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JCIT, Central Circle-25, New Delhi Versus Allied Perfumers Pvt. Ltd. And Vice-Versa

2017 (12) TMI 662 - ITAT DELHI

Scope of assessment u/s 153C - addition u/s 68 - Held that:- Additions made by the AO are beyond the scope of section 153C because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any inc .....

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tions against the respective Orders of the Ld. CIT(A)-I, New Delhi relevant to assessment years 2001-02 & 2002-03 respectively. Since the issues involved in these appeals and cross objections are common, hence, the appeals and cross objections were heard together and are being disposed of by this common order for the sake of brevity. 2. The grounds raised by the Revenue in ITA No. 3171/Del/2011 (2001-2002) read as under:- 1. The order of the Ld. CIT(A) is not correct in law and facts. 2. Whe .....

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rounds of appeal before or during the course of hearing of appeal. 3. In other appeal of the Revenue, the grounds are identical, except the difference in the figures, hence, the grounds of other appeals are not reproduced for the sake of brevity. 4. The grounds raised by the Assessee in Cross Objection 274/Del/2011 in ITA No. 3171/Del/2011 (2001-2002) read as under:- 1. Whether the assessment framed under section 153A/ 143(3) of the Income Tax Act, 1961 is legal, when consequent upon action take .....

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objection. 5. In other Cross Objection of the Assessee, the grounds are exactly identical, hence, the grounds of other Cross Objection are not reproduced for the sake of brevity. 6. The brief facts of the case are that assessee filed original return of income declaring an income of ₹ 36,27,660/- on 23.11.2006. The same was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) at the returned income. In this case a search and seizure operation was conducted u/s .....

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s. 153C of the Act was issued on 29.9.2008 to the assessee requiring it to file the return of income in the prescribed form. In response thereto, the assessee company vide letter dated 07.10.2009 submitted that the previous return declaring income at ₹ 36,27,660/- filed on 28.11.2003 may kindly be deemed as the return of income submitted in response to notice u/s. 153C of the Act. Notice u/s. 143(2) dated 15.9.2009 was issued to the assesse fixing the case for 25.9.2009. In response to the .....

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1 has partly allowed the appeal of the asseseee. 6. Aggrieved with the order of the Ld. CIT(A), Revenue is in appeal and assessee is in Cross Objection before the Tribunal. 7. At the threshold, Ld. Counsel of the assessee has stated that the Cross Objection filed by the assessee has involved the legal issue and therefore, the same may be first decided. Hence, we first deal with the Assessee s Cross Objection and adjudicate upon the legal issue. 8. Ld. Counsel of the assessee further draw our att .....

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f the Hon ble Delhi High Court passed in the case Commissioner of Income Tax vs. Kabul Chawla reported (2016) 380 ITR 573 (Del.) and in the case of Principal Commissioner of Income Tax (Central) -2 vs. Index Securities (P) Ltd. wherein the Hon ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions are not sustainable in the eyes of law. He further stated in the present case the AO has made the additi .....

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quashed. 9. On the other hand, Ld. DR relied upon the order of the authorities below and stated that the provision of section 153C has rightly been applied in the case of the assessee on the material available with them. He relied upon the following judgments of the Hon ble High Courts and hence, requested that the appeal of the Assessee may be dismissed. - Pr. CIT v Instronics Ltd.(2017) 82 taxmann.com 357 (Delhi) - Ganpati Fincap Services (P) Ltd. v CIT (2017) 82 taxmann.com 408 (Delhi). - CIT .....

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rities and the cases referred by the Ld. Counsel of the Assessee as well as by the Ld. CIT(DR). We find that the additions made by the AO are beyond the scope of section 153C of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during .....

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ble Supreme Court of India in the case of Commissioner of Income Tax-III, Pune vs. Sinhgad Technical Educational Society reported in (2017) 84 taxmann.com 290 (SC) as well as the decisions of the Hon ble Delhi High Court passed in the case Commissioner of Income Tax vs. Kabul Chawla reported (2016) 380 ITR 573 (Del.) and in the case of Principal Commissioner of Income Tax (Central) -2 vs. Index Securities (P) Ltd. - The Hon ble Supreme Court of India in the case of Commissioner of Income Tax-III .....

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esident of Assessee, an educational institution, indicating capitation fees received by various institutions run by assessee did not establish co-relation documentwise with assessment years in question, notice issued under section 153C had rightly been quashed and set aside - Held, yes (in favour of assessee). - The Hon ble Delhi High Court in the case of Commissioner of Income Tax vs. Kabul Chawla (2016) 380 ITR 573 (Del.) has held as under:- 37. On a conspectus of Section 153A(1) of the Act, r .....

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pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect .....

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709 and 713 of 2014 of assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdi .....

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ncome or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005- 06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. - The Hon ble Delhi High Court in the case of Principal Commissioner of Inco .....

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