TMI Blog2017 (4) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... al interest on interest free advances given to sister concerns for the A.Y. 2005-06 to 2007-08. - Decided in favour of assessee - I.T.A.Nos.196, 197 & 222/Vizag/2014 - - - Dated:- 31-3-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri R. Govindarajan, DR ORDER PER Shri Manjunatha, Accountant Member: These 3 appeals filed by the assessee are directed against common order passed by the Commissioner of Income Tax (A)-1, Hyderabad dated 19.2.2014 for the assessment years 2005-06, 2006-07 2007-08. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed off by this order for the sake of convenience. 2. The brief facts of the case are that the assessee is a Private Limited company engaged in the business of trading in gold and jewellery. A search and seizure operation u/s 132 of the Income Tax, 1961 (hereinafter called as the Act ) was conducted on 9.1.2009 in the business premises of the assessee. During the course of search seizure operations, certain incriminating documents relating to the assessee were fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 u/s 143(3) r.w.s. 153A of the Act by making addition of ₹ 5,76,59/- towards notional interest. Thereby, the income of the appellant was determined at ₹ 1,31,17,199/- as against the returned income of ₹ 1,25,40,940/-. 2. The learned Commissioner of Income Tax (Appeals) confirmed the above addition vide order dt 19.02.2014. Being aggrieved, the petitioner preferred an appeal before the Hon'ble Income Tax Appellate Tribunal, Visakhapatnam. 3. From the facts on record which are clearly stated in the assessment order, it is evident that the above addition made was not based on any material found during the search. It has been consistently held by various Hon'ble Benches of the ITAT and also the High Courts (including Hon'ble Visakhapatnam Bench in the case of L.G. Trinadha Rao in ITA No 306/V/2011 vide order dt 19.04.2016) that with regard to an assessment year for which there are no pending proceedings, additions can be made in the assessment u/s 143(3) r.w.s. 153A only as with reference to seized material. 4. The date of search in the case of the appellant is 09.01.2009 and the appellant filed the original return of income for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted and no proceedings were pending as on the date of search? The ld. A.R. for the assessee, referring to the decision of ITAT, Visakhapatnam bench in the case of L. Suryakantham Vs. ACIT in ITA Nos.300 to 305/Vizag/2012, submitted that in the case of concluded assessments the A.O. has no jurisdiction to make additions towards returned income in the absence of incriminating material. The A.R. further submitted that in the case of abated assessment and assessments, which are pending as on the date of search, the A.O. can assume jurisdiction to assess/re-assess total income, which is found during the course of search. In this case, the assessments for the assessment years 2005-06 to 2007-08 are already concluded and no proceedings are pending as on the date of search and hence, the A.O. is precluded from making additions in the absence of seized materials. On the other hand, the Ld. D.R. strongly supported order of the CIT(A). 9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The only issue that arises for our consideration is whether on the facts and in the circumstances of the case, the A.O. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that as per sec. 153A of the Act, de-novo assessment can be made only in respect of the assessment year for which the assessment proceedings had been abated and that in respect of assessment years for which the assessment had already been reached a finality, such assessment could not be made u/s 153A of the Act unless there was seized materials. 20. The A.O. has passed reassessment orders u/s 153A/153C of the Act for all the six assessment years immediately preceding the year in which search was conducted. According to the A.O., as per the provisions of section 153A of the Act, there is no limitation or restriction provided in the new procedure of search assessments on the powers of A.O. for making assessment/reassessment and the A.O. is not required to confine his assessments on the material found during the course of search as was the case in the old procedure of block assessments. The new procedure of block assessment was explained by way of provisions of section 153A of the Act. As per section 153A of the Act, the A.O. shall assess or reassess the total income of the specified six assessment years irrespective of the fact that the assessment of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record, we find that the assessment for the assessment year 2004-05 to 2007-08 were not pending as on the date of search. The fact that the assessment has been completed u/s 143(1) 143(3) of the Act are not material. The time limit for issue of notice u/s 143(2) of the Act has been expired. On further verification of the documents available on record, we find that there was no incriminating documents found during the course of search in respect of assessment year 2004-05 to 2007-08. Therefore, we are of the opinion that the A.O. was not correct in reassessing the total income of the assessment year 2004-05 to 2007-08 in the absence of any seized materials. Accordingly, we direct the A.O. to delete the additions made for the assessment year 2004-05, 2005-06 2007-08. 23. It is pertinent to discuss herein the case laws relied upon by the assessee. The assessee has relied upon the ITAT, special bench decision in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287. The coordinate bench of this Tribunal, while deciding the issue in favour of the assessee held as under: In assessments that are abated, the AO aretains the original jurisdiction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial and quasi judicial controversies as it must in other spheres of human activity. Our decision is in consonance with this observation . The decision rendered by the Special bench that the assessing officer can make additions in the case of concluded assessments on the basis of incriminating materials is also based upon the decision rendered by Honble supreme Court in the case of Parashuram Pottery works Co. Ltd (supra). 23. We have earlier noticed that the Hon'ble jurisdictional Andhra Pradesh High Court has also upheld by the orders passed by the Tribunal by following the decision rendered by the Special bench in the case of All Cargo Global logistics Ltd (supra) in the following cases:- (a) Sree Lalitha Constructions (J1TA No 368 of 2014) (b) M/s. Hyderabad House Pvt Ltd (ITTA No.266 of 2013) (c)M/s. AMR India ltd (FITA No.357 /v/2014) Further we agree with the contentions of the assessee that the decision rendered by the jurisdictional High Court in the case of Gopal Das Bhadruka (supra) have been rendered on the facts prevailing in those cases, since the issue relating to concluded assessments and pending assessments was not before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act for the assessments which are not pending as on the date of search. In this case, the search was conducted on 14.7.2009. The assessment for the assessment years 2004-05 to 2007-08, were not pending as on the date of search. The time limit for issue of notice under sec. 143(2) has been expired. Therefore, the A.O. has no jurisdiction to reassess the income for the assessment year 2004-05 to 2007-08 in the absence of any incriminating materials. Hence, we delete the additions made by the A.O. for the assessment year 2004-05, 2005-06 2007-08. Accordingly, the ground raised by the assessee is allowed. 10. In this case, search was taken place on 9.1.2009. As on the date of search, the assessment for the assessment years 2005-06 to 2007-08 were already concluded and there are no proceedings pending for those assessment years. The time limit for issue of notice u/s 143(2) of the Act, for the assessment years 2005-06 to 2007-08 has been expired. The A.O. made additions towards notional interest on interest free advances given to sister concerns without any incriminating materials and based on the books of accounts and financial statements, which were already part of regula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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