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2019 (9) TMI 604

..... ct that the original assessment completed u/s 143(3) vide order dated 31.12.2008 which had attained finality at the time of search. It is also undisputed that additions made by the AO is not based on incriminating material found during the course of search, albeit is based on perusal of balance sheet which was part of the assessment record and duly scrutinise during the course of original assessment proceedings. In such a situation, additions made are beyond the scope of 153A proceedings. This proposition of law has been well settled and reiterated by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and has been reiterated in the case of Pr. CIT vs. Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] Hence there is no incriminating material qua each of the assessment year roped in under section 153A, then, no addition can be made while framing the assessment under section 153A. As admittedly no incriminating material relating to these assessment years or as a matter of fact for any of the assessment years were found during the course of search and accordingly, the originally assessed income. Accordingly the addition is dire .....

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..... the perusal of the Balance Sheet it is seen that the assessee company has received fresh share application money/capital to the tune of ₹ 1,01,00,000/-. The assessee vide query raised at point No. 3 of this office questionnaire 02.12.2010 was specifically asked to furnish the information with regard to share application money received during the year and to establish the identity, creditworthiness and genuineness of the transactions of the share applicants. In response to above query, two letters were filed on 22.12.2010 containing the details of fresh share application money received during the year mainly in the form of documents submitted before the ITO-6(1), Kanpur in regular course of assessment proceedings. The details of fresh share application money received by the assessee is given as under :- S.No. Name of the Party Amount of Share application money and share premium 1 Ashish Gupta ₹ 50,00 0 2 B.S. Yadav ₹ 50,000 3 Emkay Commercial Company Ltd. ₹ 4.0,00,000 4 Emkay Commercial Company Ltd. ₹ 30,00,000 5 Raziel Tieup Pvt. Ltd. ₹ 10,00,000 6 Esmarie Mercantiles Pvt. Ltd. ₹ 10,00,000 7 Nendej Tieup Pvt, Ltd. ₹ 10,00,000 Total &# .....

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..... nd loss account were subject to detailed scrutiny by the AO which is evident from various notices and replies filed by the assessee as given in the paper book from pages 1 to 61. Once the entire issue and the fresh share application money received by the assessee during the year as appearing in the balance sheet has been examined by the AO, then without their being any seized material, no further addition can be made based on same material. Thus, addition made by the AO and as sustained by the Ld. CIT(A) should be deleted on this ground. 6. On the other hand, Ld. DR though did not controvert the contention that there is no incriminating material found at the time of search, but he submitted that, once notice u/s 153(3) is issued to the assessee then it is incumbent upon the assessee to file the return of income and AO has all the powers to assess and reassess the total income for the year and same cannot be restricted to the seized material. He too relied upon the judgment of Hon ble High Court in the case of CIT vs. Anil Kumar Bhatia(supra). 6. After considering the aforesaid submissions and on perusal of the orders and letter referred to before us, we find that it is an admitted .....

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..... 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 153A 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 were not produced or not already disclosed or made known in the course of original assessment. 8. The Hon'ble High Court has also taken note of the judgment of their earlier judgment in the case of CIT vs. Anil Kumar Bhatia reported in [2013] 352 ITR 493 (Del) and .....

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..... er, does not mean that the assessment under Section 153A 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." 58. In Kabul Chawla {supra), the Court discussed the decision in Filalex India Ltd. {supra) as well as the above two decisions and observed as under: "31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das {supra), and Filatex India Ltd. v. CIT-IV {supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 {Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absenc .....

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..... ce in Section 153A of the Act as under: "26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the I.T.A. No.4679 & 4680/DEL/2014 21 interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents." 9. Thus, the Hon'ble High Court after detail analysis concluded that, whence there is no incriminating material qua each of the a .....

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