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2016 (8) TMI 312 - ITAT DELHI

2016 (8) TMI 312 - ITAT DELHI - TMI - Assessment order u/s 153A/143(3) - addition u/s 68 - Held that:- The instant appeal it is undisputed that the impugned additions were made by the Assessing Officer without there being any finding that the additions related to any seized material. There is no iota of any reference to any incriminating material in the assessment order u/s 153A/143(3) and therefore following the ratio laid down by the Hon'ble Delhi High Court in CIT Central-III vs Kabul Chawla .....

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st the order dated 15.03.2013 passed by the Ld. CIT(A)-III, New Delhi for assessment year 2004-05 whereas the CO has been filed by the assessee. 2. The facts of the case, in brief, are that the above issues emerge from the fact that a search and seizure action was carried on assessee's premises on 20.08.2009 which is a part of Unity Group of companies. The other companies/concerns which were also searched along with the appellant are as under:- S. No. Name of the appellant 1. North Delhi Pro .....

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₹ 12,52,00,000/- from 28 different entities. The AO made enquiries from 8 entities by sending the notices under section 133(6)/131 of the Act. Out of 8 entities, 5 entities filed their written confirmation and other related documents etc. However, remaining 3 entities namely Vikas Parafins Pvt. Ltd., Raf Steel Pvt. Ltd. and Universal Electrique Motors Pvt. Ltd, who had invested ₹ 10,00,000/-, ₹ 15,00,000/- and ₹ 25,00,000 respectively, did not comply with the notices iss .....

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the validity of proceedings u/s 153A but allowed the assessee s appeal on merits and deleted the entire addition. 5. Now the Department has filed an appeal and has raised the following grounds:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 50,00,000/- made U/s 68 of the Income tax Act 1961, on account of unexplained cash credits under the head share application money received. 2. On the facts and in the circumstance of the case, .....

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sed the following grounds:- 1. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the proceedings initiated under Section 153A of I.T. Act, which is bad in law in the absence my incriminating material belonging to the assessee being found during the course of search. 2. That on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming th .....

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d in eyes of law being based on incorrect postulate that search assessment u/s 153A is de novo in nature whereas the same is to be based and confined to incriminating material unearthed during search operations. 4. That on facts and circumstances of the case the learned Assessing Officer has erred in charging interest of ₹ 16,68,188/- u/s 234B of I.T.Act. 7. Before proceeding with the grounds of appeal of the Department, we deem it appropriate to first address and adjudicate on the CO of t .....

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f section 153 A only the assessments which were pending on the date of initiation of search u/s 132 of the Act will abate and the assessment proceedings which have become final as on the date will not stand abated. It was further submitted that no incriminating material was found during the course of search to show that the entries were not genuine. Ld. AR also drew our attention to the decision of the Hon ble High Court of Delhi in CIT Central-III vs. Kabul Chawla in ITA Nos. 707/2014, 709/2014 .....

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the Act, the AO shall assess or reassess the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. The first proviso states that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years . The second proviso states that the assessment or reassessment relating to the said six assessment years pending on the date of .....

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the making of a de novo assessment in this particular assessment year. While under the first proviso, the AO is empowered to frame assessment for six years, under the second proviso only assessments which are pending on the date of initiation of search abate. The effect is that completed assessments do not abate. The assessments can be said to be pending only if the AO is statutorily required to do something further. If the section 143(2) notice has been issued, the assessment can be said to be .....

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t was not pending and as no material was found during the search, the addition has been rightly deleted by the Ld. CIT (A). It will also be worthwhile to reproduce para 37 of the judgment of the Hon ble High Court of Delhi in the case of CIT Central - III vs. Kabul Chawla (supra) which lays down the entire law with regard to section 153A 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 decis .....

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i. 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 six years in separate assessment orders for each of the 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 Sec .....

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