TMI Blog2017 (6) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... T.A.No.513 & 514/Vizag/2013 And I.T.A.No.524/Vizag/2013 - - - Dated:- 9-6-2017 - V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member Appellant by : Shri G.V.N. Hari, AR Respondent by : Shri T.S.N. Murthy, DR ORDER PER Shri G. Manjunatha, Accountant Member: These cross appeals filed by the assessee, as well as the revenue are directed against separate but identical orders of the CIT(A) Guntur dated 28.3.2013 for the assessment years 2004-05 2005-06. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience. 2. The Ld. A.R. for the assessee, at the time of hearing submitted that there is a delay of 1 day in filing these appeals before the ITAT. The A.R. further submitted that the delay in filing appeals is due to some transport problem and the person could reach the Tribunal only on 3.7.2013. In this regard, assessee filed petition for condonation of delay along with affidavit. Therefore, the delay in filing appeal may be condoned. On the other hand, the Ld. D.R. did not oppose condonation petition filed by the assessee. 3. Havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. Aggrieved by the assessment orders, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has challenged the additions made by the A.O. towards deemed dividend u/s 2(22)(e) of the Act, on the ground that the assessee had substantial share application money, even after allotment of shares in the subsequent year, in the books of accounts and he had withdrawn money out of share application money standing to the credit of his account, therefore, the A.O. was erred in making additions towards deemed dividend u/s 2(22)(e) of the Act. The CIT(A) after considering the explanations of the assessee, upheld the action of the A.O. in bringing to tax amount withdrawn by the assessee u/s 2(22)(e) of the Act. However, allowed partial relief and directed the A.O. to recompute additions made towards deemed dividend u/s 2(22)(e) of the Act. Aggrieved by the CIT(A) order, the assessee as well as the revenue are in appeal before us. 6. The assessee has filed common grounds for both the assessment years. From these grounds of appeal, the assessee has challenged the additions made by the A.O. towards deemed dividend u/s 2(22)(e) of the Act. The assessee also file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal may kindly be admitted and appropriate orders may kindly be passed in the interest of rendering substations justice. On the facts and in the circumstances of the case, whether the addition to this extent of ₹ 1,75,000 made by the assessing officer towards deemed dividend and sustained by the learned CIT(A) is beyond the scope of additions that can be made in an assessment u/s 143(3) r.w.s. 153A of the Income Tax Act, 1961. 7. During the course of hearing, the Ld. A.R. for the assessee submitted that all the material facts relevant to the legal issue are already on record and the issue as to scope of additions that can be made in an assessment u/s 143(3) r.w.s. 153A of the Act, is purely a legal issue which can be raised at any time before the Tribunal. Therefore, requested to admit additional ground of appeal and pass such orders as may be appropriate in the interest of rendering substantial justice. The Ld. D.R., on the other hand strongly opposed admission of additional grounds raised by the assessee. 8. Having heard both the sides and considered material on record, we find that facts which are necessary for adjudication of legal issue raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Development Company Vs. DCIT in ITA No.38 of 2014 dated 25.7.2014. 11. 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 right in making additions without any seized materials in respect of assessment years for which the assessment proceedings have been concluded as on the date of search. The Ld. A.R. for the assessee, submitted that the issue has been already considered by the coordinate bench of Visakhapatnam ITAT in the case of Sri Hari Prasad Bhararia Vs. DCIT in ITA Nos.435 to 441/Vizag/2014, wherein it has been observed that the A.O. has no jurisdiction to make additions in the absence of any seized materials in the assessments made u/s 143(3) r.w.s. 153A of the Act, for the assessment years which are concluded and no proceedings are pending as on the date of search. The relevant portion of the order is extracted below: 12. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no power to re-assess the income of those completed assessment years. We find force in the arguments of the assessee, for the reason that the coordinate bench of this Tribunal in ITA Nos.300 to 305/Vizag/2012, in case of L. Suryakantham Vs. ACIT, has considered similar issue and held that the A.O. had no jurisdiction to make additions u/s 153A of the Act, for the assessments which are not pending as on the date of search and also the time limit for issue of notice u/s 143(2) of the Act has been expired. The relevant portion of the order is extracted below: 19. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 of the Act. During the course of search, incriminating documents found reveals that the assessee has inflated labour charges for the assessment years 2008-09 2009- 10. Based on the documents found during search, the assessee has accepted that he has inflated 10% labour charges and which is common in this line of business. Consequent to search action u/s 132 of the Act, the assessee case has been centralized and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or pending as on the date of search. Therefore, the A.O. has reassessed the income of six assessment years and recomputed the profits afresh after considering the relevant facts available on record. It was the contention of the assessee that the A.O. cannot disturb the completed assessments unless there was a seized material. The assessee further contended that where assessments are not pending as on the date of search and time limit for issue of notices u/s 143(2) of the Act has been expired, irrespective of the fact that those assessments have been completed u/s 143(1) or 143(3) of the Act, then the A.O. has no power to reassess the income of those completed assessment years. 21. We find force in the arguments of the assessee for the reason that the issue no longer res integra, as the issue has been already decided by the ITAT, special bench and held that where the assessments are not pending as on the date of search, the A.O. losses jurisdiction u/s 153A of the Act to reassess the income of those completed assessments. Though the provisions of section 153A of the Act does not specify abated and completed assessments, the natural meaning assigned to it should be given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately. 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. 24. The assessee relied upon, A.P. High Court decision in the case of CIT Vs. M/s. AMR India Ltd. in ITTA No.354 of 2014 dated 12.6.2014. The Hon ble High Court held that the A.O. has no jurisdiction to re-agitate the assessments which were already completed and subsiding. The relevant portion is extracted below: We have heard Sri J.V. Prasad, learned counsel for the appellant, and gone through the impugned judgement and order of the learned Tribunal. It appears that the learned Tribunal found on fact that after completion of assessment proceedings and after reaching finality thereon, the Assessing Officer tried to reagitate the assessments. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I1on'ble Andhra Pradesh High Court On the contrary, the above said three decisions of the jurisdictional High Court comes to the support of the assessee's contentions with regard to the legal proposition agitated before us, besides the decisions rendered by various other High Courts. Accordingly, we are of the view that the scope of enquiry in the case of unabated assessments, i.e., the assessment years in which proceedings are not pending, is that the undisclosed income should be ascertained only on the basis of materials found during the course of search. If no incriminating material showing any undisclosed income was found in the case of concluded proceedings, then the question of making any addition does not arise. in that case, the assessing officer should complete the assessment of those years by determining the very same total income that was assessed in the earlier proceeding. 24. In view of the above, We are unable to agree with the contentions of Ld Standing Counsel that the assessing officer would get unfettered powers in the case of unabated assessments, once they were reopened us 153A of the Act. In our view, in the case of unabated assessments, the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessments which are not pending as on the date of search. The assessment for the assessment years 2005-06 to 2009-10 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 2005- 06 to 2009-10 in the absence of any incriminating materials. The CIT(A) has rightly deleted the additions. We do not see any reason to interfere with the order of CIT(A). Hence, we inclined to uphold CIT(A) order and direct the A.O. to delete the additions made towards deemed dividend for the assessment year 2005-06 to 2009-10. 12. In this case, search was taken place on 24.7.2008. As on the date of search, the assessments for the assessment years 2004-05 2005-06 are already concluded and there is no pending proceeding for those assessment years. The time limit for issue of notice u/s 143(2) of the Act, for the assessment years 2004-05 2005-06 has been expired. The A.O. made additions towards deemed dividend u/s 2(22)(e) of the Act without any incriminating materials and also based on the books of accounts and financial statements, which were already ..... 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