TMI Blog2017 (11) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 153A being not expected to be exercised routinely, should be exercised if the search reveals any incriminating material. Addition u/s. 68 relate to the cash deposited by the assessee in its bank accounts - Held that:- As these bank accounts were not found during the course of the search. Even the learned DR did not produce any material showing that these banks accounts were found during the course of search. In these circumstances, we are bound to delete the addition made u/s. 68 in each of the assessment years. Thus, ground no.2 of the assessee’s appeal in each of the assessment yeas is allowed and we delete the additions made u/s. 68 of ₹ 5,85,600/- ₹ 4,31,800/-, ₹ 12,52,200/- ₹ 11,43,000/- and ₹ 2,73,850/- respectively. Addition u/s. 69C towards investment in the residential flat - Held that:- We noted that in this case, the assessee has made an investment of ₹ 61 lacs as has been disclosed by the assessee’s husband in the statement recorded u/s. 132(4). Out of the said sum of ₹ 61 lacs, ₹ 5 lacs has been paid by the assessee and ₹ 20 lacs has been paid by the assessee’s husband, which has been shown in his I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits in the bank were duly explained by the Cash Book filed during the assessment proceedings. In ground no.2 for A.Y. 2004-05, 2005-06 and 2006-07, the figure ₹ 5,85,600/- be read as ₹ 4,31,800/-, ₹ 12,52,200/- and ₹ 11,43,000/- respectively. 3. In ITA No. 1458/Mum/2012 for A.Y. 2007-08, the assessee has taken the following effective ground of appeal: 1. On the facts and circumstances of the case, the Learned Assessing Officer erred in issuing Notice U/s. 153A of the Income Tax Act since the Assessee was not a search party and there was no warrant of authorization or Panchnama made on date of search i.e. 24/2/2009 25/2/2009. Consequently, the assessment made U/s. 143(3) read with Section 153A needs to be quashed since the same is without jurisdiction. 2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of ₹ 2,73,850/- as Cash Credit U/s. 68 ignoring the cash book filed wherein the cash deposits were substantiated by the previous cash withdrawals from the bank. 3. On the facts and circumstances of the case, Learned Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 12,72,020/- 2007-08 60,37,690/- Thus, making the following additions in each assessment year Assessment Year Income Added (Rs.) Under Section 2003-04 5,85,600/- 68 2004-05 4,31,800/- 68 2005-06 12,52,200/- 68 2006-07 11,43,000/- 68 2007-08 2,73,850/- 68 56,00,000/- 69C So far as the addition made in each of the assessment year u/s. 68 is concerned, they have been made on the basis of cash deposit made by the assessee in the following bank accounts Assessment Year 2003-04 2004-05 2005-06 2006-07 2007-08 Banks Malad 6370 4,03,000 1,09,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warrant in the name of the assessee on 24.02.2009, as submitted by the learned DR vide his letter dated 14.12.2015, the search warrant in the name of the assessee was issued on 06.03.2009 only for the purpose of searching locker no.82, Syndicate bank, which was not even in the name of the assessee. Our attention was also drawn towards Panchnama as Annexure A to letter of the CIT-DR, dated 14.12.2015, in this regard. It was also pointed out that the assessment u/s. 153A was made on the basis of the search taken place on 24.02.2009. It was further submitted that in each of the assessment years, the assessee has submitted the return before the search. Therefore, the assessment order u/s. 153A is invalid. 6. The learned DR, on the other hand, vehemently contended that in all these assessment years, the assessment was completed u/s. 143(3) r.w.s. 153A of the I.T.Act. He relied on the decision of Hon ble Kerala High Court in the case of CIT vs. M/s. St. Francis Clay Decor Tiles [385 ITR 624], in which it was held that u/s. 153A the phraseology incriminating was any material which was unearthed during search operations or any statement made during the course of search by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search. The returns so filed were also processed u/s. 143(1) prior to the date of the search. Since the assessment has already been completed for each of the assessment year by processing the return u/s. 143(1), therefore these assessments were not pending and were not abated. We have also gone through case laws as relied upon by both the parties. We noted that the Hon ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). approved the decision of the Special Bench of this Tribunal in the case of All Cargo Global Logistics Ltd vs. DCIT 137 ITD 287 under various paragraph of its order on the question of whether any addition can be made while completing assessment u/s. 153A on the basis of the material which was not found during the course of search, where assessment have not been unabated. Head notes of the order reported read as under: A bare perusal of section 153A would indicate as to how a nonobstante clause has been inserted and with a defined intent. Where search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31-5- 2003, that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced. [Para 24] The Division Bench outlined the ambit and scope of the powers conferred by section 153A and observed that on a plain reading of section 153A, it becomes clear that on initiation of the proceedings under section 153 A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under section 132 or making requisition under section 132A stand abated and not the assessments/reassessments already finalised for those assessment years covered under section 153A. By a Circular No. 8 of 2003, dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under section 153A, the assessments/reassessments finalised for the assessment years covered under section 153A stand abated cannot be acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A , then, each of the above conclusions rendered by the Division Bench would bind the instant Court.[Para 29] Even otherwise, Court is in agreement with the Division Bench when it observes as above with regard to the ambit and scope of the powers conferred under section 153A '.Even if the exercise of power under section 153 A is permissible still the provision cannot be read in the manner suggested by the revenue. Not only the finalised N assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31-3- 2003. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words 'search' and 'requisition' appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t he course of search but not produced in the course of original assessment, and; (ii) undisclosed income or property discovered in the course of search . In view of this decision, no doubt, the addition in the case of the assessee can be made by the Assessing Officer only on the basis of incriminating material found during the course of search. No doubt, before us learned DR has placed reliance on the decision of Hon ble Delhi High Court in the case of Filatex India Ltd vs CIT (supra), as well as Judgment of Hon ble Karnataka High Court in the case of Canara Housing Development Company Ltd. (supra), in which it was held by the respective High Court held that the assessing authority shall determine the total income of the assessee takinginto consideration the materials which was the subject-matter of earlier return and the undisclosed income unearthed during search and also any other income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken the statement of the assessee s husband. . The statement under these circumstances given by husband of the assessee, in our opinion, will be binding on the assessee. 11. Now the question before us arise whether the statement so recorded will be regarded as incriminating material for the purpose of making addition in unabated assessment. The learned DR in this regard relied on the decision of Hon ble Kerala High Court in the case of CIT vs. M/s. St. Francis Clay Decor Tiles (supra). We noted, in this decision, the Hon ble High Court defined the phraseology incriminating and took the view that incriminating will mean any material unearthed during search operations or any statement made during the course of search by the assessee will be a valuable piece of evidence in order to invoke section 153A of the Act. No contrary decision was brought to our knowledge by the learned AR but as a alternative, he submitted that the assessee has paid a sum of ₹ 5 lacs through cheque out of her bank account while a sum of ₹ 20 lacs was paid by her husband Shri Mohammed Farooq and the said amount has duly been shown by him in his IT Return, a copy of which was filed before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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