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DCIT, Central Circle-29, New Delhi Versus Uppal Chadha High-Tech Developers (P.) Ltd.

2017 (9) TMI 967 - ITAT DELHI

Assessment u/s 153A - proof of undisclosed income discovered from seized/incriminating material - Held that:- In the instant case the learned CIT-(A) has given the finding that as on the date of search no assessment was pending in both the assessment years involved. The learned CIT-(A) has also given the finding that no incriminating material was found or seized in relation to the assessment years involved and the Assessing Officer has not relied on the incriminating or seized material for makin .....

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appeals of Revenue are directed against a common order dated 22/05/2015 passed by the Commissioner of Income Tax (Appeals)-30, New Delhi [in short the CIT-(A) ] in relation to assessment years 2008-09 and 2009-10 respectively. Being identical issues involved in both the appeals, same were heard together and disposed off by way of this consolidated order. The Grounds of appeal in both the assessment years being identical, we are reproducing the grounds of appeal raised in ITA No. 5002/Del/2015 fo .....

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incriminating material. 3. On the facts and in the circumstances of the case, the Ld. CIT (A) has in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153A r.w.s. 153C of the Act. 4. On the facts and in the circumstances of the case, the Ld. CIT (A) has in law and on facts in arriving at the conclusion that the words total income as used in section 153A would only mean income unearthed during search when the decision of the Hon ble High Court .....

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008-09 on 29/09/2008 declaring a loss of ₹ 16,54,638/-which was processed under section 143(1) of the Incometax Act, 1961 (in short the Act) on 15/07/2009. For the assessment year 2009-10 the assessee filed return of income on 26/09/2009 declaring a loss of ₹ 3,21,06,357/- and which was processed under section 143(1) of the Act on 26/09/2009. Subsequently, a search and seizure action under section 132 of the Act was carried out at the premises of Sh. Gurdeep Singh Chadha ( Ponty Chad .....

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on 153A read with section 153C of the Act for both the assessment years 2008-09 and 2009-10. In response, the assessee filed return of income under section 153A of the Act on 13/12/2013 for both the assessment years declaring loss of ₹ 16,54,638/- and loss of ₹ 3,21,06,357/- respectively i.e. same income as was declared in original return of income. In assessment proceedings under section 153A of the Act for the assessment years 2008-09 and 2009-10, the Assessing Officer disallowed t .....

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search with regard to the addition made. The Ld. CIT-(A) after considering the submission of the assessee allowed the appeals for both the assessment years, in favour of the assessee on the ground of jurisdiction, with finding as under: I have considered the assessment order, written submission and oral arguments of Ld. AR. I have perused the assessment made u/s 153C read with section 153A for all assessment year. There is no addition on the basis of any evidence or incriminating material found .....

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n nature for assessment of income. Now the issue is whether in absence of any incriminating seized documents for any assessment year, addition can be made u/s 153C read with section 153A in respect of closed assessment. In respect of all assessment years either the assessments were completed u/s 143(3) or time to issue notice u/s 143(2) have expired. Therefore, these assessments are closed assessment. Ld. AR relied upon the decision of Jai Steel India Vs. ACIT (259 CTR 281) Raj. & Singhad Te .....

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ed document is an essential factor for the proceedings u/s 153C. Ld. AR has further relied upon the decision of S.B. of ITAT, Mumbai vide order dt.06.07.2012 in the case of All Cargo Logistics Ltd. vs. DCIT, where it has been held that assessment u/s 153A can be made on the basis of incriminating material found during the search. Ld.AR argued that the assessment u/s 153C is based on the provisions of section 153A therefore; the decision will be squarely applicable for assessment u/s 153C also. L .....

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153C Ld. AR relied upon the decision of SSP Aviation Ltd. Vs. DCIT (2012) 346 ITR 0177 (Del), LMJ International Ltd. (2008) 22 SOT 315 Kol, MGF Automobiles Ltd. Vs. ACIT CC-7, New Delhi (ITA Nos. 4212 & 4213/Del/2011, ITAT E Bench, New Delhi. Ld. AR further argued that in the amendment in Budget-2014 u/s 153C required that the paper on the basis of which satisfaction is recorded must bearing on the determination of income. I have considered entire judicial pronouncements relied by Ld. AR. As .....

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grounds of appeals are allowed for all Assessment Years. 2.1 Aggrieved, the Revenue is in appeal, raising the grounds as reproduced above. 3. In the grounds raised, the Revenue is aggrieved with the conclusion that the words total income as used in section 153A of the Act for only mean undisclosed income discovered from seized/incriminating material. 4. The Ld. CIT(DR) placed reliance on following decisions: 1. SSP Aviation Ltd Vs DCIT, Delhi High Court, 2016, 20 taxmann.com 214 In view of provi .....

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ent found during search was copy of a ledger of books of account of assessee company which evidenced certain cheque payments as well as cash payments to a company by assessee, there was prima facie material to suggest that satisfaction as per section 153C was duly recorded and thus, notice issued to file return to assessee was justified. 3. PCIT Vs Super Malls Pvt Ltd, Delhi High Court, 2016, ITA 449/2016 Satisfaction note recorded u/s 153C in respect of the assessee, being the third party, coul .....

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nn.com 290 (SC). He further submitted that no addition could have been made in completed assessments in absence of any incriminating material as held by the Hon ble Delhi High Court in the case of PCIT Vs. Metta Gutgutia in ITA No. 306/2017, wherein the Hon ble High Court has upheld the finding in the case of CIT versus Kabul Chawla (2016) 380 ITR 573 (Del). 6. We have heard the rival submissions and perused the relevant material on record. In the instant case the learned CIT-(A) has given the f .....

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Court in the case of Meeta Gutgutia (supra) has observed as under : 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Principal Commissioner of Income Tax v. Saumya Construction Pvt. Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of .....

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16 as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the .....

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t was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to .....

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and revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of asse .....

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that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclo .....

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se no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated, in case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the searc .....

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d, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessm .....

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t case stands concluded by the decision of this court In the case of CIT v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 62. Subsequently, in Principal Com .....

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