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TMI Blog2017 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. For this assessee has raised following ground No.1: - "The Learned CIT(A) has erred in law and on facts and in the circumstances, in upholding the order of the AO making addition Rs.1,00,000/- 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. Briefly stated facts are that a search and seizure operation u/s 132 of the Act was conducted on 28-06-2006 on Mali Group of cases. During the course of search, the AO noticed from the capital account filed by the assessee that he has credited a gift of Rs. 1,00,000/- received from one Shri Sanjay Jethava. As the assessee could not explain the source of gift or could not produce the donner, the AO treated the gift as unexplained investment u/s 69A of the Act. Aggrieved assessee preferred the appeal before CIT(A), who also confirm the action of the AO for the reason that assessee failed to discharge his onus in this regard and could not produce any evidence. Aggrieved, now assessee is in second appeal before the Tribunal. 4. Before us the learned Counsel for the assessee Shri. Girish Dave ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al for those assessment years covered u/s. 153A of the Act. Hon'ble High Court also discussed the CBDT Circular No. 8 of 2003 dated 18.09.2003 reported in 263 ITR (st.) 61 at page 107 wherein CBDT has clarified that on initiation of proceedings u/s. 153A of the Act the proceedings pending in appeal, revision or rectification proceedings against final assessment shall not abate. It is only because the final assessments do not abate the appeal, revision or rectification pending against final assessments would not abate. Therefore, Hon'ble High Court rejected the arguments of the Revenue that on initiation of proceedings u/s. 153A of the Act, the reassessment final for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO while passing independent assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under subsection (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (Supra). Respectfully, following the same and in the given said of facts, we are of the view that this gift is a genuine gift and addition should not have been made. Accordingly, we are deleted the addition and allow this issue of assessee's appeal. 7. The next issue in ITA No.5781/Mum/2015 for the A.Y. 2004-05 is as regards to the order of CIT(A) confirming the order of the AO in excluding the income declared from assessee's firm M/s Nimbeshwar Creation amounting to Rs. 15,26,938/- and consequently confirmed the addition of Rs. 15,000,00/- being unexplained investment/expenditure in renovation /purchasing of Flat No.601,6th Floor, A-Wing, Suparshava Apts., opp. Orbit Towers, Raamchandra Sudkoji Sawant Chowk, Elphistone Road, Mumbai. For this assessee has raised following ground No.2 and 3: - "2. The learned CIT(A) has erred in law and on facts and in the circumstances, in upholding the order of the AO in ignoring the source of investment from M/s Nimbeshwar cration of Rs. 15,26,938/- towards purchase of property. 3. The learned CIT(A) has erred in law and on facts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creation earned for the A.Y. 2004-05 and declared amounting to Rs. 15,28,938/- out of unaccounted profit of Rs. 20,26,938/-, the balance of Rs. 5,00,000/- was declared in the A.Y. 2005-06 pertains to the F.Y. 2004-05. But the AO as well as the CIT(A) was not convinced and added the amount of Rs. 15,00,000 being unexplained investment in the house property and taxed this unaccounted profit of Rs. 15,26,938/- in A.Y. 2005-06 instead of the A.Y. 2004-05. 9. We have gone through the seized paper Annexure A9 consisting of pages 123 and also Annexure A3 wherein, the transactions of unaccounted profit of benami concern M/s Nimbeshwar Creation is appearing. From reading these papers it is clear that the part of the profit pertains to A.Y. 2004-05 and part pertains to A.Y. 2005-06. For reaching this conclusion the reason is that the almost profit to the extent of Rs. 14,00,000/- is earned in A.Y. 2004-05 because the year mentioned is 2004 while distributing the profit as per the capital account seized. Anyhow, the assessee has earned the total profit of Rs. 30,25,282/- in a benami firm M/s Nimbeshwar Creation and admittedly, the assessee's share to the extent of 67% and the profit accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances, in confirming an addition of Rs. 2,42,882/- on unaccounted sales of Rs.23,04,730/- by application of G.P. Rate instead of Net profit rate. As Tax is to be calculated on net profit and not on gross profit. 2. The learned CIT(A) has erred in law and on facts and in the circumstances, in making further addition of Rs. 54,080/- as unexplained circumstances, in making further addition of Rs. 54,080/- as unexplained investment in stock u/s 69A as stock worth Rs. 6,00,000/- offered by the assessee was sufficient against the undisclosed sales of Rs. 23,06,730/-." 13. At the outset, the learned Counsel for the assessee stated that the complete details in respect of the direct and indirect expenses are appearing in the seized records lying with the department and CIT(A) has not examined this issue while adjudicating the issue of application of profit rate. The learned Counsel for the assessee sated that this is a limited issue and this can be remitted back to the file of the AO for verification whether there are direct or indirect expenses available in the seized records and if direct or indirect expenses are available this should be allowed. On query for the Benc ..... 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