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TMI Blog2017 (12) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 the impugned gift was not taxable and relied upon the judgment of the Rajkot Bench of the I.T.A.T. in the case of Vineetkumar Raghavjibhai, Bhalodia Vs. ITO, 140 TTJ 58 in this regard. The Ld.Pr.CIT rejected the contention of the assessee, distinguishing the case law relied upon by the assessee and holding the gift to be taxable in the hands of the assessee. The Ld.Pr.CIT thereafter directed the Assessing Officer to enhance the income of the assessee by Rs. 15 lacs. 3. Aggrieved by the same, the assessee has filed present appeal before us raising following grounds: "1. That the order of the Id. Principal Commissioner of Income tax(Central)(PCIT), Gurgaon passed on 3.11.2015 was illegal, erroneous, perverse and thus uncalled for. 2. That the Id. PCIT is not justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 per law. The Ld. counsel for the assessee pointed out that the impugned order had been passed u/s 153A of the Act in pursuance to search conducted on the assessee. He thereafter pointed out that as on the date of initiation of search, assessment stood completed since the time period for issuing notice u/s 143(2) of the Act had expired. The Ld. counsel for assessee thereafter stated that in such cases addition in assessment framed u/s 153A could be made only on the basis of incriminating material found during the course of search which in the present case was absent vis-à-vis the gift received by the assessee. Therefore, addition on account of the said gifts could not have been made in any case in the order passed u/s 153A and assumption of jurisdiction by the Ld.Pr.CIT holding the order passed u/s 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 380 ITR 573(Del) laid down this proposition holding as under "On a conspectus of Section 153A(1) read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges was that, firstly, once a search takes place u/s 132, notice u/s 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Secondly, Assessments and reassessments 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. Thirdly, 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstrated 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 received from Ramesh Chander Kapoor & Sons (HUF). It is evident, therefore, that it was on the basis of this information which was procured during the course of assessment proceedings and not on the basis of any incriminating material found during the course of search which led the Ld.Pr.CIT to believe that an error had crept in the order of the Assessing Officer. 12. We therefore agree with the Ld. counsel for assessee that since no information relating to the impugned gifts was found during the course of search the Assessing Officer could not have made any addition vis-à-vis the said gifts in the order passed u/s 153A and, therefore, the Ld.Pr.CIT cannot now hold the order of the Assessing Officer as erroneous for not making addition on account of the same. The Hon'ble Delhi High Court in the case of CIT vs Mahesh Gupta(supra) has in ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 titled: CIT vs Kabul Chawla. Therefore, we concur with the ITAT's opinion in this regard. The search and seizure proceedings in such cases are undoubtedly meant to bring to tax amount that are to be determined on the basis of materials seized in the course of such searches; permitting anything over and above that would virtually amount to letting the Revenue have a third or fourth opinion as it were. Searches - to quote the view of Attorney-General (NSW) vs Quin (1990) HCA 21 in another context are "not the key which unlocks the treasury" of the Revenue's jurisdiction in regard to matters that had attracted attention in the regular course of assessment. 6. For the above reasons, we are of the opinion that no questions of law arise. The appeal is, therefore, dismissed." 13. For this reason alone we hold that the Ld.Pr.CIT has erred in assuming the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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