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2018 (3) TMI 957

ch. The addition/s have been made on the basis of the subsequent information received by the AO. Such information, had it been related to the incriminating material found during the course of the search, the AO could well have been within its jurisdiction to take into consideration such information and make additions relating to the search material found during the search. - In absence of any incriminating material being found during the course of the search AO will be without jurisdiction in making such additions. It is the incriminating material found during search which gives jurisdiction to the AO to make additions in the assessment proceedings under Section 153A of the Act in respect of assessments which have not abated. In the absence of incriminating material in such cases, as held in the case of Kabul Chawla in Para 37 (v) [2015 (9) TMI 80 - DELHI HIGH COURT ] the completed assessment is not to be disturbed. - Decided in favour of assessee - ITA No.2839/DEL/2015 - Dated:- 19-3-2018 - SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Ved Jain Ms Devina Sharma, Advocate Shri Ashish Chaddha, CA For The Respondent : S .....

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sue regarding share capital. 2.3 Now, the assessee is in appeal before the ITAT and has challenged the action of the Ld. CIT (A) in dismissing the assessee s appeals for the captioned years. The assessee has raised the following grounds in its appeal for A.Y. 2006-07: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT (A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in ignoring the fact that the order passed by AO is illegal, without jurisdiction and in violation of the statutory requirement of the Act. 3. On the facts and circumstances of the case, learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law. 4. On the facts and circumstances of the case, learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A are bad in .....

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f ₹ 1,28,000/- made by AO on account of commission. (ii) That the abovesaid addition has been confirmed, despite the same being made arbitrarily at the rate of 1% without there being any basis for the same. 12. The respondent craves leave to add, amend or alter any of the grounds of appeal. 2.4 Since the grounds raised in the assessment year 2007-08 are identical as in assessment year 2006-07, the same are not being reproduced. 3. The Ld. AR submitted that AY 2006-07 may be taken as the lead case and he be permitted to argue on assessee s appeal for AY 2006-07. It was submitted that since the issue involved was identical, the outcome of the appeal for AY 2006-07 will determine the outcome of the appeal for AY 2007-08 also. 3.1 The Ld. DR had no objection to this proposal of the Ld. AR. 4. It was submitted by the Ld. AR that the additions made by the AO were unsustainable in the absence of any incriminating material being found during the course of the search. It was submitted that the search had taken place on 28th January, 2011 and the assessment years under consideration were 2006-07 and 2007-08. Thus, the assessment proceedings for these years as on 28th January, 2011, i.e .....

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admitted fact that nothing incriminating was found during the course of the search. The Ld. DR was fair enough to accept out that no incriminating material was found during the course of the search. The contention of the Ld. DR was with reference to the information which AO got during the pendency of the assessment proceedings under Section 153A. It was the contention of the Ld. DR that the AO in such cases is entitled to use the same and make the addition. At this juncture, reference may be made to the judgment of the Hon ble Delhi High Court in the case of Kabul Chawla (Supra). In Para 37 of this judgement, the Hon ble Delhi High Court has summarized the legal position as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (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. ii. Assessments and reassess .....

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evidence found, it does not mean that the Page | 12 assessment can be made without any reference or establishing any nexus with the seized material. Thus, as per this judgment, the existence of the seized material found during search is a must for making addition in those assessment years which have not abated. 6.2 The importance of the seized material being found during the course of the search has also been explained in the subsequent judgment of the Hon ble Delhi High Court in the case of Pr. Commissioner of Income Tax. vs. Meeta Gutgutia reported in 395 ITR 526 (Delhi). In this case, the Revenue had relied upon the judgment of the Hon ble Delhi High Court in the case of Smt. Dayawanti Gupta vs. CIT reported in 390 ITR 496 (Delhi), wherein it was held that material seized which is relevant to one particular assessment year is sufficient to infer a certain modus operandi adopted by the assessee for all the assessment years in question. It was held that the judgment in the case of Smt. Dayawanti Gupta vs. CIT (supra) was rendered in the peculiar facts of that case, whereby it was held that the material seized for one particular assessment year could lead to an inference regarding .....

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