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2019 (5) TMI 741

Jayesh Steel Pvt. Ltd. [2018 (11) TMI 1614 - ITAT AHMEDABAD] in favour of the assessee wherein it was decided that since the additions in question are not based on any incriminating material found during the search operation, as is the undisputed factual position in this case, the very foundation of the additions ceases to be sustainable in law - Decided against revenue - I.T.(SS)A. No.08/Ahd/2017 - 8-5-2019 - Shri Pramod Kumar, Vice President And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri R.C. Danday, CIT-D.R. For the Respondent : Shri S. N. Soparkar & Parin Shah, A.R ORDER PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the revenue is directed against the order dated 31.10.2016 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad under section 143(3) r.w.s 153A(1)(b) of the Income Tax Act, 1961 (in short the Act ) arising out of the order dated 30.03.2014 passed by the Deputy Commissioner of Income Tax, Central Circle - 2(3), Ahmedabad for the Assessment Year 2009-10. 2. The facts leading to this case is this that in the case of Jayesh Steel Group, search operation u/s 132 of the Act was conducted on 13.10.2011. The assessee s case was a .....

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date of the search and indeed did not abate within the meaning of second proviso to section 153A. The Ld. AR is also right in putting reliance on Kabul Chawla (supra) and on Jurisdictinal High Court decision in Saumya Construction (supra) for the proposition that no addition unfounded on and de hors the incriminating seized documents could have been made by the AO while refraining u/s 153A/153C those assessments which had remained unabated within the meaning of second proviso to section 153A. The AO's reliance on Shivanath Red Harnarain (India) Ltd., 117ITD 74 (Del) in his report dated 21/10/2016, is, in my considered opinion, totally misplaced in view of the same remaining no longer a good law as emphatically ruled by both Delhi HC in Kabul Chawala and Gujarat HC in Saumya Construction (supra). The AR is thus right that the AO erred in "interfering with" assessments which remained unabated as on the date of search. As such, when the examination of seized material by the AO did not lead him to any incriminating document/entry for the year under reference, he was indeed duty-bound to "reiterate" the total income which had attained finality before the date-of .....

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for a year (s) within the relevant six assessment years, then also the AO is duty bound to reopen those proceedings and reassess the total Income but by taking note of the undisclosed income if any 'unearthed during the search". The expression 'unearthed during the search' is quite significant to denote that in respect of completed or non-pending assessments, the Assessing Officer is albeit duty bound to assess or reassess the total income but there is a cap on the scope of additions in such assessment, being the items of income 'unearthed during the search'. In other words, the determination of 'total income; in respect of the assessment years for which the assessments are already completed on the date of search, shall not be influenced by the items of income other than those based on the material unearthed during the course of search................. . 7. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, and having noted that the additions of ₹ 11,05,51,000/- is not based on any incriminating material found during search operations on the assessed, we delete t .....

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to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of Income-tax-1 v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 1S3A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some Incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fa .....

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spective parties, perused the relevant materials available on record. We have also carefully considered the order passed by the Hon ble Tribunal in the case of ACIT-vs-The Jayesh Steel Pvt. Ltd. in IT(SS)A No.49 & 50/Ahd/2017 for A.Y. 2008-09 & 2010-11 in which the search proceeding was conducted on 13.10.2011 and the assessee is also covered in the said search action. The relevant portion of the said judgment in deciding the issue is as follows: 7. This issue is no longer res integra. Upholding the stand of this Tribunal that during the post search assessment proceedings under section 153 A in respect of completed assessments additions cannot be made other than on the basis of incriminating material found during search operations , Hon ble jurisdictional High Court, in the case of PCIT Vs Saumya Constructions Pvt Ltd [(2016) 387 ITR 529 (Guj)] has observed as follows: ……….it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found 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 incom .....

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