TMI Blog2019 (6) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri G. D. Agrawal, Vice President And Ms Suchitra Kamble, Judicial Member For the Applicant : Sh. S. S. Rana, CIT (DR) For the Respondent : Sh. Ved Jain, CA ORDER PER SUCHITRA KAMBLE, JM These two appeals are filed by the Revenue against the order dated 27/03/2015 passed by CIT(A)-XVII, New Delhi for Assessment Year 2008-09 2009-10 respectively. 2. The grounds of appeal are as under:- I.T.A. No. 3943/DEL/2015 (i) Whether the CIT(A) has erred in deleting the addition of ₹ 1,03,73,611/- made by the A.O u/s 41(1)/68 of the I.T Act despites the facts that the assessee could not produce any documentary evidence in support of his claim that the liabilities of M/s Dashmesh Impex and M/s Abchal Impex were actually paid by M/s Silver Rock Trading LLC Company. (ii) Whether the CIT(A) has erred in restoring back the issue of the addition of ₹ 7,72,665/- u/s 68 of the I.T Act to the file of the A.O which is not permissible under the provisions of the I.T. Act. I.T.A. No. 3944/DEL/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A and order passed by the learned Assessing Officer (AO) under Section 153A/143(3) is bad in law and hence needs to be cancelled. 2.That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made under Section 153A are bad in law in the absence of any incriminating material belonging to the assessee being found during the course of the search. The Ld. AR submitted that in terms of the provisions of Rule 27 of the ITAT Rules, 1963, the assessee is entitled to defend the order of the CIT(A) on the issued decided against the assessee and assessee is assailing the legal issues which were decided against him. In this regard, the Ld. AR submitted that the assessments of the year under consideration being A.Y. 2008-09 and 2009-10 have already completed. The Ld. AR further submitted that it is a settled law that a completed assessment could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer. 9. On the next issue, regarding addition of ₹ 7,72,665/- u/s 68 of the Act, the Ld. AR submitted that the CIT(A) has restored the matter back to the Assessing Officer. However, no order has been passed by the Assessing Officer on this issue till now as per the submissions of the Ld. AR. Therefore, considering the above facts and judicial precedents, the Ld. AR submitted that the orders passed by the Assessing Officer in the case of assessee for A.Y. 2008-09 and 2009-10 deserves to be quashed, as the additions made in these orders are not based on any incriminating material found during the course of search in the case of assessee and the CIT(A) is correct in deleting the said additions on merits. 10. The Ld. DR objected the Application under Rule 27. The Ld. DR submitted that cash of ₹ 1,12,50,000/-was seized by DRI from residence of the assessee on 01.10.2010. The assessee has shown increased in its personal capital account of ₹ 1,03,73,611/-. The assessee is having 25% share in partnership firm M/s Abchal Impex. There is no way he could have taken liabilities of the firm in his personal account through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating material found for the year under consideration as is evident from the fact that it is not a case of search but requisition u/s 132A of the Act. Thus, the decision of the Hon ble Delhi High Court in case of Kabul Chawla (supra) is squarely applicable in the present case. The Hon ble High Court held that iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. Thus, the Assessing Officer has passed the order without giving any nexus or relevance with the so called incriminating material. On the contrary there is no incriminating material available at all. The case laws submitted by the Ld. DR will also not hold ground in department s case as the very basis of the Assessment Order that of incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence are neither the appellant s trading liability as individual nor the business of these concerns were taken over by the appellant as per the explanation to section 41(1)(b); therefore, I do not see any justification in taxing the liability taken over by the appellant u/s 41 as the conditions laid down in section 41 are not fulfilled here at all. Further, I am of the considered opinion that by taking over the above referred liabilities, the appellant has not derived any benefit there from nor such liabilities were ceased to exist. By passing journal entries in the books of accounts M/s Dashmesh Impex and M/s Abchal Impex as mentioned above, the liabilities in the names of various creditors get replaced by the appellant s personal capital accounts appearing in the books of the business concerns. Such outstanding amount does not constitute income arising out of the remission/cessation of the trade liability in terms of section 41. Reliance is placed on the decision of the Hon ble Delhi High Court in case of CIT v. Hotline Electronics Ltd. 205 Taxman 245 and Shree Vardhman Overseas Ltd (2012) 204 Taxman 524. Such amount can be brought to tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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