TMI Blog2018 (12) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... s in appeal before the Tribunal against order of ld.CIT(A)-12, Ahmedabad dated 31.8.2015 passed the Asstt.Year 2008-09. 2. Sole grievance of the assessee is that the ld.CIT(A) has erred in law and on facts by not allowing exemption under section 10(38) of the Act for capital gain of ₹ 1,16,74,502/-. The assessee has raised additional plea by way of additional grounds of appeal that disallowance of exemption under section 10(38) has been made erroneously in an assessment order passed under section 153A r.w.s. 143(3) because no incriminating material was found during the course of search. 3. Brief facts of the case are that a search and seizure operation was carried out in the group cases of Riddhi Siddhi on 22.9.2011 under section 132 of the Income Tax Act. A notice under section 153A was issued upon the assessee on 25.9.2012. In response to this notice, return was filed on 25.9.2012 declaring total income at ₹ 66,96,554/-. Original return under section 139 was filed at Rs.NIL as observed by the AO in para-3 of the assessment order. The ld.AO had issued notice under section 143(2) and investigated various issues. Apart from other issues, he took one of the issues, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to STT, which obviously is not the case. Therefore, by implication also, section 10(38) excludes from its benefit the transfers by way of conversion of capital asset into stockin- trade. Therefore, I find myself in full agreement with the- argument and The reasoning given by the Id. Assessing Officer and find no merits in the arguments raised on behalf of the appellant. Therefore, the action of the Id. A.O. requires no interference and the ground raised by the appellant deserves to be rejected, and is accordingly rejected. 4. At the very outset, the ld.counsel for the assessee contended that when the ld.CIT(A) has decided the appeal, the law on the scope of section 153A was not developed till the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Saumya Construction P. ltd., 380 ITR 529 (Guj). Apart from this decision various other decisions at the end of Hon ble Delhi High Court wherein it has been propounded that when no incriminating material was found during the course of search, then addition in the assessment under section 153A will not be made to the income of the assessee. He further relied upon the following decisions: i) CIT Vs. Kabul Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 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. 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 of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of ₹ 11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however ..... X X X X Extracts X X X X X X X X Extracts X X X X
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