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2016 (9) TMI 1147 - ITAT DELHI

2016 (9) TMI 1147 - ITAT DELHI - TM - Validity of proceeding under section 153A - no notice under section 143(2) issued within the statutory period available - disallowance under section 40A(3) - existence of incriminating material - Held that:- Original return of income under section 139(1) of the Act was filed on 17/09/2009 and no notice under section 143(2) of the Act was issued within the statutory period available, which expired on 30/09/2010. Since in the case of the assessee search was co .....

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ating material was found during the course of search. Thus, we find that on fulfillment of these two conditions i.e. no incriminating material was found during the course of search and no assessment was pending as on the date of the search, no addition could have been made in the proceeding under section 153A of the Act in the case of the assessee. We, thus, respectfully following the ratio laid down in the case of decision of the Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ), we hold that .....

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or assessment year 2009-10 raising following grounds: i. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in making disallowance of a sum of ₹ 14,19,644/- under provisions of the section 40A(3) of Income Tax Act, 1961. ii. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction to pass impugne .....

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ances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961. v. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 2. The learned Authorized Representative of the assessee addressing the ground No. 2 of the appeal submitted that in the case of the assessee original return .....

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ourt in the case of CIT Vs. Kabul Chawla, (2016) 310 ITR 573 (Del). The learned Authorised Representative also filed the copy of acknowledgement for the return of income filed for the assessment year under consideration under section 139(1) of the Act. The learned Authorized Representative also placed reliance on the decision of the Tribunal Delhi E Bench in the case of Nilay Infrastructure Private Limited Vs. DCIT in ITA No. 5297/Del/2013, pronounced on 10/06/ 2016. 3. The learned Commissioner .....

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ection 153A of the Act was issued on 09/01/2012, asking the assessee to file the return of income. In response, the assessee filed a letter stating that return filed originally under section 139(1) of the Act on 17/09/2009 might be treated as return filed in the response to the notice under section 153A of the Act. In the assessment proceedings under section 153A of the Act, the Assessing Officer has made disallowance under section 40A(3) of the Act, amounting to ₹ 14,19,644/-. The learned .....

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rt has held as under: Summary of the legal position 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 (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 .....

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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 arbitrary or made without any relev .....

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nts 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 153 A only on the basis of some incriminating material unearthed during the course of search or requisition .....

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urisdictional High Court in the case of Kabul Chawla (supra). 6. Respectfully following the ratio laid down in above decisions, when we examine the facts of the present case, we find that original return of income under section 139(1) of the Act was filed on 17/09/2009 and no notice under section 143(2) of the Act was issued within the statutory period available, which expired on 30/09/2010. Since in the case of the assessee search was conducted on 21/01/2011, no assessment was pending as on the .....

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