TMI Blog2017 (9) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... was less than ₹ 10 lakhs and the fact that the assessee has constructed a shop in the Sri Ram Residency is an undisputed fact. The assessee has not furnished details of the expenditure incurred for construction of the shop. Therefore, in the absence of any evidence to show that the value of the asset was less than ₹ 10 lakhs, we do not find any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. This ground of appeal is dismissed. - Decided against assessee. Addition towards unexplained creditors - Held that:- The issue dealt with by the AO in the assessment order u/s.153A of the Act, could not and ought not to have been examined by the AO in the assessment proceedings u/s.153A of the Act as the said issue stood concluded with the assessee's return of income being accepted prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section. Such assessment did not abate on the date of search. In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings u/s.153A of the Act has to be confined only to material found in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. When assessee has given a submission that the gold and silver articles were belonging to his father and sister, the same required to brought to tax or examine the sources in the hands of his sister and father but not in the hands of the assessee. Accordingly, the addition made by the A.O. in the hands of the assessee cannot be sustained and we set aside the order of lower authorities and delete the addition made by the A.O. The appeal of the assessee is allowed. - I.T.A. Nos. 424, 425 & 426/Vizag/2013 - - - Dated:- 31-7-2017 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member Appellant by :Shri G.V.N. Hari, AR Respondent by : Shri R. Govinda Rajan, DR ORDER Per D. S. Sunder Singh, Accountant Member These appeals are filed by the assessee against order of the Commissioner of Appeals-I {CIT(A)-I}, Hyderabad vide ITA Nos.0496 to 0501/CC-1, Vizag/CIT(A)-I/10-11 dated 28.2.2013 for the assessment years 2005-06, 2007-08 2009-10. Since, the facts are identical and the issues are common, they are clubbed, heard together and disposed-offby way of this common order for the sake of convenience. ITA No.424/Vizag/2013 A.Y. 2005-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as on merit. Not being successful before the CIT(A), the assessee is in appeal before us. 6. During the appeal hearing, the assessee argued that the loose document found was on the letter head of his father and it is not pertaining to the assessee, hence there is no incriminating material found in this case for making addition as unexplained investment. Further, the Ld. A.R. also argued that the assessee is following the mercantile system of accounting and as per the system of accounting followed by the assessee, the cost or market value of work in progress or the stock in trade whichever is lower in required to be accounted in the books of accounts. In the assessee s case, the shop was constructed with a nominal expenditure and no approval was accorded by the municipal authorities and the shop is liable to be demolished by the municipal authorities at any point of time and the assessee was under the impression that the value of the stock was nil, hence, it was not declared the in the work in progress of the assessee. Therefore, the Ld. A.R. was of the view that both on merits and on technical grounds, there is no case for making the addition which requires to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raju at ₹ 10 lakhs. The document was found in the residential premises of the assessee. Similarly, the assessee has constructed a shop in Sri Ram Residency which fact has been accepted by the assessee. The asset (shop) found in Sri Ram Residency and the document found during the course of search indicating the value of the shop constitutes the incriminating material and therefore, we hold that the A.O. has rightly initiated the proceedings u/s 153A of the Act. Accordingly, the argument of the assessee that there is no incriminating material, cannot hold waters and the same is rejected. The Next argument of the Ld A.R is the assessee is following the mercantile system of accounting and the value of asset at cost or market price whichever is lower required to be adopted for the purpose valuing closing stock/work in progress. In this case, the asset is said to be constructed with a nominal or negligible amount without the approval of the municipal authorities. Municipal authorities can demolish shop at any time, since it was constructed without authorization. Therefore, according to the Ld. A.R., the value of the asset was nil, and rightly adopted by the assessee in the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the instant case, as far as the unsecured credit of ₹ 2,50,000/- is concerned, there is no material found during the course of search. Therefore, according to the Ld. A.R., there is no case for making any addition u/s 153BA r.w.s. 143(3) of the Act. The Ld. A.R. relied on the orders of this Tribunal in the case of Y.V. Anjaneyulu Vs. DCIT, Central Circle, Vijayawada in ITA Nos.513 514/Vizag/2013. On the other hand, the Ld. D.R. relied on the orders of the lower authorities. 10. We have heard both the parties and perused the materials available on record. In this case, search was conducted on 22.8.2008 and the assessment under the consideration is the A.Y. 2005-06. Time limit for issue of notice u/s 143(2) of the Act is expired on 31.3.2007. Since the period of limitation for issue of notice u/s 143(2) of the Act has been expired, the assessment deemed to have been completed and reached finality. As per the judicial precedents and the ruling of this Tribunal in the case law cited (supra), the coordinate bench held that where the assessment have been reached finality cannot be tinkered with unless there was a seized document indicating undisclosed income or the asset. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings has been abated and that in respect of assessment years for which the assessment had already been completed, no additions can be made u/s 153A of the Act unless there was incriminating material found during the course of search. 13. The A.O. has passed assessment orders u/s 153A of the Act, for all the six assessment years, immediately preceding the year in which the 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 assessment on the powers of the A.O. for making assessment/re-assessment and the A.O. is not required to confine his assessments on the materials found during the course of search as was the case in the old procedure of block assessments. It is the contention of the assessee that the A.O. cannot disturb the completed assessment 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 notice 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 years were complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 as well as jurisdiction c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersies 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 the I1on'ble Andhra Pradesh High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 14. In this view of the matter and considering facts and circumstances of this case and also respectfully following the decision of co-ordinate bench of Visakhapatnam, in the case of L. Suryakantham Vs. ACIT, in ITA Nos.300 to 305/Vizag/2012, we are of the view that the A.O. has made reassessment u/s 153A/153C of the Act, on the basis of information/material available in the return of income, without referring to any seized material. Therefore, following the special bench decision (supra) we hold that the A.O. had no jurisdiction to make additions u/s 153A of the Act, for the assessments which are not pending a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court decision in the case of Anil Kumar Bhatia expressed a view that in respect of assessments completed prior to the date of search the scope of proceedings u/s 153A of the Act has to be confined only to the material found in the course of search. For the sake of convenience, we extract the relevant para-25 26 of the cited order. 25. We therefore hold that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search. The next aspect to be considered is as to when returns of income filed u/s.139 of the Act are shown to have been accepted without an intimation u/s.143(1) of the Act or without any notice issued u/s.143(2) of the Act within the time limit contemplated by the proviso thereto, can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act. Section 153A of the Act, uses the expressing pending assessment or reassessment . When a return is filed and when neither an acknowledgement or intimation u/s.143(1)of the Act is issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 12. Respectfully following the decision of this coordinate bench in the case cited (supra) and the decision of Hon ble ITAT Kolkata bench, we hold that the addition of ₹ 2,50,000/- is squarely covered by the above case laws in favour of the assessee and the same is deleted. The appeal of the assessee is allowed on this ground. 13. In the result, appeal filed by the assessee for the assessment year 2005-06 in ITA No.424/Vizag/2013 is partly allowed. ITA 425/Vizag/2013 A.Y. 2007-08: 14. All grounds of appeal are related to the addition of ₹ 15 lakhs towards the unexplained investments. During the course of assessment proceedings, the assessing officer made the addition of ₹ 35 lakhs towards unexplained creditors, since the assessee has not produced the details and confirmations from the creditors. Out of addition made by the A.O. of ₹ 35 lakhs, a sum of ₹ 20 lakhs was deleted by the CIT(A) relating to M. Raju P.R. Srinivasa Rao and the amount of ₹ 5 lakhs in the case of D.V. Subba Raju and ₹ 10 lakhs in the case of R. Purushottam was confirmed by the CIT(A). Therefore, the assessee is in appeal before us. The Ld. A.R. argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the creditors since the credits were introduced in the books of accounts in the year under consideration. The assessee failed to establish that the amount outstanding was in fact advances and got adjusted against the sale of flats. In nutshell, the assessee failed to offer any explanation with regard to the credits introduced during the financial year. Therefore, the A.O. rightly brought the unexplained credits u/s 68 of the Act, which the CIT(A) has upheld the order of the A.O. and we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld. The appeal of the assessee is dismissed. ITA No.426/Vizag/2013 A.Y. 2009-10: 18. All the grounds of appeal are related to the addition of ₹ 7,88,000/- assessed against unexplained investment and jewellery. During the course of search, the investigation wing found the gold and jewellery weighing around 1044 gms and the Silver articles weighing 5840 gms in the premises of the assessee. At the time of search, the assessee explained that 430 gms. of gold was belonging to him and the balance of gold was belonging to his father and sister. Accordingly, the value of 473 gms. was admitted by the assessee in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 20. On the other hand, the Ld. D.R. relied on the orders of the lower authorities. 21. We have heard both the parties and perused the materials available on record. During the course of search conducted in the residence of the assessee, gold weighing around 1044 gms. and silver articles 5840 gms. was found from the lockers. The assessee has stated that there were no lockers in his name. This is evident from question No.6 of the statement recorded from the assessee on 22.8.2008 and in response to question No.10, the assessee has reiterated that lockers were belonging to his father and his sister. For ready reference, we reproduce the question No.10 and answer of the statement dated 22.8.2008 from page 28 of paper book. Q.10. During the course of S S operations, we opened two lockers at HDFC Bank, Dwarakanagar and SBI, Dondaparthi, wherein we found jewellery articles of gold silver. Please explain the sources and also state whether you have filed any wealth tax returns. A. Actually these two lockers belong to my father and my sister. However, my father will explain all the sources for acquisition of gold and silver articles. The detailed explanation wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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