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2016 (9) TMI 1151 - ITAT MUMBAI

2016 (9) TMI 1151 - ITAT MUMBAI - TMI - Validity of proceedings u/s 153A - computing the six assessment years for assessing / reassessing u/s 153C - Held that:- The reference to the date of search in cases of “other person” where warrant of authorization was not issued, the date of receipt of the documents by the AO of the “other person” constitutes the “date of search” for the purpose of computing the six assessment years for assessing / reassessing u/s 153C of the Act. In the present case, the .....

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s 143(3) of the Act, is required to be quashed on technical grounds. - - I.T.A. No.537/M/2014, I.T.A. No.538/M/2014, I.T.A. No.567/M/2014, I.T.A. No.568/M/2014 - Dated:- 12-8-2016 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri Dharmesh Shah, Mr. Bipin Shah and Ashwin Kashinath For The Revenue : Shri Bhupendra Kumar Singh, DR ORDER PER BENCH: There are four appeals under consideration involving the cross appeals for the assessment ye .....

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aised the following concise grounds and additional grounds which read as under:- 1. The Ld CIT (A) has erred in law and in facts in not appreciating that the AO has passed the order without complying with the principles of natural justice and the assessment order is thus illegal and bad in law. 2. The Ld CIT (A) has erred in law and in facts in not appreciating that the notice issued by the AO is bad in law and void ab initio. 3. The Ld CIT (A) has erred in law and in facts in confirming the dis .....

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in facts in not appreciating that the commission income has actually been earned by Mr. Narendra Shah and ought to be taxed in his hands and not in the hands of the appellant. 7. The Ld CIT (A) erred in law and in facts in not appreciating that the AO has erred in levying interest u/s 234A, 234B and 234C of the Act. Additional Grounds of appeal:- In the appeal filed by the appellant, the appellant has inadvertently left out the grounds challenging the validity of the order passed by the Assessi .....

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commission. There was search action u/s 132 of the Act on Shri Narendra R. Shah dated 24.1.2006. During the course of search proceedings on Shri Shah, the search team laid their hands on pay slips involving assessee-company. Consequently, both the assessee as well as Shri Shah was centralized with same Assessing Officer. AO made various additions in the assessment of the assessee u/s 153C of the Act. Similar additions were made in the hands of Shri Shah on protective basis. Before us, Ld Counse .....

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s 153C of the Act after complying with the statutory requirement relating to the recording of satisfaction, issue of notice u/s 153C of the Act etc, whereas, the AO completed the assessment for the AY 2006-07 u/s 143(3) of the Act and not u/s 153C of the Act on 24.7.2008. The same constitutes an invalid assessment and the same is required to be quashed in view of the express provisions of the Act vide first proviso to section 153C read with clause (b) of section 153A(1) of the Act. In this regar .....

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5.11.2014 and another decision of the ITAT, Delhi in the case of R.L. Allied Industries Vs. ITO vide ITA Nos. 567 & 568/Del/2011 & 4812 to 4816/Del/2012 (AYs 2000-01 to 2002-03), dated 28.11.2014 which are relevant for the proposition that the date of receipt of the documents constitutes date of search for the purpose of determining the six assessment years referred to in clause (b) of section 153A(1) of the Act. 4. On the other hand, Ld DR for the Revenue relied heavily on the decision .....

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008-2009 considering the fact that the date of search was 20.4.2007 (AY 2008- 2009). 5. We have heard both the parties and considered the arguments of the Ld Representatives of both the parties and we have also perused the orders of the Revenue Authorities as well as the facts applicable to the case under consideration. To start with we have examined the provisions of first proviso to section 153C and the provisions of clause (b) of section 153A(1) of the Act and the same read as under:- First p .....

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reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : 6. From the above, it is expressly mentioned the reference to the date of search in cases of other person where warrant of authorization was not issued, the date of receipt of the documents by the AO of the other person constitutes the date of search for the purpose of computing the six assessment years for assessing .....

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This view is repeatedly supported by the orders of the Tribunal viz the decision of the Delhi Bench of the Tribunal in the case of Jasjit Singh vs. ACIT (supra) and another decision of the ITAT, Delhi in the case of R.L. Allied Industries Vs. (supra). For the sake of completeness of this order, the relevant conclusions of the said Tribunal‟s decision in the case of R.L. Allied Industries (supra) are extracted as under:- Assessee‟s AO having received the seized material on 12th March, .....

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therefore, immediately preceding assessment year mentioned in clause (b) of section 153A(1) of the Act is AY 2006-07. Therefore, considering the settled legal position of the issue and without going into the other arguments raised by the assessee we are of the opinion, the assessment for the AY 2006-07, which was made u/s 143(3) of the Act, is required to be quashed on technical grounds. Accordingly, the legal ground raised by the assessee is allowed. Considering our decision on the legal groun .....

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he adjudication of the present appeal raised by the Revenue becomes infructuous. Accordingly, grounds raised by the Revenue are dismissed as infructuous. 11. In the result, appeal of the Revenue is dismissed. II. Cross appeals for the AY 2007-08 ITA No.568/M/2014 (By assessee) ITA No.538/M/2014 (By Revenue) 12. Both these cross appeals are filed against the order of the CIT (A)-37, Mumbai dated 22.11.2013 for the AY 2007-2008. 13. Briefly stated relevant facts of the case are that the assessee i .....

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or earning commission income. It is the claim of the assessee that the rate of commission earned by the assessee is @ 2% in case of long term capital gains and the turnover in this regard works out to ₹ 1,10,81,116/- and the rate of commission for accommodation entries involving subsequent transaction is @ 0.5% and the transactional value in this regard is around ₹ 2.22 Crs. Assessee claimed expenses applying the flat rate of 20% of the gross commission for undertaking such accommoda .....

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odation entries. After considering the submissions of the assessee, CIT (A) examined the claims of the assessee and finally, partly allowed the appeal of the assessee. While coming to such decision, CIT (A) held that estimating the commission adopting the rate of 3% would fair and reasonable. Relevant lines from para 6.4.19 read with 14.3.2 of CIT (A)‟s order are relevant in this regard. 15. Aggrieved with the above decision of the CIT (A), Revenue is in appeal against the relief granted t .....

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