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2016 (7) TMI 1042 - ITAT DELHI

2016 (7) TMI 1042 - ITAT DELHI - TMI - Assessment u/s 153C - Held that:- Order passed u/s 153C are barred by the limitation and the addition has been made without any incriminating material found during the course of search assessment orders and addition therein are not sustainable. Similarly, we also hold for the above appeals for AY 2002-03 to 2005-06 and Cross objections therein that the orders u/s 153C are not sustainable as those are barred by limitation. The additions in those assessments .....

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the ld CIT (A)-I, New Delhi dated 31/03/2011 for the AYs 2001-02 to 2005-06. 2. The revenue has raised the following grounds of appeal for Assessment Year 2001-02:- 1. The order of the Ld. CIT(Appeals) is not correct in law and facts. 2. Whether in the facts and circumstances of the case, the Id. CIT (A) erred in deleting the addition of ₹ 1,37,50,000/- made u/s 68 of the Income Tax Act by the AO in respect of share application money introduced during the year. 3. Whether in the facts and .....

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n respect of share application money introduced during the year. 3. Whether in the facts and circumstances of the case, the Id. CIT (A) erred in deleting the disallowances of ₹ 1,96,93,116/- made u/s 80IB of the Income Tax Act by the AO. 4. Whether in the facts and circumstances of the case, the Id. CIT (A) erred in directing to re-compute the trading profit after considering and verifying claim of administrative expenses. 4. The revenue has raised the following grounds of appeal for Asses .....

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sment Year 2004-05:- 1. The order of the ld CIT(A) is not correct in law and facts. 2. Whether in the facts and circumstances of the case, the ld CIT(A) erred in deleting the disallowance of ₹ 6,80,44,440/- made u/s 80IB of the Income Tax Act by the AO. 6. The revenue has raised the following grounds of appeal for Assessment Year 2005-06:- 1. The order of the ld CIT(A) is not correct in law and facts. 2. Whether in the facts and circumstances of the case, the ld CIT(A) erred in deleting th .....

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hing incriminatory was found, and re-visiting the issues, which have been settled earlier, is permissible. 2. Because the order passed by the assessing officer was so vulnerable on both the facts as well as law that, the Ld. CIT (A) had no option but to correct the same in the interest of justice and equity. 3. The appeal by department is bad in law because the issues which have been decided by the Apex Court and which have become the law of land have been totally ignored by the department. 8. T .....

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the issues, which have been settled earlier is permissible. 3. Because the Ld. Lower authorities have failed to appreciate that the assessee had fully discharged the initial onus regarding cash credits being Share application money amounting to ₹ 5,00,000/- by placing irrefutable documentary evidence on record and in view of decision pronounced by the Apex Court as well as High Court, the Hon'ble High Court in the case of Dwarkadhish Investments Pvt Ltd 201Q-T!OL-617-HC-Del-IT. 4. Bec .....

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of trading cost was given to the assessee. Therefore, the direction of Ld. CIT (A) to do so, how becomes erroneous. 6. Whether on the facts and circumstances of the case, the Hon'ble CIT(A) is correct in upholding the addition of ₹ 34,794/- on account of interest on bank deposits which were made for the purpose of getting cash credit facilities and made as a deposit with sales tax department as income from other sources instead of income from business and profession. 9. The assessee ha .....

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so vulnerable on both the facts as well as law that the Ld. CIT (A) had no option but to correct the same in the interest of justice and equity. 3. The appeal by department is bad in law because the issue for-claiming exemption u/s 80IB which has already been settled earlier and which has got finality after the order of Hon'ble ITAT in appeal no. IT 1429 (Del) of 2006. The revisiting of the issue is not allowed in fiscal laws in the garb of reassessment u/s 153A of the act. 4. The appeal by .....

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ection 132 of the Act on 21.03.2007 against the assessee was carried out and nothing incriminatory was found, and re-visiting the issues, which have been settled earlier, is permissible. 2. Because the order passed by the assessing officer was so vulnerable on both the facts as well as law that the Ld. CIT (A) had no option but to correct the same in the interest of justice and equity. 3. The appeal by department is bad in law because the issue for claiming exemption u/s 80IB which has already b .....

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39;ble ITAT itself had adjudicated that interest income is income from the business and allowable u/s 80IB in the assessment year 2002-03 in the case of assessee itself. 11. The assessee has raised the following grounds of Cross objection No. 264/Del/2011 for Assessment Year 2005-06:- 1. Whether the assessment framed under section 153A / 143(3) of the Income Tax Act. 1961 is legal, when consequent upon action taken by the department under section 132 of the Act on 21.03.2007 against the assessee .....

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ich was otherwise allowable u/s 37 of the income tax act. 12. Vide application dated 30.04.2014 the assessee has raised an additional ground of cross objection for all the years as under:- 5. Ground No. 5 That assessment made u/s 153C is barred by limitation as they were required to be completed by 31.12.2008 as per section 153B of the Income tax Act while the same was made in December 2009. 13. The assessee has submitted that though C O is already filed and this is an additional ground which is .....

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e stating that at this stage the ground challenging the order of the assessment cannot be made. 14. We have carefully considered the rival contentions and also perused the application made by the assessee stating the reason that while originally this ground could not be raised. The ground is legal in nature and therefore can be raised at any time during the course of pendency of appeal. In view of this we admit the additional ground for adjudication. 15. For the sake of brevity we advert to the .....

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ion entries in various group companies through entry operators. Notice u/s 153C of the Act was issued on 24.11.2008 and in response to which assessee submitted that original return filed on 26.03.2003 may be treated as return filed in response to the notice. In the original return assessee declared income of ₹ 1234270/-. The ld AO noted that assessee has received share application money to the tune of ₹ 13750000/- and unsecured loan of ₹ 41.50 lakhs which was unexplained and th .....

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rther as the search got concluded on 23.03.2007 the assessments should have been passed by 31.12.2008 which were passed on 30.12.2009. He therefore referred to the decision of the coordinate bench in case of JH Finvest Pvt. Ltd. for the similar assessment years in same search dated 30.05.2014 wherein at para No. 9.1 onwards the facts of the search were discussed and subsequently, in para No. 10 of that order the coordinate bench held that the date of conclusion of the search is 23.03.2007 being .....

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urya Vinayak Industries the issue has been decided and which has also not been challenged by the revenue before the Hon ble High Court. Therefore, now the issue is squarely covered in favour of the assessee on the issue of limitation. On the issue of addition he submitted that in absence of any incriminating material found in the course of search no addition can be made in view of the decision of Hon ble Delhi High Court in CIT Vs. Kabul Chawla 234 Taxmann 300. Therefore, the cross objection of .....

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. wherein the Hon ble High Court has confirmed the decision of coordinate bench on issue of limitation and on addition has been referred for filing of SLP before Hon ble Supreme Court as crucial fact was not mentioned the last Punchnama was drawn on 15.05.2007. 18. In the rejoinder ld AR submitted that this fact has been considered by Hon ble High Court in para NO. 6 of the order of the Hon ble High Court. Therefore, now this cannot be agitated. He further stated that merely because the revenue .....

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r:- 3. The background to the present appeals is that on the basis of authorizations dated 20th March 2007 under Section 132 (1) of the Act, a search was commenced on 21 st March 2007 in the office premises of the above Assessees as well as the other Assessees, including Rim Zim Valley Products Pvt. Ltd, Aakriti International, apart from the residences of Mr.Sanjay Jain and Mr. Rajeev Jain, Directors of J.H. Finvest Pvt. Ltd. The search apparently continued on 22nd and 23rd March 2007 as well. It .....

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perusal of the said documents shows that as far as the panchnama prepared on 23rd March 2007 was concerned, it was in respect of the authorizations issued for search of the above Assessees. It notes in para 8 that The search commenced on 23/3/07 at 2.15 pm. The proceedings were closed on 23/3/07 at 5.55 pm as finally concluded . It must be noted that para 8 is a pre-printed clause with blanks for the date and time. There is an option to choose one of the expressions: as finally concluded/as temp .....

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ank accounts of the said persons. Restraint orders were also issued in respect of certain small safes in which there were materials/documents and for which keys were not available. The search purportedly continued thereafter on 15th May 2007 when another panchnama was drawn up. In para (A) of the said panchnama it is mentioned that the warrants of authorization were issued in the case of the above Assessees apart from Mr. Sanjay Jain and Mr. Rajeev Jain, Rim Zim Valley Products Ltd. In para 2, i .....

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in. The case of the Assessees, which has been accepted by the ITAT in the impugned order, was that the assessment ought to have been completed by 31st December 2008, but was completed on 31st December 2009, i.e., beyond the period of twenty one months from the end of the financial year in which the last authorisation for the search under Section 132(3) was issued. This is in terms of Clause (i) of the second proviso to Section 153B (1) of the Act. It is pointed out that the names of the Assessee .....

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7. The ITAT has in the impugned order, after discussing the earlier decisions of the ITAT and the High Courts, noted that mere passing of a restraint order would not extend the time limit available for completion of the assessment pursuant to the search. It has been noted that Section 132(3) of the Act for passing a restraint order can be only resorted to if there is any practical difficulty in seizing the item which is liable to be seized. If all actions of the search were completed and nothing .....

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s authorisations issued and various panchnama prepared, it would be the last panchnama prepared in respect of the last authorisation which would be relevant for computing the limitation period. 9. In the present case, as noted by the ITAT, there is only one authorisation which was issued on 20 th March 2007. Although, the ITAT in para 10.5 of the impugned order noted that in the authorization letter dated 20/3/2007, names and address of the assesses in question have not been mentioned but in Pan .....

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ally concluded on that date itself. It appears that no further authorisation had been issued for the search of the Assessees who are the Respondents in these appeals. Consequently, the Revenue cannot take advantage of the restraint orders passed in respect of other persons in order to seek extension of the time period for completion of the assessment proceedings in terms of Section 153B qua the Respondent Assessees herein. 10. Even assuming that the restraint orders were validly passed, once the .....

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ry of the period of limitation which, as far as these Assessees are concerned, commenced on 23rd March 2007, when the search "finally concluded". 11. Consequently, the impugned order of the ITAT, holding that the assessments in question were barred by limitation, and therefore liable to be quashed, does not call for any interference. 12. The second ground on which the ITAT has invalidated the assessments is that there was no incriminating material found in the course of the search agai .....

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ng the absence of any incriminating material having been found against the said Assessee invalidating the assessment. 14. No substantial question of law arises from the impugned order of the ITAT in these cases. The appeals are accordingly dismissed. 20. Therefore, respectfully following the decision of Hon ble jurisdictional High Court wherein it has been held that the search finally concluded on 23.03.2007 the assessment should have been made before 31.12.2008 but completed on 30.12.2009 is ba .....

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ot survive. For AY 2001-02 the assessment proceedings are not abated and therefore same are concluded assessments and in case of concluded assessment the addition can be made only on the basis of incriminating material found during the course of search. 22. Ld DR relied on the orders of the lower authorities. 23. We have carefully perused the assessment order and also the nature of addition of ₹ 1.79 crore made therein. We did not find any reference to the material found during the course .....

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a search 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 assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii .....

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ncome would be brought to tax". (iv) Although section 153A 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 Assessing Officer 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 ba .....

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ment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer 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 .....

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