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2016 (6) TMI 549 - ITAT AHMEDABAD

2016 (6) TMI 549 - ITAT AHMEDABAD - TMI - Validity of the assessment order passed u/s. 153A read with Section 143(3) - Held that:- In the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating m .....

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ded in favour of the assessee. - IT(SS)A Nos.153, 154, 155 & 156, 160, 161, 162 & 163, 167, 168, 169 & 170/Ahd/2012, IT(SS)A Nos.174, 175 & 176/Ahd/2012, IT(SS)A Nos.180, 181, 182 & 183/Ahd/2012, IT(SS)A Nos.187, 188, 189 & 190/Ahd/2012, IT(SS)A Nos.194 & 195/Ahd/2012 - Dated:- 29-4-2016 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER For The Appellant : Shri S.N. Soparkar with Shri P.M. Mehta For The Respondent : Shri Jagdish, CIT (D.R.) ORDER PER BENCH All these .....

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ssions made by him in the case of one appeal would be applicable to all the appeals. Learned Departmental Representative did not object to the aforesaid submission of the learned Authorised Representative. We, therefore, for the sake of convenience, proceed to dispose of all these appeals by this common order and proceed with the facts in assessee s appeal IT(SS) A No.153/Ahd/2012 for the assessment year 2003-04. 3. The assessee is an individual who is stated to be deriving income from salary, o .....

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09 and served upon the assessee and in response to which assessee filed his return of income for AY 2003-04 on 30.11.2009 declaring total income of ₹ 2,01,130/-. The case was taken up for scrutiny and thereafter the assessment was framed under section 143(3) r.w.s. 153A(1)(b) of the Act and vide order dated 29.12.2010, the total income was determined at ₹ 9,51,130/- inter alia by making addition of ₹ 7,50,000/- on account of unproved transactions of gift. Aggrieved by the order .....

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IT(SS)A No.153/Ahd/2012 for A.Y. 2003-04 1. In law and in the facts and circumstances of the appellant s case, the learned CIT(A) has grossly erred in rejecting Grounds No.1 and 2 of the appellant s appeal before him challenging the validity of the assessment order passed u/s. 153A read with Section 143(3) of the Income Tax Act, 1961. 2. In law and in the facts and circumstances of the appellant s case, the learned CIT(A) has erred in confirming addition in respect of gifts received by assessee .....

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s appeal before him challenging the validity of the assessment order passed u/s. 153A read with Section 143(3) of the Income Tax Act, 1961. 2. In law and in the facts and circumstances of the appellant s case, the learned CIT(A) has erred in confirming addition in respect of gifts received by assessee for ₹ 14,00,000/- by considering the same as unexplained gifts u/s. 68 of the Act. The same may kindly be deleted. 3. The Assessing Officer has erred on facts and in law charging interest u/ .....

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pellant s case, the learned CIT(A) has erred in confirming addition in respect of gifts received by assessee for ₹ 28,50,000/- by considering the same as unexplained gifts u/s. 68 of the Act. The same may kindly be deleted. 3. The Assessing Officer has erred on facts and in law charging interest u/s 234A, 234B and 234C when no such interest is leviable. The appellant denies its liability to pay interest. IT(SS)A No.156/Ahd/2012 for A.Y. 2006-07 1. In law and in the facts and circumstances .....

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The same may kindly be deleted. 3. The Assessing Officer has erred on facts and in law charging interest u/s 234A, 234B and 234C when no such interest is leviable. The appellant denies its liability to pay interest. 4. Before us, at the outset, learned Authorised Representative submitted that apart from challenging the assessment framed u/s 153A, the assessee is also challenging the additions made on merits. He submitted that the appeal can be disposed of on the short legal ground, namely that t .....

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gal question of validity of section 153A proceedings accordingly. 5. Before us, Learned Authorised Representative reiterated the submissions made before Ld. CIT(A) and further submitted that the impugned assessment framed under section 153A of the Act is not valid in view of the fact that no incriminating material indicating the unaccounted income was found at the time of search and therefore, the Assessing Officer was not justified in issuing notice under section 153A of the Act and passing the .....

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f any incriminating material, the completed assessments could not be interfered. Learned Authorised Representative submitted that in the present case, the assessee had already accounted the gifts in the respective assessment years by crediting the capital account and the fact of the amount being reflected in the capital account is acknowledged by the Assessing Officer in para 5.3, page 2 of the order. He submitted that the gift deeds and the copies of acknowledgment of returns of income of the d .....

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d filed the return of income and the return of income for the respective years were processed u/s 143(1) of the Act. On the date of search, the time limit for issuing notice under section 143(2) had already elapsed and in such a situation for those assessment years, on the date of search, the assessments had already attained finality. In such a situation and in the absence of any incriminating material found at the time of search, the completed assessments could not be interfered with for the pu .....

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31/07/2006 3 155/Ahd/2012 2005-06 27/03/2006 143(1) 31/03/2007 4 156/Ahd/2012 2006-07 30/03/2007 143(1) 31/03/2008 Vishal V Agrawal 5 160/Ahd/2012 2003-04 27/09/2003 143(1) 30/09/2004 6 161/Ahd/2012 2004-05 01/11/2004 143(1) 30/11/2005 7 162/Ahd/2012 2005-06 28/03/2006 143(1) 31/03/2007 8 163/Ahd/2012 2006-07 27/03/2007 143(1) 31/03/2008 Vikashkumar D Agrawal 9 167/Ahd/2012 2003-04 27/09/2003 143(1) 30/09/2004 10 168/Ahd/2012 2004-05 01/11/2004 143(1) 30/11/2005 11 169/Ahd/2012 2005-06 27/03/200 .....

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20 187/Ahd/2012 2003-04 27/09/2003 143(1) 30/09/2004 21 188/Ahd/2012 2004-05 01/11/2004 143(1) 30/11/2005 22 189/Ahd/2012 2005-06 27/03/2006 143(1) 31/03/2007 23 190/Ahd/2012 2006-07 24/03/2006 143(1) 31/03/2007 Aruna A Agrawal 24 194/Ahd/2012 2003-04 24/11/2003 143(1) 30/11/2004 25 195/Ahd/2012 2004-05 05/08/2004 143(1) 31/08/2004 6. On the basis of the above chart, he pointed that in all the above cases, since the time limit of issuance of notice under section 143(2) had elapsed on the date o .....

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- ITA No.2637/Del/2010 order dated 20.06.2013 and pointed to the relevant finding at page no.19 of the paper book. He also placed reliance on another decision of Ideal Appliances Co. Pvt. Limited vs. DCIT - ITA No.173/Mum/2015 and others - order dated 31.12.2015. He placed on record copy of the aforesaid submission. He, therefore, submitted that in respect of the years for which the time limit for issuance of notice under section 143(2) had expired before the date of search in those assessment .....

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. Learned Departmental Representative, on the other hand, supported the order of the Assessing Officer and the learned CIT(A) and further submitted that during the course of search, documents found were of incriminating nature and it was noticed that the assessee and his family members had received gifts from 289 persons, the individual gifts received by the assessee and his family members are in the range of ₹ 75,000/- to ₹ 1,00,000/- in all cases; aggregate to ₹ 2.66 crores d .....

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donors revealed that the donors had given the gift of more than the income shown in the return of income. On a sample basis he pointed to page nos.3 & 4 of the paper book and pointed out that Shri Mahavir Prasad Agrawal is stated to have given gift of ₹ 1,00,000/- whereas his total income as per copy of the return of income was ₹ 60,250/- only. He therefore submitted that on the basis of the material found during the course of search coupled with the post search inquiries by ADI .....

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ntative in the case of Raj Kumar Arora (supra) is on different facts as it deals with the scope of s. 153A assessment and not that of assumption of jurisdiction and that this fact has also been noted by the Co-ordinate Bench of the Tribunal in the case of Intas Pharmaceuticals Limited - IT(SS)A Nos.807 to 809/Ahd/2010 & 20/Ahd/2011 order dated 14.08.2015. He pointed out the relevant paragraphs in page no.14 of the aforesaid order. On the submission of learned Departmental Representative abou .....

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e case of CIT vs. Ashok Dua reported in (2009) 177 taxman 494 (Delhi) and placed on record a copy of the aforesaid decision. He, therefore, reiterated that in the absence of any incriminating material found during the course of search, no addition under section 153A of the Act could be made and the assessment framed under section 153A is bad in law and therefore needs to be set aside. 10. We have heard the rival submissions and perused the material on record. The issue in the present case is the .....

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the nature of incriminating material (iii) the assessment years for which the assessments have been framed u/s 153A had already attained finality and therefore could not be disturbed in the absence of any incriminating material. 11. It is an undisputed fact that in the present case search u/s 132 of the Act was carried out in the case of assessee on 15.10.2008 and during the course of search, material in the form of gift deeds and the copy of return of income of the persons giving the gift (i.e .....

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he gifts received in the assessment framed u/s 153A of the Act. It is also a fact that in the assessment order that is framed under 153A, AO in respect to the gifts that has been received by the assessee in various assessment years has at para 5.2 page 2 of the order has noted that the gifts were reflected in the capital account of the assessee in the various assessment years listed therein. The exact noting of the AO reads On verification of the capital accounts, it is seen that the assessee ha .....

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nd the copies of the return of income of the donors, found at the time of search are only supporting document of the gifts which have been declared by the Assessee. It is also Ld AR s contention that the return of income of the assessees have been processed u/s 143(1) and till the date of search, no notice u/s 143(2) has been issued with respect to the respective assessment years meaning thereby that the time period for selecting the return of income for scrutiny has elapsed and thereby the asse .....

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t this moment it will be relevant to refer to the provisions of s. 153A, which reads as under: 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated 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 furni .....

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essment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within 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] pending on the date of ini .....

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ately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.] [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, 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 reviv .....

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espect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 13. Reading of section 153A it is seen that what section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the I.T. Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such p .....

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that when the assessment made under Section 153(A)(1)is annulled, the assessment or reassessment that stood abated shall stand revived. Thus on a plain reading of Section 153A of the Incometax Act, it becomes clear that on initiation of the proceedings under Section 153A, it is only the assessment / reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments al .....

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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 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 .....

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ence found in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an 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 b .....

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record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A 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. 15. When the facts of the present case are seen in the light of the observations made by .....

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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. 16. In the present case, as already noted above, the AO had proceeded on the basis of gift deeds and copies of return of income of the donors and the post search inquiries to conclude that the gifts received by the assessee are bogus gifts. Before us, Revenue has not placed any material on reco .....

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and on the basis of these material AO held the gift to be bogus, the issue was decided in favour of the Assessee by Tribunal. In the appeal of Revenue against the order of Tribunal, the order of tribunal was upheld by the Hon ble High court by holding as under: 6. As regards the gifts, the Tribunal Iclt that it was not necessary to go into the question as in whether the alleged gifts were genuine or represented the assessee's own money sought to be laundered by way of NRI gifts. The Tribunal .....

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ot have been raised by the assessee. The Tribunal concluded that it could not be said that the gifts have been unearthed as a result of a search under section 132 of the Income-tax Act, 1961, only. The documents found during the course of search were the records available with the assessee which could be relied upon by the assessee before the Department in the event his claim of having received the NRI gifts was called in question. The Tribunal returned a finding that there was no nexus between .....

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ent in search cases have been given and if any amount of income has not been taxed and during the course of search, if some undisclosed income is found on the basis of the material seized, that should be treated as undisclosed income. As per the scheme of special assessment under Chapter XIV-B, the assessment has to be based on incriminating material found in the course of the search. In the present case, all that was found were the gift deeds and the affidavits and there was no incriminating ma .....

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e (supra), did not interfere with the findings and conclusions returned by the Tribunal and was of the view that no substantial question of law arose for the consideration of this Court. 18. As far as the proposition that when the return has been processed u/s 143(1) and the time period of issuance of notice u/s 143(2) for selecting the return for scrutiny has elapsed and when no incriminating material has been found during the course of search then in such cases proceedings do not get abated by .....

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issuing notice u/s 143(2) of the IT Act for selecting case for security expired on 31.12.2004. The first search was conducted on the premises of assessee on 22.9.2005 and the 2nd search was conducted on 25.8.2006 and in both the searches, no incriminating material, document, unaccounted assets and bogus of accounts were found and seized relating to land development expenses debited in profit and loss account for the year. The both searches on assessee did not yield any incriminating material on .....

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ion that A.O has the jurisdiction u/s 153A of the Act to initiate assessment/ reassessment proceedings for all the six years to compute the total income of the assessee including the undisclosed income where action have been taken against the assessee u/s 132(1) of the IT Act. However, the question remains that when return has been processed u/s 143(1) (a) and the time period for issuing notice u/s 143(2) for selecting return for scrutiny has elapsed then what nature of proceedings commenced and .....

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t return is filed and acknowledgement or intimation issued, the proceedings initiated by filing the return are closed, unless they are again triggered by issuing notice u/s 143(2) of the IT Act. In the case under consideration, the period for issuing the notice u/s 143(2) elapsed. The process has attained the finality which can only be assailed u/s 148 or 263 of the IT Act. Such proceedings can never be initiated u/s 143(2) when the time period for issuing notice u/s 143(2) has expired. Hon ble .....

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with section 143(3) and certain incriminating documents have been found indicating undisclosed income, the addition shall only be restricted to those documents or incriminating material, and clubbed only to the assessment framed originally, as the law does not permit the Assessing Officer to disturb issues already concluded. Where on the date of initiation of search under section 132 or requisition of books, no proceeding is pending, but in the search, material is found indicating incriminating .....

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e notices under section 153A, asking the searched person to file its returns. But since there are no proceedings pending before him, the second proviso stops the Assessing Officer to proceed further, because proceedings cannot abate and since there is no material, no further jurisdiction is embarked on him. Where no proceedings are pending and no incriminating material has been found on clubbing, what remains is the income originally determined or assessed. 10. The ITAT SMC bench, Mumbai in ITA .....

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2002-03, assessee filed details of gift received in the shape of gift deeds, bank statements, confirmations and acknowledgement of income tax return filed by the donor. Thereafter the assessment under section 143(3) was completed and no addition on account of gift received by the assessee was made. It clearly shows that the AO was satisfied in respect to gift received by the assessee. Similarly, for assessment year 2001-02, the assessee has enclosed all the details of the gift along with return .....

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cial Bench of the Tribunal has answered the question in the following manner :- (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means- (i .....

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other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 13. In the present case, neither any incriminating material was found nor any other material or document along with books of accounts were found, which were not produced before the AO while completing the assessment originally. For assessment year 2001-02, no incriminating material was found or any other documents were .....

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ment u/s 153(A) would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that has escaped assessment are clubbed together and assessed as the total income. The expiry of time for issuing notice u/s 143(2) of the Act takes away the jurisdiction of the AO for issuing notice u/s 143(2). It is jurisdictional power available with the AO to be exercised in a given period. Once, it is exercised then it can be completed .....

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all issues arising from the original return and issue arising on the basis of incriminating documents, and assets found and seized during the search. Wherever the proceedings are completed prior to the search then nothing merges with proceding u/s 153A of the Act and nothing abates. In such a situation, the AO has to respect the completeness of the proceedings. Admittedly, in the case of assessee, no incriminating documents were found and seized. The provisions of section 153A give power to asse .....

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Therefore, the question arises whether AO can make any addition in the reassessment proceedings u/s 153(A) after making inquiries which are not suggested by any document or asset seized during the search. It depends on the nature of addition. The facts and circumstances of the assessee clearly show that no incriminating document found relating to the land development expenses debited in the books of accounts. No material was on the record on that basis which income of assessee could be further .....

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ar under consideration, the same are deleted. 19. We also find that the co-ordinate Bench of Mumbai Tribunal in the case of Gurinder Singh Bava Vs DCIT (2012) 28 Taxmann.com 328 (Mum) has after relying on the decision of Special Bench of Tribunal in the case of Alcargo Global Logistics Ltd. has held that when the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search and therefore there was .....

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