original assessment was completed on 09.08.2000 u/s 143(3) and the claim of carry forward of capital loss was also allowed and again in proceedings u/s 147 vide order dated 10.03.2006, the said claim for capital loss was accepted. Therefore, it was not permissible under law to make a different assessment of income on the same facts and circumstances without finding any new material. Ld. A.R. has strongly placed his reliance on the judgement of Hon'ble Delhi High Court in the case of Jindal Photo Films Vs ITO in I.T.A. No. 256 ITR 01 (Del.), CIT Vs Kelvinator of India Ltd. 320 ITR 561, CIT Vs Eicher Ltd 213 CTR 57 . Ld. A.R. submitted that having completed assessment on two occasions one u/s143(3) and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2000-01 placed in paper book pages 24-33 wherein ITAT had upheld the addition on account of gifts received by assessee on the basis of incriminating material only. She argued that since the addition made by lower authorities on account of bogus gifts was upheld by ITAT, it cannot be said that no incriminating material was found. Ld. D.R. further argued that provisions of section 153A are mandatory provisions and the fresh assessments has to be carried out and there is no requirement of incriminating material and in this respect she relied upon the case law of Apoorva Extrusion Pvt. Ltd. in I.T.A. No. 3308/Del/2010 for the Assessment Year 2002-03 decided vide order dated 09.10.2014. Ld. D.R. strongly argued that the case law of Anil Kumar Bhatia 29 taxman 98 decided by Hon'ble Delhi High Court is very much in favour of Revenue wherein the Hon ble Court has held that once the provisions of Section 153A are triggered, the A.O. is empowered to assessee or reassess the total income of aforesaid years. Ld. D.R. further heavily relied upon the case law of Filatex India Ltd. 269/2014 decided by Hon'ble Delhi High Court wherein she invited our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Section 153A, there was chapter XIV-B of the Act which took care of the assessments to be made in cases of search and seizure and such assessments were known as block assessments because the chapter provides for a single assessment to be made in respect of period of block of 10 years. The block assessment so made was independent and in addition to normal assessment proceedings as clarified by Explanation below section 158BA(2). After introduction of group of sections 153A-153C, the single block assessment was given a go by. Under new section 153A in a case where search is initiated u/s 132, the A.O. is obliged to call upon searched persons to furnish return for 6 assessment years immediately preceding the Assessment Year relevant to previous year in which search was conducted. Another feature of this section is that the A.O. is empowered to initiate the reassessment of total income of aforesaid years. This is a departure from earlier block assessment scheme in which block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved resulting into multiple assessments. The argument of Ld. A.R. that addition made u/s 153A on same set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fetters, if need be. 11. In view of above, the ground No.2 taken by assessee is dismissed. 12. However in ground No.3, the assessee has further raised an objection that no incriminating material was found during search and, therefore, no addition can be made in the absence of such incriminating material. Hon ble Delhi High Court in the case of Anil Kumar Bhatia has though held that provisions of Section 153A are mandatory and in the course of non pending assessments, the addition can be made even without finding any incriminating material. However, in the case of pending assessments, the Hon ble Court has left open the answer to the question as to whether in case of completed assessments, the addition can be made in the absence of incriminating material. This can be seen from the following observations of Hon'ble High Court: We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express no opinion as to whether section 153A can be invoked even in such a situation. That question is, therefore, left open. 13. As is apparent, in this year, no incriminating material was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power under Section 263. In the entire scheme of 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided under section 153A of the Act the Assessing Officer shall assessee or reassess the total Income of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. 14. From the above orders of Hon ble Karnataka High Court, we find that Hon'ble High Court has held that during assessment proceedings u/s 153A, addition can also be made in respect of such income not forming part of declared income or undeclared income. Therefore, this decision is in favour of revenue. 15. Hon ble Rajasthan High Court in the case of Jai Steels (supra) has been pleased to hold that assessee was not eligible to claim deduction for an expenditure during assessment proceedings u/s 153A if the claim was not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material found during the search, then, the Special Bench was right in holding that the power under section 153A being not expected to be exercised routinely, should be exercised if the search reveals any incriminating material. If that is not found, then, in relation to the second phase of three years, there is no warrant for making an order within the meaning of this provision. In any event, the issue stands concluded by a Division Bench judgment of this Court rendered in the case of Commissioner of Income Tax Appeal no.36 of 2009 decided on 29th October, 2010. It is, therefore, apparent that the law laid down by this Court is binding on the Revenue. If that is 'binding then the questions of law and with regard to applicability of section 153A need to be answered against the Revenue and in favour of the assessee. 19. Therefore, there are different views of different high courts in this respect and in such a situation; the view favourable to the assessee is to be followed. 20. As regards argument of Ld. D.R. that existence of incriminating material in all years is not necessary and it is sufficient if incriminating material is found for any of the years, we do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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