TMI Blog2017 (12) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... al has been preferred by the assessee against the order of Ld. Principal Commissioner of Income Tax (Central) (hereinafter referred to as Ld.Pr.CIT), Gurgaon dated 3.11.2015 relating to assessment year 2007-08 passed under section 263 of the Income Tax Act, 1961 (in short the Act ). 2. The brief facts leading to the present appeal are that, pursuant to search conducted on the assessee, initially assessment order u/s 153A(1)(b) of the Act was passed on 31.1.2014 for the impugned assessment year. Thereafter on examining the records, the Ld.Pr.CIT found that the assessee had received two gifts of ₹ 10 lacs and ₹ 5 lacs during the year from M/s Ramesh Chandra Kapoor Sons (HUF), which according to him was taxable in the hands of the assessee as per the provisions of section 56 of the Act. He found that the Assessing Officer had failed to tax the same and therefore, there was a prima facie case of the assessment order being erroneous as well as prejudicial to the interest of the revenue. Accordingly, notice u/s 263 of the Act was issued to the assessee to show cause as to why the assessment should not be revised u/s 263 of the Act. In response the assessee stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son. 6. That section 6 of the Hindu Succession (Amendment) Act, 2005, express that devolution of interest in coparcenaries property, the daughter of coparcener shall a) by birth become a coparcener in her own right in the same manner as the son; b)have the same rights in the coparcenaries property as she would have had if she had been a son; (c) be subject to the same liabilities in respect of the said coparcenaries property as that of a son. 7. That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal. 4. As is evident from the grounds of appeal raised before us, the assessee has contested the order passed on both the legal issue of assumption of jurisdiction u/s 263 of the Act as well as on the merits of the case of making addition of the impugned gift in the hands of the assessee. 5. We shall first be dealing with the legal ground raised by the assessee in ground No.2. Before us Ld Counsel for the assessee first contended that the order passed by the Assessing Officer could not be held to be erroneous at all since the AO could not have made the impugned addition in the said order as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Pr.CIT vs. Shri. Mahesh Kumar Gupta in ITA 810/2016 CM Nos.43256 43257/2016 dt.22-11-2016 in this regard. 8. The Ld. DR, on the other hand stated that non inclusion of gift which was clearly taxable in the hands of the assessee u/s 56 of the Act, tantamonted to error having been crept in the order of the Assessing Officer which caused prejudice to the interest of the Revenue and the assumption of jurisdiction by the Ld.Pr.CIT was, therefore, valid. 9. Having heard both the parties we find merit in the contention of the Ld. counsel for assessee. Undisputedly, the assessment order which had been held to be erroneous by the Ld.Pr.CIT was passed in pursuance to search conducted, u/s 153A of the Act. Also it is not disputed that as on the date of initiation of search the assessment for the impugned year stood completed. The Assessing Officer, therefore, could have made addition in the order passed u/s 153A of the Act only on the basis of incriminating material found during the course of search. Various decisions of Hon'ble High Court and ITAT Chandigarh Bench have laid down the above proposition. The Hon ble Delhi High Court in the case of Cit vs Kabul Chawla (2016) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incriminating material unearthed during the course of search or requisition of documents or undisclosed income 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. 10. The same was reiterated in the following decisions also PRINCIPAL COMMISSIONER OF INCOME TAX vs. SAUMYA CONSTRUCTION P. LTD.(2016) 387 ITR 0529 (Guj) PRINCIPAL COMMISSIONER OF INCOME TAX vs. MS. LATA JAIN (2016) 384 ITR 0543 (Delhi) PRINCIPAL COMMISSIONER OF INCOME TAX vs. DEVANGI ALIAS RUPA (2017) 98 CCH 0051 Guj HC 11. Having said so we further find that the order of the Ld.Pr.CIT passed u/s 263 of the Act finds no mention of any incriminating material found during the course of search relating to impugned gifts. In fact, the Ld. counsel for assessee has demonstrated before us that it was during the course of assessment proceedings u/s 153A that a questionnaire was issued to the assessee dated 7.8.2013 asking the assessee to file details of any gift made or received during the impugned year, in response to which the assessee had filed the copy of capital account disclosing the impugned gifts r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med part of the original assessment. It is urged by the Revenue that CIT acted within his jurisdiction in concluding that the AO erroneously did not bring to tax the amount that had to be included under Section2(22)(e)facially itself, therefore, the CIT's order was justified, consequently, the ITAT should not have interfered with that determination. 4. There is no dispute that the search and seizure proceedings in this case did not result in anything, therefore, material either in the form of books of account or other documents related to the issue of deemed dividend under Section 2(22) of the Act. The amounts paid were in fact originally declared in the assessment returns of the assessee. The CIT, therefore, had opportunity to exercise his powers as it were on the basis of returns as filed originally and validly under Section 263 of the Act. 5. In the circumstances in the absence of any material disclosing that the issue of deemed dividend had been willfully derived or had been deemed or otherwise withheld from the assessment an addition under Section 153 A was warranted-based on the proposition taught by this Court in judgment dated 28.08.2015 in ITA 707/2014 titl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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