TMI Blog2016 (1) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... given in the succeeding paragraphs of this order. 2. Firstly, we shall take up the appeal ITA No.1730/M/2013 pertaining to the AY 2007-2008 in respect of Shri Samrathmal P. Mali. This appeal filed by the assessee on 4.3.2013 is against the order of the CIT (A)-40, Mumbai dated 4.1.2013 for the assessment year 2007-2008. In this appeal, assessee raised two grounds and they read as under: 1. The Ld CIT (A) has erred in law and on the facts and in the circumstances of the case in upholding the addition of ₹ 5,00,000/- to the total income of the appellant. 2. The Ld CIT (A) was not justified in ignoring my ground of appeal in levying interest u/s 234A, 234B and 234C of the Act. 3. Briefly stated relevant facts in this regard are that there a search action u/s 132 of the Act was conducted in the Mali Group of cases on 28.6.2006. However, there was no seizure of any kind in the hands of the assessee. However, assessee was signatory to the declaration u/s 132(4) of the Act amounting to ₹ 75 lakhs. The said disclosure was divided among five brothers [ie (i) Shankarlal P Mali; (ii) Samarthmal P. Mali; (iii) Chunnilal P. Mali; (iv) Bhagaram P. Mali and (v) Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT (A), against which the Revenue is not in appeal. Therefore, the addition made by the AO in the assessment is not based on any incriminating material or any legally sustainable grounds. In such circumstances, re-opening the non-abated assessment is not sustainable. Therefore, we take strength from the number of judgments by the various Hon‟ble High Courts as well as the orders of the Tribunal and the decision of the Tribunal in the case of M/s. Ideal Appliances Co. Pvt. Ltd vs. DCIT is one of the, wherein one of us (AM) is a party to the order. Considering the signif icance and for the sake of completeness of this order, relevant paras from the said Tri bu n al ‟s or de r i n th e c as e of M/ s . Ide al Ap pl iances Co. Pvt. Ltd (supra) are same are extracted as under:- 7. We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited decision of the Tribunal in the case of Shri Govind Agarwal v. ACIT being ITA No: 3389/Mum/2011 dated 10.01.2014 (supra); All Cargo Global Logistics v. Addl.CIT (supra); SKS Ispat and Power Limited vs. DCIT CC 45 (ITA 8746/M/12 and ITA 8747/M/12) (supra) as well as the judgment of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments and they are: A. [2013 36 taxmann.com 523 (Rajasthan) in the case of Jai Steel (India) vs. ACIT - From Held portion: .The requirement of assessment or reassessment under the said section has to be read in the context of sections 132 or 132A, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. ....... ....... Para 26 of the Judgment: The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition could be made only on the basis of incriminating material found during search. B. All Cargo Global Logistics Ltd. v. Deputy Commissioner of Incometax, Central Circle-44 [2012] 23 taxmann.com 103 (Mum.) (SB) Para 58 of SB decisions: Thus, question No.1 before us is answered as under : (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately ; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 14. Thus, in case of the completed assessments either u/s 143(1) or 143(3), the above extracts are uniform in advocating against making additions in routine manner in the assessments made u/s 153A of the Act when there is no incriminating material gathered in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party which cannot be used by the AO for making additions and such additions, if any, cannot be sustained legally. As such, we find that the AO has not used the said report of the DVO also for making additions of ₹ 31,33,007/-, the difference between accounted amount of ₹ 46,13,007/-, claimed as the amount spent on construction of house and acquisition of land as on 31.3.2002 minus Rs. ₹ 14.8 lakhs, the investment made on the land plots. AO made addition for assessee‟s failure to provide evidences / bills in support of the claim of expenditure on the construction. It the presumption of the AO that the plots since acquired only by July 2001, the assessee would not have spend ₹ 31,33,007/- by 31.3.2002. This is merely a presumption rather conclusion based on any evidences. Such additions are unsustainable in law in the assessments made u/s 153A r.w.s 143(3) of the Act. 17. Rajasthan High Court judgment in the case of Jai Steel (India) (supra), vide para 18, it is categorically mentioned that the requirement of assessment or reassessment under the said section (153A) has to be read in the context of sections 132 or 132A of the Act, inasmuch as, in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. 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 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 relevance or nexus with the seized material. Obviously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures, therefore, for the sake of adjudication and reference, the grounds raised in the appeal for the AY 2001-2002 are reproduced as under: 1. The Ld CIT (A) has erred in law and on the facts in the circumstances of the case in holding notice issued under section 153C of the Act as valid and consequential erred in law in holding the assessment made under section 153C of the Act as valid. Without prejudice to the above, 2. The Ld CIT (A) has erred in law and on the facts and in the circumstances of the case, in upholding the order of the AO making addition of ₹ 1 lakh by treating the gift received as income of the appellant ignoring all the details submitted to him relating to the gift‟ including the order passed in regular assessment by the predecessor AO. 3. The Ld CIT (A) has erred in not granting rebate of ₹ 506 u/s 88 for the life insurance premium of ₹ 2,530/- paid on the life of the assessee. 8. In all these AYs, the additions made by the end the fate of these additions in the first appellate proceedings are tabulated as under:- 9. Ld Counsel for the assessee brought our attention to each of the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Act. Drawing our attention to each of the assessment order and the additions made by the AO, Ld Counsel for the assessee demonstrated that there is no reference to the seized material in any of the additions made by the AO. In support of his contention that when there is finding or discussion about the any incriminating material seized during the search, the assessment order passed u/s 153A r.w.s 143(3) of the Act is not tenable in law, Ld Counsel for the assessee filed written submissions and also relied on following decisions viz., (i) CIT vs. Smt Shaila Agarwal, 346 ITR 130; (ii) All Cargo Global Logistics Ltd vs. DCIT [18 ITR 106] (Mum.) (SB); (iii) Spacewood Furnishers Pvt Ltd Ors vs. DGIT Ors. [340 ITR 393 (Bom)] (iv) Shri Govind Agarwal v. ACIT being ITA No: 3389/Mum/2011 dated 10.01.2014; (v) SKS Ispat and Power Limited vs. DCIT l (vi) Sinhgad Technical Education Society vs. ACIT [2011] 140 TTJ 233 and others. 10. On the other hand, Ld DR relied on the order of the AO and the CIT (A). Further, on the legal propositions, Ld DR has nothing to controvert except relying on the decisions of the Revenue Authorities. He further mentioned that the event of survey actio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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