TMI Blog2016 (6) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... by filing the present appeals sought to set aside the impugned order dated 29.07.2015 passed by the Commissioner of Income-tax (Appeals)-24, New Delhi qua the assessment years 2006-07 and 2007-08 on the grounds inter alia that :- ITA No.5522/Del/2015 (AY 2006-07) 1. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts. 2. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts as the assessment order passed u/s 153A itself is invalid and liable to be quashed as there was no incriminating material found during search and no proceedings were abated. 3. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the addition of ₹ 2,34,50,000/- by disallowing the genuine business expenditure. 4. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the addition of ₹ 2,34,50,000/- by disallowing the genuine business expenditure despite the fact that no material is found during search and seizure, suggesting escapement of income and no proceedings were abated. 5. That the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company is involved in the real estate business of S.K. Jaipuria group and is indulged into inflating the cost of project by debiting bogus expenses by raising bill from non-existing parties or entry providers, namely:- i. M/s. Matrix Buildcon Pvt. Ltd., D-6, Gali No.4, Ganga Vihar, Delhi. ii. M/s. Anupam Buildmart Pvt. Ltd., E-7A, 1st Floor, Friends Complex, Jawahar Park, Laxmi Nagar, Delhi. iii. M/s. B.P. Buildtech Pvt. Ltd., 9/1934, Gali No.2, Kailash Nagar, Delhi iv. M/s. Naman Buildtech Pvt. Ltd., H-3, 2nd Floor, Shivaji Park, Punjabi Bagh, Delhi. v. M/s. Roshan Buildtech Pvt. Ltd., 19/20-1, Moti Bagh, Sarai Rohilla, Delhi. vi. M/s. Gautam Buddha Buildtech Pvt. Ltd., 203, 2nd Floor, Laxmi Nagar, Delhi. vii. M/s. Rupayan Developers Pvt. Ltd., C 383, Health Club, Bank Street, Munirka, Delhi. viii. M/s. Lotus Buildwell Pvt. Ltd., WZ-14, Janak Puri A-2, New Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement and failed to produce the parties for examining to prove the genuineness of the transactions. Consequently, the amount of ₹ 2,34,54,000/- is treated as bogus expenses and added to the total income of the assessee. FACTS OF ITA NO.5523/Del/2015 7. Briefly stated, the facts of this case are : on the basis of search and seizure operation conducted under section 132 of the Acton M/s. Jaipuria Group of cases on 27.03.2012, the assessee filed return of income for Assessment Year 2007-08 declaring an income of ₹ 21,23,62,060/- on 29.08.2013 in response to the notice u/s 153 of the Act. Assessee, however, declared deemed dividend income u/s 115JB to ₹ 21,19,53,090/- and tax payable at ₹ 2,11,95,309/-. 8. However, during the year under consideration, assessment was completed u/s 143(3) on 29.12.2009 making an addition of ₹ 1,18,81,368/- on account of trading addition and ₹ 5,78,78,830/- on account of disallowance of compound fee paid to GDA, which are stated to have been deleted by CIT (A). However, revenue has filed appeal before the ITAT on 15.03.2012 and as such, both the additions of ₹ 6,97,60,198/- is retained in this or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. M/s. B.P. Buildtech Pvt. Ltd. - 1,20,00,000 iv. M/s. Naman Buildtech Pvt. Ltd. - 1,60,00,000 v. M/s. Roshan Buildtech Pvt. Ltd. 93,75,000 57,50,000 vi. M/s. Gautam Buddha Buildtech Pvt. Ltd. 1,40,79,000 30,00,000 vii. M/s. Rupayan Developers Pvt. Ltd. - 25,00,000 viii. M/s. Lotus Buildwell Pvt. Ltd. - 47,50,000 Total 2,34,54,000 7,12,00,000 11. However, summons issued to the aforesaid parties except M/s. Rupayan Developers Pvt. Ltd. and M/s. Matrix Buildcon Pvt. Ltd. received back unserved and consequently was asked to show cause as to why the transactions with aforesaid parties be treated as bogus one. Even, the summons issued u/s 133 (6) of the Act to the aforesaid 8 parties to furnish th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge bear no reference of material, if any, unearthed during the search operation. 17. In the backdrop of the aforesaid undisputed facts, the first question arises for determination in this case is as to whether the AO is justified to complete the assessment u/s 153A by making an addition of ₹ 2,34,54,000/- for AY 2006-07 and ₹ 7,12,00,000/- for AY 2007-08 even in the absence of any incriminating material deemed found during the search conducted u/s 132 of the Act? 18. Identical issue has come up before the Hon ble jurisdictional High Court in the case cited as Kabul Chawla (supra) wherein all the earlier decisions delivered by the Hon ble High Courts have been considered and legal position decided by the Hon ble jurisdictional High Court is summarized for ready reference 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 19. Now, adverting to the case at hand, so far as assessment for the AY 2006-07 is concerned, the assessment was though completed u/s 143(1) but undisputedly no notice was issued u/s 143(2) within the period of limitation on the date of search, meaning thereby no assessment was pending in this case as on date of search i.e. 27.03.2012 and question of abatement does not arise and in these circumstances, addition could be made on the basis of incriminating material unearthed during the search only. However, assessment qua AY 2007-08 was admittedly completed u/s 143(3) prior to the date of search i.e. 27.03.2012. 20. Ld. DR for the revenue by laying emphasis on paras 37 (iv), (vi) and (vii) vehemently contended that section 153 does not mandate to make an addition strictly on the basis of evidence found during the course of search rather assessment can be made on the basis of evidence found in the course of search or other post-search material or information available with the AO which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment qua the AY 2006-07 was pending as on date of search as mere issuances of acknowledgement by the ministerial staff does not imply that assessment has been completed, is not tenable in the face of undisputed fact that when within the prescribed period, no notice u/s 143 (2) has been issued prior to the date of search, assessment is deemed to be completed; (vi) that there is not an iota of material with the AO to initiate proceedings u/s 153A what to talk of incriminating seized material; (vii) that the ld. CIT (A) affirmed the assessment order by relying upon the decisions relied upon by Hon ble jurisdictional High Court in the case cited as Filatex India Ltd. vs. CIT-IV (2014) 49 Taxmann.com 465 (Delhi) which has been distinguished in the Kabul Chawla (supra) on the ground that in the said case, there was some material unearthed during the search whereas in the instant case there is admittedly no incriminating material unearthed during the search to proceed u/s 153A. 22. In view of what has been discussed above, we are of the considered view that without entering into the merits of this case, addition made in both the cases u/s 153A read with section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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