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2019 (11) TMI 365

..... ng 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. 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 as income from other sources also deserves to be allowed in favour of the assessee for the reasons given by us while adjudicating ground number 1 of the appeal of the assessee. Accordingly, Ground no 2 is also allowed. Penalty u/s 271 (1) (c) - HELD THAT:- 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 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 s .....

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..... ncriminating document was found in search in respect of assessment year 2005 - 06, and therefore no addition could have been made by the learned assessing officer in terms of the decision of the honourable Bombay High Court in case of All Cargo And Global Logistics Ltd vs. Deputy Commissioner Of Income Tax and other leading cases u/s 153A with section 143 (3) of the income tax act in absence of any incriminating material. 4. Adverting the 1st ground of appeal, the learned authorised re-presentative submitted that there is no incriminating material found during the course of search based on which these additions have been made which are contested in the appeal of the assessee as well as in the appeal of the learned assessing officer. He therefore submitted that in view of the decision of the honourable 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 .....

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..... de on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer 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 the seized material." (v) In the 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 153A is relatable to abated pro ceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings. (vi) In so far as the pending assessments 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 Office .....

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..... ld DR was asked specifically that what are those documents, however no such documents were shown to us. Coming to the order of the learned CIT - A or as well as in the remand report obtained by the learned CIT - A there is no reference to any material seized during the course of search on the assessee. Therefore, respectfully following the decision of the honourable jurisdictional High Court in case of CIT vs. Kabul Chawla (supra), all the three additions made by the learned assessing officer in the concluded assessment for assessment year 2005 - 06 were without any incriminating material found during the course of search. Therefore, all these three additions deserve to be deleted. The learned CIT - A has already deleted the addition of INR 2,500,000 under section 68 as well as the addition of INR 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 h .....

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..... 06 in the case of the assessee has already been described while deciding the appeals of the assessee and quantum proceedings for the above said assessment year. Consequently the learned assessing officer initiated penalty u/s 271 (1) ( c) of the income tax act for intentionally concealing the particulars of true income and also furnishing inaccurate particulars of income and therefore the penalty proceedings were initiated in the assessment proceedings. Consequent to that, as addition with respect to INR 3 525645/- was upheld, the penalty proceedings on the same were also initiated. Therefore the learned joint Commissioner of income tax (OSD), central circle, passed an order u/s 271 (1) (C) of the act on 23/3/2012 levying penalty u/s 271 (1) (C) of the act after considering explanation by the assessee. 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 (app .....

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..... ch, the learned CIT - A passed an order on 13/1/2014 deleting the addition of INR 7,000,000 on account of deemed dividend and INR 2 804022/- on account of cessation of liability u/s 41 of the act. Therefore, revenue is in appeal before us. 18. The learned authorised representative at the time of commencement of hearing made an application under rule 27 of The Income Tax Appellate Tribunal Rules, 1963 stating that though the assessee has got relief before the learned CIT - A and therefore it has not referred any appeal against the order of the learned CIT - A, But, as the revenue has come in appeal, the assessee intends to support the order of the learned CIT - A invoking the provisions of rule 27 on the ground that in absence of any incriminating material being found during the course of search for 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 pres .....

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