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2016 (7) TMI 817 - ITAT AHMEDABAD

2016 (7) TMI 817 - ITAT AHMEDABAD - TMI - Aassessments made u/s. 153A - addition to income - Held that:- In the light of the documents found at the time of search which may be considered as incriminating for making the impugned assessments. Surprisingly, there is not even a whisper of any incriminating material found at the time of search which could be considered as the basis for framing assessments u/s. 153A of the Act. As, there is no alleged incriminating material which could have prompted t .....

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, IT(SS)A. No. 85/AHD/2013, IT(SS)A. No. 86/AHD/2013, IT(SS)A. No. 87AHD/2013 - Dated:- 7-7-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Appellant : Shri P.M. Mehta, AR For The Respondent : Shri Rajeev Agarwal, CIT/DR PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. The aforementioned captioned bunch of appeals by the respective assessees are directed against separate orders of the Ld. CIT(A)-III, Ahmedabad dated 30.11.2012 pertaining to respective assessme .....

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08.2009. Notice u/s. 153A were issued and served upon the assessees and the assessees filed return of income accordingly. Statutory notices u/s. 143(2) and 142(1) of the Act were subsequently issued and served upon the assessee. 5. During the course of the assessment proceedings, gifts received by the assessees were examined. The assessee was asked to explain the genuineness of the gifts. Assessees filed detailed reply in the light of the provisions of Section 68 of the Act, identities of the do .....

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perused the orders of the authorities below. We have given a thoughtful consideration to the legal proposition put forward by the ld. counsel. The ld. counsel vehemently stated that the order made u/s. 153A of the Act is illegal and bad in law because the assessments have been framed by the A.O. without any incriminating material found at the time of search. 8. We proceed by deciding the issue of assessments made u/s. 153A qua the incriminating material. Following chart will explain the details .....

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hir Pukhraj Bagrecha 83/Ahd/2013 2004-05 26/10/2004 143(1) 31/10/2005 84/Ahd/2013 2005-06 25.01.2006 143(1) 31.01.2007 Sayarben S Bagrecha 85/Ahd/2013 2004-05 19/10/2004 143(1) 31/10/2005 Pooja Rajesh Bagrecha 86/Ahd/2013 2004-05 22/12/2004 143(1) 31/12/2005 Rajesh Sureshkumar Bagrecha 87/Ahd/2013 2004-05 28/10/2004 143(1) 31/10/2005 9. A perusal of the chart shows that prior to the date of search, the aforementioned assessments stood completed and, therefore, if no incriminating material is fou .....

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nality, unless the materials gathered in the course of the proceedings u/s. 153A of the Income Tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the AO while passing order u/s. 153A r.w.s. 143(3) cannot disturb the assessment order." 10.2. The Hon'ble Hig .....

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. 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO.? 3. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in limiting the scope of Sec. 153A only to undisclosed income when as per the section the AO has to assess the total income of the six assessment years?"- and the Hon ble High Court of Bombay finally held as under:- We, therefore, dis .....

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taking into consideration, records available the following facts emerges as undisputed. The regular return of income was filed on 2.12.2003 and the same was processed u/s 143(1)(a) of the Act. The time period for 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 .....

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scope of assessment u/s 153(A) when the return has been accepted u/s 143(1)(a) and time period for issuing notice u/s 143(2) has elapsed. 8. In our considered view, there is no dispute with regard to the proposition 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, t .....

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In our considered opinion, section 153A referred to "pending" "assessment" or "reassessment" and not "assessment orders". The assessment may not be pending even though there is no formal order u/s I43(1)(a). The moment 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 .....

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of assessment under section 153A the Assessing Officer shall have a free-hand, through abatement, only on the proceedings that are pending, to frame the assessments afresh. But in a case where the proceedings have reached finality, assessment under section 153A read 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 orig .....

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Hon ble High Court has summarized the legal position as under:- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(l) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant .....

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six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitra .....

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. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the 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 cou .....

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ITAT was correct in concluding that there had to be incriminating material recovered during the search qua the Assessee in each of the years for the purposes of framing an assessment under Section 153 A of the Act? 6. It is not in dispute that in respect of the Respondent Assessee for the AYs in question the initial assessment proceedings took place under Section 143(3) of the Act. Thereafter they were sought to be reopened by issuing notice under Section 147 of the Act and reassessment orders .....

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