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2019 (11) TMI 365

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..... rt-term capital gain on sale of shares whereas the learned assessing officer treated the same as income from other sources, the above addition has already been deleted in the quantum of appeal of the assessee for assessment year 2005 - 06 as the addition was not made on the basis of the incriminating material found during the course of search, the penalty on this issue now do not survive. Accordingly ground number 1 of the appeal of the assessee challenging the levy of the penalty u/s 271 (1) (C) of the act is allowed. - ITA No. 5696/Del/2014 And 3128/Del/2016, ITA No. 5982/Del/2014 And 2216/Del/2014 - Dated:- 5-11-2019 - Ms Suchitra Kamble, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Ved jain, Advocate For the Revenue : Shri Samar Bhadra CIT ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the bunch of four appeals pertaining to one assessee for two assessment years i.e. assessment year 2005 - 06 and 2006 - 07, therefore they are disposed of by this common order. 2. ITA number 5696/del/2014 for assessment year 2005 - 06 is filed by the assessee against the order of The Commissioner of Income Tax (Appeals), Meerut dated 19/8/2014. The brie .....

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..... able Delhi High Court in case of CIT vs. Kabul Chawla [2016] 380 ITR 573 (Del) in concluded assessment no addition can be made without any incriminating material found during the course of search. He extensively read the orders of the learned assessing officer as well as the learned CIT - A and stated that both these additions have been made without reference to any incriminating material found during the course of search. Therefore, such additions could not have been made by the learned assessing officer in the 1st place itself. 5. The learned departmental representative relied upon the order of the learned assessing officer and the learned CIT - A and submitted that no such ground has been raised by the assessee before the lower authorities and therefore now the assessee cannot challenge the same. He submitted the copy of the panchanama and submitted that there are certain documents found in search. 6. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly, in this case, the search operation was carried out on 15/2/2008 and the last search was on the locker on 20/2/2008. The impugned assessment year before us is assessment ye .....

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..... s are concerned, the jurisdic tion to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer 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. 7. Thus, completed assessments can be interfered with by the assessing officer only based on some incriminating material unearthed during the course of search. In the present case addition in dispute before the learned CIT - A in the 2nd round of proceedings is (1) addition of INR 2,500,000 on account of the unexplained loan u/s 68 of the income tax act received from Mr Prem Sheth. (2) the addition of INR 6,500,000 under section 2 (22) (e) of the income tax act taken as .....

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..... R 6,500,000 on account of deemed dividend on merits against which the learned assessing officer is in appeal before us. With respect to the addition of INR 3 525645/-, the learned CIT - A has upheld the addition and held that the benefit of long-term capital gain will not be available to the assessee on the sum of INR 3 525645/- to the assessee and the above sum should be taxed under the head income from other sources. Against the confirmation of this addition, the assessee is in appeal. As the addition is involved in the appeal of the assessee as well as in the appeal of the learned assessing officer are not made on the basis of any incriminating material found during the course of search, all these 3 additions deserves to be deleted. Accordingly, we allow ground number 1 of the appeal of the assessee holding that no incriminating document was found during the course of search and therefore not all these additions made by the learned assessing officer could be made in the hands of the assessee. 8. As we have already deleted the addition made in the hands of the assessee as no incriminating material found during the course of search, the treatment of the long-term capital gain of I .....

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..... essee. While levying the penalty the learned AO noted that assessee has furnished inaccurate particulars of his income and also concealed the particulars of his income and thereby has committed an offence within the meaning of section 271 (1) (C) of the act. 14. Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the Commissioner of income tax (appeals) - IV, Kanpur who passed an order dated 17/3/2016 dismissing the appeal of the assessee and thus confirming the penalty levied by the learned assessing officer. 15. As the penalty has been levied on the addition of INR 3 525645/- being disclosure made by the assessee under the head short-term capital gain on sale of shares whereas the learned assessing officer treated the same as income from other sources, the above addition has already been deleted in the quantum of appeal of the assessee for assessment year 2005 - 06 relying upon the decision of the honourable Delhi High Court as the addition was not made on the basis of the incriminating material found during the course of search, the penalty on this issue now do not survive. Accordingly ground number 1 of the appeal of the assessee challe .....

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..... r the assessment year under consideration, the assessing officer could not have made the additions which have been deleted by the learned CIT - A. He further submitted that the above issue is squarely covered by the decision of the honourable jurisdictional Delhi High Court in case of CIT vs. Kabul Chawla in ITA number 707 dated 28/8/2015. He further supported his argument that in the present case as assessee has not filed any appeal but he is entitled to support the decision of the CIT - A on any ground but he is not entitled to raise a ground which will work adversely to the appellant. He further stated that assessee can raise a ground which may be a totally new ground, if it is purely 1 of law, and does not necessitate regarding of any evidence, even though the nature of the objection may be such that it is only a defense to the appeal itself but was further and may affect the validity of the entire proceedings miserably. He supported the above argument by placing reliance on the decision of the jurisdictional High Court in 123 ITR 200. Even otherwise on merits he relied upon the order of the learned CIT - A. 19. The learned departmental representative vehemently objected to the .....

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