TMI Blog2019 (11) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the assessee regarding validity of search proceedings. Therefore, this ground of appeal is dismissed. Assessee has not received notice u/s.143(2) at his registered office or place of search - HELD THAT:- It is clear from the above observations of the CIT(A) that there was no mandatory to issue notice u/s.143(2) of the Act and served to the assessee for completion of assessment u/s.153A of the Act. The provisions of Section 153A of the Act is a special provision to unearth the escaped income by the assessee. Ld.CIT(A) has decided this issue after relying on the various judgments as quoted by him, which are applicable in the present case also. The ld AR was also unable to controvert the findings recorded by the CIT(A) in this regard. He just submitted that issuance of notice u/s.143(2) of the Act is mandatory for assuming jurisdiction for completion of assessment. It is also settled position of law that there is no mandatory requirement of issuance of notice under section 143(2) of the Act in respect of assessment proceedings u/s.153A of the Act as decided in TARSEM SINGLA VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [ 2016 (7) TMI 703 - PUNJAB AND HARYANA HIGH COURT] .Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in this case was deprived of reasonable opportunity of hearing. Therefore, we remit the matter back to the file of AO for making de novo assessment after depth examination as per provisions of Income Tax Act, 1961 after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate with the department for early disposal of the case and also directed to not to seek any adjournments because the assessee has been given many opportunities of being heard by the AO during the original assessment proceeding. Thus, the grounds of appeal of the assessee for A.Y.2013-2014 are allowed for statistical purposes. - IT(SS)A Nos.34 to 40/RAN/2019, IT(SS)A Nos.27 to 33/RAN/2019, IT(SS)A No.62 & 63/RAN/2019 - - - Dated:- 18-11-2019 - Shri C.M. Garg, JM And Shri L.P. Sahu, AM For the Assessee : Shri Devesh Poddar, Advocate For the Revenue : Shri Inderjeet Singh, CIT(DR) ORDER PER BENCH: These are the appeals filed by two different assessees namely, Shri Kamal Deo Sharma (husband) and Smt. Tripta Sharma(wife), as well as revenue against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amount of sundry creditors include opening balance, expenses payable or transaction in regular course of business. Complete detail of the same was filed before the lower authorities. There is no basis to observe sundry creditors as cash credit for addition to be made U/s 68. No such additions have been made in the subsequent years. Moreover there was no incriminating material seized to suggest for the said addition. As such, the addition made is fit to be deleted. 5. For that Ld. CIT(A) was not justified in confirming the addition of ₹ 7,61,05,543/- made U/s 2(22)(e) against the credit balance of M/s Rajat Minerals and M/s KDS Contractors Pvt Ltd. The said amount includes opening balance, salary, TDS and transaction in regular course of business, as such, no addition is called for U/s 2(22)(e). The amount stands disclosed in books of account which were accepted in regular course of assessment, as such, the addition made in course of assessment U/s 153A is illegal and fit to be deleted. 6. For that Ld. CIT(A) was not justified in sustaining the addition of ₹ 27,85,952/- being the alleged difference in turnover as per 26AS and aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Jain and Sri Rohit Jain. The Group is engaged in the business of Iron Ore Mining at Barbil, Orissa. Simultaneously, search was also conducted on the assessee Shri Kamal Deo Sharma, who is engaged in the business of raising and Transport contractor operating from Barbil, Orissa and having business transactions with Shri Padam Kumar Jain and Core Minerals Group and Smt. Tripta sharma was also covered under the search. During the course of search various documents were found and seized as per panchanama drawn by the search team, which is placed on record. After centralization of the group cases, the AO issued notice(s) u/s.l53A of the Act for A.Y.2009-10 to 2014-15 and notice u/s. 142(1) for A.Y.2015-16 requiring the assessee to file the return. The assessee complied with the above notices by filing the return of income. During the course of assessment proceeding, the AO was in receipt of assessee specific Tax Evasion Petition (TEP) on dated 21.11.2016 detailing complete modus operandi of tax evasion, details of suppression of income and inflation of expenses including the violations of specific provisions like Sec.2(22)(e) of the Act etc. alongwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book -1 at Page No. 108 to 113. It is seen vide the said panchnama that at page 112 certain inventories/bank account details of the assessee and his group was recorded and in page 113 certain documents/books of account such as purchase bills, sales bills, and raising bills of this group was seized. Vide the said panchnama in page 110 of the paper book-1 it is said during the course of search, statement of Sri Sanjay Pati was recorded who looks after the entire work of the assessee and his group. Ld. AR further as a matter of fact, contended that during the course of assessment proceedings or remand proceeding or in the order of CIT(A) there is no whisper of the statement recorded of the said accountant or the seized documents as mentioned in page 113 of the paper book 1. Further, ld. AR submitted that the assessee stated before the AO that assessment for A.Y. 2009-10, 2010-11, 2011-12 and 2012-13 are completed/unabated assessment and the same should not have disturbed in absence of any incriminating material found or seized during the course of search. In this regard, ld. AR placed reliance on the decision of Hon'ble Delhi High Court in case of Kabul Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to mention that no opportunity was allowed to the assessee during the course of remand proceedings, rather remand report was prepared at the back of the assessee. It was only when Ld. CIT(A) forwarded the copy of the assessee for counter comments that we made our submissions. We would like to mention that the said seized documents has only been referred for a simple reason that the name of the assessee appeared on the same. As mentioned above there was absolutely no reference to any seized document during the course of assessment and even in the course of remand proceeding Ld. AO in particular has failed to correlate the seized document with the addition made. As such, we would like to submit that the addition made is fit to be deleted. 2. Addition U/s 2(22)(e): Ld. AO while completing the assessment made addition of ₹ 7,61,05,543/-being deemed dividend for the credit amount appearing in name of the assessee in two companies namely M/s Raj at Minerals Pvt. Ltd. ₹ 2,78,00,000/- and M/s KDS Contractors ₹ 6,78,57,240/-. This figure was taken completely from the audited books as stated by ld.AO in the questionnaire issued on 21/11/2016 copy of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 52,500/- being deemed rental income. During the course of assessment proceeding Ld. AO failed to even specifically mention for which property said addition has been made. However, in the course of remand proceeding Ld AO states that the addition is being made for the house property in Joda, Orissa stating that the assessee failed to establish that the said property was used as transit office. We would like to mention that the search upon the assessee was only conducted on the said premises which can be clearly seen from the copy of panchnama which is annexed in paper book No. 1 at page No. 108 onwards. This itself is sufficient to show an establishment that the said property was used as transit office by the assessee and his group for controlling the business. In any view of the case the addition made by Ld. AO is not based upon any seized material found during the course of search proceeding. 5. Disallowance of expenses: ₹ 98,88,221/-: :Ld. AO while completing the assessment made addition of ₹ 98,88,221/- by making a disallowance of 100 % of the expenses claimed under the head of salary and general expenses and 50% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that these all exercise must be done by the AO while framing the assessment order. Accordingly, ld AR of the assessee submitted that the additions made by the AO on various heads and confirmed by the CIT(A) may kindly be deleted and appeals of the assessee may kindly be allowed. 9. On the other hand, ld. DR relied on the orders of authorities below and submitted that with regard to ground No.1 this forum has no right to hear the case. In respect of ground No.2, ld. DR submitted that the ld. CIT(A) has rightly discussed this issue and the order of CIT(A) should not be disturbed as this issue has not been objected by the assessee before the Assessing Officer. With regard to ground No.3, ld. DR submitted that the proceedings u/s 132 is sufficient for reopening for the last six years of the case. In the Tax Evasion Petition there was sufficient information that the assessee is not disclosing his true income. During the statement recorded the accountant has accepted that the assessee is not disclosing his true income. Ld. CIT(A) has sought remand report from the AO wherein the AO has referred to the incriminating material and considering the same and relying on variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of the case, we decline to accept the ground No.1 taken by the assessee regarding validity of search proceedings. Therefore, this ground of appeal is dismissed. 11. With regard to ground No.2, the assessee has contested that the assessee has not received notice u/s.143(2) of the Act at his registered office or place of search. The CIT(A) while dealing with the issue has dismissed the ground of assessee after observing as under :- 5.1 Appellate finding and decision : The appellant through the above ground contended that he has not received Statutory notice u/s. 143(2) either at his registered office or place of search and therefore the AO has no jurisdiction to pass order u/s. 153A/143(3) of the Act. However, it is evident from assessment order vide para 4, the AO categorically stated that a Statutory notice u/s. 143(2) of the Act was issued on 02/11/2016 fixing the date of compliance on 11/11/2016 . Further, in response to the said notice of hearing Shri Deepak Banga, CA and AR of the appellant attended before the AO. Therefore the contention of the appellant that no proper notice u/s. 143(2) was issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of su assessment or reassessment. 5.4 In the instant case of the appellant, the AR of the appellant Sri Deepak CA appeared from time to time and cooperated in the assessment proceedings. No objection as to issue and service of notice u/s. 143(2) was ted before the AO till the completion of assessment. Therefore the appellant can't raise the validity of issue of notice u/s. 143(2) during appellate proceeding. Hence the contention of the appellant is rejected even on this count also. In this regard reliance is placed on the decision of the Hon ble Punjab Haryana High Court in the case of Josh Builders Developers (P.) Ltd. Vs. PCIT-1, Chandigarh reported in [2017] 79 taxmann.com 435 wherein it was held that the Assessee, having not raised any objection with regard to issuance and service of a valid notice during assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the Tribunal ought not to have interfered with the order of the Commissioner (Appeals). HELD that the alleged irregularity in the service of notice as pointed out by the assessee virtually faded into insignificance insasmuch as the assessee was represented by her own auditor, who filed the return on behalf of the assessee. That apart, neither in the course of the hearing before the Assessing Officer or before the Commissioner (Appeals), the assessee raised any grievance as regards the appearance made by the auditor on her behalf, on the footing that there was no proper service of notice in relation to the assessment proceedings initiated originally by the assessing authority, viz., the Joint Commissioner. Thus, it was rightly held by the Tribunal, that the alleged irregularity was practically waived by the assessee which could not be found fault with inasmuch as, at no point of time till the final order was passed by the Commissioner (Appeals), the assessee made any grievance as regards the representation and appearance made by one S in his capacity as auditor, who admittedly filed the returns. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly applicable only from the assessment year 2008-09. In this view of section 292BB, the Tribunal held that despite the fact that the assessee participated in the assessment proceedings, it could still object to the validity of the assessment order. Accordingly, the Tribunal set aside the impugned assessment order. On revenue s appeal HELD The only question that arises for consideration is whether the notice issued on 30-12-2004 under section 143(2) was validly served upon the assessee-firm on 31-12-2004 as claimed by the Assessing Officer. One proceeds on the assumption that the notice was not served on either of the two partners of the assessee-firm and that it was served on some person who was not specifically authorized to receive notice. Even so, one is not persuaded to hold that there was no valid service of the notice upon the assessee-firm. It should be remembered that the basic purpose of issuing a notice under section 143(2) is to give an opportunity to the assessee, who has submitted his return, to support the same by adducing the necessary evidence, documents, etc. Clause (ii) of section 143(2) in terms says ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument is an afterthought because the initial argument was that the appearance made on behalf of the assessee on 5-1-2005 was not pursuant to the notice issued on 30-12-2004. Perhaps realizing the difficulty that this argument is likely to cause to the assessee, the argument was modified later to the effect that there was no evidence to show that the case was fixed for hearing on 5-1-2005 or that any one appeared before the Assessing Officer on that date on behalf of assessee. The Commissioner (Appeals) has noted in his order that in the remand report the Assessing Officer has stated that in the notice dated 30-12-2004, the case was fixed for hearing on 5-1-2005. This statement constitutes sufficient evidence to refute the contention advanced on behalf of the assessee. As regards the other part of the contention that there was no evidence of any one appearing before the Assessing Officer on behalf of the assessee on 5-1-2005, one may refer to the grounds taken by the revenue in the appeal. In one ground it has been asserted that pursuant to the notice issued on 30-12-2004 the counsel for the assessee appeared before the Assessing Officer on 5-1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, including those of this Court to the effect that if there is no valid service of the notice under section 143(2) of the Act, the assessment order is null and void. The question is whether there was a valid service of the notice upon the assessee. Considering the facts of the case and the conduct of the assessee, it is opined that there has been a valid service of the notice upon the assessee. He has also participated in the proceedings. In the decided cases to which attention was drawn, the discussion has proceeded on the basis that there was no service of the notice upon the assessee and therefore the assessment order was null and void. Where the facts show that there has been effective service of the notice upon the assessee pursuant to which he has also participated in the proceedings for assessment of his income, there is nothing in law to compel the Court to hold that despite notice that his case is posted for hearing before the Assessing Officer, the assessment order passed after giving him full opportunity of being heard would still be invalid. That will be a travesty of justice. [Para 14] In the instant case, authorized repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules of natural justice should not be permitted to be abused by the very person for whose benefit it is intended and should not be permitted to become a tool to ward off the liability to pay the tax. [Para 17] In view of the foregoing discussion, it is held that the Tribunal was not right in quashing the assessment proceedings. The assessee was properly served with the notice under section 143(2) and within the statutory period prescribed by the proviso to the said sub-section. Since, the Tribunal has not examined the order of the Commissioner (Appeals) giving relief to the assessee in respect of various additions made in the assessment because of the view it took on the question of validity of the assessment, the issue was to be remitted to the Tribunal for a fresh disposal. [Para 20] 5.7 Reliance is also placed on the decision of Hon ble Delhi High Court in the case of CIT-II, New Delhi Vs. Madhsy Films Pvt Ltd reported in 301 ITR 69 wherein the Hon ble court held that, where notice issued to assessee under section 143(2) had been dispatched by speed post at its address as per its return and same had not been received back, it could be presum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein it was held that the where an assessment has to be completed under section 143(3) read with section 158BC, notice under section 143 (2) must be issued and omission to do so cannot be a procedural irregularity and the same is not curable. It is to be noted that the above said judgment was in the context of Section 158BC. Clause (b) of Section 158BC expressly provides that the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of Section 142, sub sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply. This is not the position under section 153A. The law laid down in Hotel Blue Moon, is thus not applicable to the facts of the present case. 10. The decision of Lunar Diamond Ltd. (supra), Vardhman Estates (supra) and Bhan Testiles (supra) relied upon by learned counsel for the assessee related to the requirement of service of notice upon the assessee within a prescribed time and thus not applicable to the present case. The case of Pawan Gupta (supra) related to mandatory issue of notice under Section 143(2) of the Act in the case of regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Dalmia v. CIT (supra) primarily was with regard to applicability of section 144B and Section 153 (since omitted with effect from 01.04.1989) to the assessment made under section 147 and 148 and thus cannot be said to be the decision laying down the law regarding mandatory issue of notice under Section 143(2). 13. The words so far as may be in clause (a) of sub section (1) of Section 153A could not be interpreted that the issue of notice under Section 143(2) was mandatory in case of assessment under Section 153A. The use of the words, so far as may be cannot be stretched to the extent of mandatory issue of notice under Section 143(2). As is noted, a specific notice was required to be issued under Clause (a) of sub-section (1) of Section 153A calling upon the persons searched or requisitioned to file return. That being so, no further notice under Section 143(2) could be contemplated for assessment under Section 153A. 14. No specific notice was required under section 143(2) of the Act when the notice in the present case as required under Section 153A (1) (a) of the Act was already given. In addition, the two questionnaires issued to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which is pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. In the present case in hand, the ld. DR was also unable to produce any cogent evidence for the assessment years under consideration i.e. AYs. 2009-2010 to 2012-2013, that assessment for these years are pending before the AO. On further perusal of assessment order at page No.3 we noticed that the submissions of the assessee has been incorporated in which it has been stated that the assessment has been completed u/s.143(3) of the Act, which has not been controverted by the revenue authorities. Therefore, these assessment years (AYs. 2009-2010 to 2012-2013) shall be unabated. In case of unabated assessment for the last four years, addition could be made only on the basis of any incriminating material found during the search. It is the case of the assessee that additions/disallowances could not be made in the assessment framed u/s.153A of the Act de horse reference to any incriminating material found in the course of search in this regard. The return of income was filed by the assessee u/s.139 of the Act, which was processed u/s.143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. counsel for the assessee has argued the case on legal ground as well as on merits of the case, but we are only dealing with legal issue i.e. absence of incriminating material during the search. We have also gone through the Paper Book containing pages 1 to 335, as discussed above. We find that the additions made by the AO are beyond the scope of section 153A of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noticed that as on the date of search i.e. 17.8.2011, no assessment proceedings were pending for the year under consideration and the AO was not justified in disturbing the concluded assessment without there being any incriminating material being found in search. In fact, in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. Perusal of the assessment orders framed u/s. 153A r.w.s. 143(3) dated 30.3.2014 would reveal that the addition made in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome would be brought to tax . 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 ITA Nos. 707, 709 and 713 of 2014 of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Kabul Chawla (supra), wherein, the Hon'ble High Court after detail analysis concluded that, where there is no incriminating material qua each of the assessment year roped in under section 153A of the Act, then, no addition can be made while framing the assessment under section 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also, 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, we set aside the orders of both the authorities below and held that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment under section 153A of the Act. Thus, the grounds raised by the assessee for the assessment year 2010-2011 are allowed. 16. In the instant case, on perusal of the assessment order, it was noticed that the AO has not disallowed any specific amount of expenses on account of any incriminating materials found at the time of search. It is pertinent to note that the assessee had filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year or years] : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years] : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made [and for the relevant assessment year or years]:] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. From the above provisions of Section 153A of the Act, it is clear that the Assessing Officer, while framing assessment under section 153A of the Act cannot make the addition/disallowance dehors any incriminating material. In this regard, reliance can also be placed on the decision of Mumbai Bench of the Tribunal in the case of K.Sera Sera Productions Ltd. Vs. DCIT, [2017] 87 taxmann.com 249 (Mumbai-Trib); wherein the Tribunal has held as under :- 8. We have carefully considered the rival submissions. In order to appreciate the controversy, it is pertinent to observe that Section 153A of the Act postulates an assessment in case of search or requisition under section 132 or under section 132A of the Act respectively. The said section envisages that the Assessing Officer shall assess or reassess the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. The second proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in such a case, the original assessment had become final. 8.1 The aforesaid proposition is also supported by judgment of Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573, wherein the legal proposition has been summarized in the following words:- Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the proviso thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes places. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is based on the disallowance made in the assessment originally finalized under section 143(3) of the Act dated 22/11/2006. The second addition is the disallowance of Stock Exchange listing fee of ₹ 2,00,000/- and the relevant discussion is contained in para-6 of the assessment order. The addition has been made primarily in the absence of evidence to substantiate the expenditure. Thirdly, depreciation on furniture and fixtures of ₹ 5,94,013/- has been denied in terms of the discussion in para-7 of the assessment order. The relevant discussion shows that in case of some of the invoices of the cost of furniture and fixtures, the assessee could not substantiate the values and thus, depreciation was denied on such value of the assets. Fourthly, the addition of ₹ 28,00,000/- out of expenditure on gifts has been made and the relevant discussion is contained in para-9 of the assessment order. The discussion shows that the Assessing Officer was not satisfied with the justification for incurrence of expenditure and out of the total expenditure of ₹ 30,00,000/- on gifts made, he disallowed an amount of ₹ 28,00,000/-. Lastly, the Assessing Officer disallowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus whatsoever with any material of incriminating nature found in the course of search which is genesis of proceedings under s.153A of the Act in the instant case. The appeal of the assessee thus hinges around one pertaining legal point as to whether, while making assessment under s.153A, the Revenue is entitled to interfere with the assessment concluded either under s.143(1) or under s.143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search. 6.1. On a bare perusal of assessment years in appeals and the composite order of the CIT(A) discussing issues connected with various additions/disallowances, we find total absence of reference to any incriminating material which may have any bearing to impugned additions/disallowances. As a corollary, it is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under s.132 of the Act and is based on re-appreciation of facts unconnected to search. 6.2. We also note that the income-tax return for the relevant assessment years were fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the hon'ble Delhi High Court. The order under section 394 of the Companies Act, 1956 was passed by the hon'ble Delhi High Court on August 7, 2003. It is also undisputed that the shares transferred were amongst the family members of the family held companies and no shares were sold to the outsiders. It is also undisputed that the buyers/assessees are not at liberty to transfer the shares so acquired to third parties outside the family concern and in case these shares are required to be transferred, the sellers would have a pre-emptive right to buy back the said shares. It is also undisputed that the memorandum of understanding as well as the sanction of scheme of merger relates back to the financial year 2003-04. 10.1 Further, a perusal of the assessment orders reveal that while making the impugned additions, the Assessing Officer has only mentioned the date of search but has not referred to any incriminating material found during the course of search which could be the foundation of these additions. There is not even a whisper of any incriminating material having been found and relied upon by the Department relating to these additions on account of per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it were. Searches-to quote the view of Attorney-General (NSW) v. Quin [1990] HCA 21 in another context are 'not the key which unlocks the treasury' of the Revenue's jurisdiction in regard to matters that had attracted attention in the regular course of assessment. 10.2 In the appeals before us, it is not the case of the Department that any material disclosing the issue of transfer of shares was withheld from the assessment and was found and seized during the course of search. It is also not the case of the Department that any other incriminating material which could point out to such transfer of shares was unearthed during the course of search and was subsequently relied upon by completing the assessment under section 153A. In such a circumstance, respectfully applying the ratio of the judgment in the case of Mahesh Kumar Gupta (supra) as well as of CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 of the hon'ble Delhi High Court, we hold that proceedings under section 153A were against the scheme of the Act in case of all the assessees. We also hold that the learned Commissioner of Income-tax (Appeals) was not justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have heard the contentions of both the parties, perused the documents placed before us as also the orders of the authorities below. 14. The undisputed facts in the present case are that on the date of search conducted on the assessee u/s 132 of the Act, i.e 17-3-2010, no assessment proceedings relating to the impugned year were pending. In fact the assessee had filed return filed u/s 139(1) of the Act on 29-6-2004, no notice u/s 143(2) had been issued to the issue and on the date of initiation of search i.e 17-3-2010 the time limit for issuing notice u/s 143(2) had expired. Thus, on the date of search no assessment proceedings were pending. Further in the assessment made u/s 153A of the Act, the only addition made pertained to disallowance of interest u/s 24(b) of the Act in the absence of any documentary proof for claiming the same by the assessee. No incriminating material, found during the course of search, pertaining to the addition/disallowance made was referred to while making the disallowance. 15. The issue before us is, whether in case of assessments framed under section 153A of the Act, addition could be made in the absence of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be passed. The Hon'ble High Court held that this was sought to be achieved in case of those assessment years where assessment proceedings were pending on the date of search by abating them and framing fresh assessment including incomes relating to incriminating material found during search. In case of those assessment years where an assessment order had already been passed under section 143(1)(a) or 143(3), those assessments could be reopened and the total income reassessed taking note of the undisclosed income if any unearthed during search, the fetters to reopening, being removed by insertion of the non-obstante clause to section 153A. The entire thrust of the judgment rested on the interpretation that there cannot be multiple assessment orders in case of search assessments under section 153A/B/C of the Act and, therefore, where assessments were pending they would abate to enable the Assessing officer to assess the total income including undisclosed income, and where assessments or reassessments had been completed, they would not abate and the Assessing Officer would only reopen the completed assessments and include therein undisclosed income. The High Court went on to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although section 153A 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. 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 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment but found in the course of search and undisclosed income/property discovered in the course of search. section 153A being enacted to a search and requisition, its construction would have to be made accordingly. 2. The second proviso to section 153A(1) states that on initiation of proceedings u/s 153A ,the assessment/reassessment proceedings pending on the date of conducting search or making requisition u/s 132A of the Act, shall stand abated. The CBDT Circular No. 8 of 2003 dt.18-09-03,clarifies that proceedings in appeal, revision or rectification against finalized assessments/reassessments shall not abate. Reading the two together, the Courts have stated that as per section 153A, Assessments/reassessments already finalized do not abate, meaning thereby that they attain finality, which cannot be disturbed unless some incriminating materials are gathered during the course of search. 3. That the words assess or reassess has been used at more than one place in the section and a harmonious construction of the entire provision would lead to the conclusion that the word assess has been used in the context of abated proceedings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search, the Assessing Officer has no jurisdiction to make any addition under section 153A of the Act. 25. We may add that during the course of hearing before us, the learned DR, Shri Manjit Singh, vehemently argued at length, raising several issues against the proposition and though as observed above, the issue is no longer res integra, we shall still deal with the arguments of the learned D.R. 26. The first argument of the learned D.R. that the issue had been decided against the assessee by the Chandigarh Bench of the I.T.A.T. in the case of Vipan Kumar Verma (supra), merits no consideration in view of the numerous judgments of the higher authorities i.e. High Courts on this issue. 27. The argument of the learned D.R. that the Hon'ble Supreme Court has granted SLP against the High Courts ruling in the case of Continental Warehousing (supra) does not disturb the current status of the interpretation of the proposition since the fact remains that as on date there are several judgments of the High Courts upholding the proposition that no addition can be made in the absence of incriminating material in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. (emphasis supplied by us) In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. 31. It is evident from the same that the understanding of the learned D.R. that by including only undisclosed income discovered as a result of search, in the assessment framed under section 153A in those cases where assessment have been completed earlier under section 143(3)/143(1) of the Act, the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om a reading of the above ,it is ev.nt that Sh Goyal admitted that certain incriminating documents relating to various investment companies, excess cash and jewellery was found at his residence. Admittedly there is no reference in the statement to any document found, which revealed that the assessee had wrongly claimed interest on loan taken for his house property, which was the only disallowance made in the assessment order passed u/s 153A for the impugned year. Moreover we find that the disallowance was made for want of evidence and not on the basis of any incriminating material found during search. Further we find that the statement is general with no reference to any specific document or asset found during search and the assessee has admittedly surrendered ₹ 11 crore on account of the same and paid taxes thereon.The statement therefore cannot be stated to be incriminating material for the purpose of disallowing interest on housing loan. 35. Moreover the Delhi Bench of the ITAT in the case of Best Infrastructure (India) (P.) Ltd. v. Asstt. CIT in ITA No. 1698 (delhi) of 2014 dt.31-5-2016, held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. There is no any iota of sentence in the assessment order that any annexures prepared by the search team in the Panchanama has been referred in the assessment order. The Tax Evasion Petition has been filed on 21.11.2016 much after search took place, which is not covered under the search and, therefore, it cannot be termed as incriminating materials found during the course of search. We also referred to the Panchanama drawn by search team the statement of Shri Sanjay Pati, Accountant has been recorded which has also not been utilized by the AO while framing the assessment order. Therefore, it is clear that there is no incriminating material was found during the course of search. 23. It is pertinent mention here that as per the provisions of Section 153A of the Act, the Assessing Officer assesses or reassesses the assessment for immediately preceding six assessment years from the date of search. In this case, the Assessing Officer has completed the assessment u/s.153A of the Act without referring any document found during the course of search and the assessment has been completed only on the basis of Tax Evasion Petition (TEP) filed by somebody el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions/disallowances on merits. Thus, appeal of the assessee in IT(SS)A No.34/Ran/2019 for A.Y.2009-2010 is partly allowed. 23. Since, we have held that the assessment framed by the AO u/s.153A of the Act is not sustainable as the AO has not referred to any loose sheet or any specific incriminating document found during the course of search enabling him to make such addition, therefore, rest of the appeals i.e.IT(SS)A No.35 to 37/Ran/2019 for the assessment years 2010-2011 to 2012-2013 being similar in grounds raised in assessment year 2009-2010, the addition made therein by the AO and confirmed by the CIT(A) is not sustainable. Thus, appeals of the assessee for assessment years 2010-2011 to 2012-2013 are partly allowed. 24. Now, we shall take up the appeals of the assessee for assessment years 2013-2014 to 2015-2016 in IT(SS)A Nos.38 to 40/Ran/2019. For the sake of convenience, we shall take up the facts and grounds mentioned in IT(SS)A No.38/Ran/2019 for deciding all the above appeals. The assessee has raised the following grounds for A.Y.2013-2014 :- 1. For that search operation was only carried out at Transit Office of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged difference in turnover as per 26AS and audited accounts. Complete reconciliation for the same was furnished before lower authorities. It was mentioned that the amount in 26AS includes interest received, and other payments includes customs and other statutory duties which have been separately accounted for in our books. As such, there is absolutely no difference in the turnover figure. Moreover there was no incriminating material found or seized during search to suggest for any such addition. As such, the addition made is fit to be deleted. 7. For that Ld. CIT(A) was not justified in confirming the addition of ₹ 52,000/- being made as deemed rental income. There was no vacant residential property for which deemed income from rent can be estimated. Complete detail of the properties held by the appellant was furnished before the lower authorities. As such, the addition made in absence of any incriminating material is fit to be deleted. 8. For that ld. C1T(A) was not justified in confirming the addition of ₹ 2,99,888/- made by ld AO by disallowing expenses. General expenses and salary to staff claimed in full was disallowed bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment orders have been passed, if it is found just, proper and necessary to restore the issue to the file of AO then the department has no serious objection to that in the interest of justice. 27. After hearing the submission of both the parties and perusing the entire material on record, we find that the AO has issued show cause notice on 21.11.2016 on the basis of TEP filed on 21.11.2016 for fixing the case on 28.11.2016 on which date the AO passed the assessment order u/s.153A r.w.s.143(3) of the Act. The search was conducted on 3rd July, 2014 and for selection of scrutiny u/s.143(2) of the Act was not expired on the date of search, therefore, this year s assessment would be completed as a regular assessment u/s.143(3) of the Act. The ld. AR of the assessee was also unable to controvert that on the date of search, the assessment for the impugned year has been completed. Our this view is supported by plethora of judicial decisions. Accordingly, on perusal of the assessment order and considering the request of the ld. AR of the assessee, to which ld. DR has not objected, we are of the considered opinion that the assessee in this case was deprived of reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er found during the course of search. Therefore, our observations made in the ground No.3 in IT(SS)A No.34/Ran/2019 shall also apply mutatis mutandis to these appeals of the assessee. Accordingly, ground No.3 is allowed. 33. Thus, appeals in IT(SS)A Nos.27 to 30/Ran/2019 for A.Y.2009-2010 to 2012-2013 are partly allowed. 34. Now, we shall take up appeals for assessment years 2013-2014 to 2015-2016. 34.1 On perusal of the grounds of appeal raised in the above appeals, we found that similar grounds have been decided by us while considering the appeals of assessee-Shri Kamal Deo Sharma in IT(SS)A No.38/Ran/2019, wherein we have remitted the matter back to the file of AO for de novo assessment. Accordingly, the issues raised in the present appeals being similar to the appeal decided by us in IT(SS)A No.38/Ran/2019 for the assessment year 2013-2014, therefore, our observations made in the above appeal shall also apply mutatis mutandis to these appeals of the assessee. 34.2 Thus, appeals of the assessee for A.Y.2013-2014 to 2015-2016 are allowed for statistical purposes. 35. Now, we shall take appeals of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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