TMI Blog2020 (2) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... enue : Shri S.B. Prasad, DR ORDER PER BENCH. The above captioned appeals filed at the instance of revenue Cross Objection by assessee pertaining to Assessment Years 2005- 06, 2006-07 2009-10 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-I (in short Ld.CIT(A) ], Indore dated 10.3.2016 which is arising out of the order u/s 153A r.w.s.143(3) of the Act dated 28.03.2013 framed by DCIT-2(1), Indore. 2. As the issues raised in these appeals are common they were heard together and are being disposed off by this common order for the sake of brevity and convenience. 3. As Revenue has raised common grounds of appeal for all three Assessment Years 2005-06, 2006-07 and 2009-10. Grounds raised for Assessment Year 2005-06 are only mentioned below:- (1) Whether in the facts and in the circumstances of the case, the Ld. CIT CA) erred in law by deleting the additions holding that these additions have not been made on the basis of incriminating materials or documents found during Search seizure action u/s 132 of the IT Act. (2) Whether on the facts and in the circumstances of the case the Ld. CIT CA) erred in law in in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. That, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the addition of ₹ 8,30,000/- made by the AO in the respondent's income by invoking provisions of section 68 of the Income-Tax Act, 1961, merely on guess work, conjectures and surmises. 5(a)That the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the addition of ₹ 6,00,000/- made by the AO in the respondents income by disallowing the entire expenditure on account of Brokerage' claimed by the respondent for deriving income from MCX sections merely on guess work, surmises and conjectures. (b) That the learned CIT(A) grossly erred, both on facts and in law, in not deciding :.....e- issue on merits with respect to the addition of ₹ 53,425/- and Rs.l,03,500/- made by the AO in the respondent's income by disallowing 50 of the expenditure actually incurred and claimed by the respondent on account of 'Legal Expenses and Salary Expenses' respectively for deriving income from MCX transactions merely on guess work, surmises and conjectures. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by making ad-hoc disallowance out of the expenditure claimed by the respondent for deriving income from MCX transactions merely on guess work, surmises and conjectures. 6. That the learned CIT(A) grossly erred, both on facts and in law, in not deciding e issue on merits with respect to the addition of ₹ 3,80,200/- made by the AO in e respondent's income on account of alleged unexplained investment in Plot No. I10 1-11, Shreeji Velly, Gram Bicholi Mardana, Indore, by invoking provisions 0- section 69B of the Income-Tax Act, 1961, on extraneous considerations, without giving proper opportunity of being heard and without considering the material fact that the entire investment was made by the respondent out of his explained sources only. 7. That, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the addition of ₹ 3,55,995/- made by the AO in e respondent's income on account of alleged unexplained investment in Plot No. R-8, Shreeji Velly, Gram Bicholi Mardana, Indore, by invoking provisions, of Section 69B of the Income-Tax Act, 1961, on extraneous considerations, without giving proper op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09 only and therefore, even on this count no addition could have been made during the assessment year under consideration. 4.That, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the addition of ₹ 5,OO,OOO/- made by the AO in the respondent's income on account of unsecured loan claimed to have been received by the respondent from M/s. Shreenath Traders, Indore, by invoking provisions of section 68 of the Income-Tax Act, 1961. 5.That, the learned CIT(A) grossly erred, both on facts and in law, in not deciding the issue on merits with respect to the addition of ₹ 25,OO,OOO/- made by the AO in the respondent's income on account of undisclosed capital gain, merely on guess work, conjectures and surmises without properly considering and appreciating the explanation of the respondent made before the AO. 6.That, the cross objector further craves leave to add, alter and/or amend Ground of Cross-objections, as and when considered necessary. 5. Brief facts of the case as culled out from the records are that the assessee is an individual engaged in the business of MCX trading. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted that no incriminating material was found during the course of search for Assessment Year 2005-06 and Assessment Year 2009-10 the finding of Ld. CIT(A) may be confirmed and Cross Objections raised by the assessee may be dismissed as infructuous. However with regard to Assessment Year 2006-07 for which the Ld. Departmental Representative referred to the incriminating material, it was submitted that no such material was found. Certain questions were asked during the search proceedings on the basis of which Ld. A.O seeked information during the course of assessment about the alleged unexplained investment. The assessee has submitted that the alleged purchase of properties were duly accounted for in the regular books and have been disclosed by the assessee. Since the alleged investments are duly explained they do not fall in the category of incriminating material and thus no addition could have been made. Ld. Counsel for the assessee apart from relying various judgments and decisions relied by the Ld. CIT(A) also relied on the decision of Hon ble High Court of Delhi in the case of Principal CIT Ors V/s Meeta Gutgutia (2017) 395 ITR 0526. Against this judgment of Hon ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regular source of income and funds available with the assessee. Fund flow statement for the period 1.4.2004 to 31.3.2011 was filed before the Ld. A.O vide letter dated 26.10.2012. For better understanding we reproduce below the finding of Ld. A.O in the assessment order for Assessment Year 2006-07 relating to addition of ₹ 3,80,200/- and ₹ 3,55,995/- for unexplained investment; 3.UNEXPLAIINED INVESTMENT:- Vide question No.14 of the statement of the assessee dated 25/11/2010 recorded during the course of search on 25/11/2010 the assessee was required to explain the source of purchase of the plot at no. 1-10 and 1-1 leach 2400 Sq. Ft. At Shreeji Velly, Gram Bicholi Mardana, Indore purchased for ₹ 148800/- each dated 02112/2005. During the course of assessment proceedings the assessee was required to furnish evidence for such source of investment. Vide submission dated 26/10/2012 the assessee submitted that he has incurred total investment of ₹ 3,80,200/-(₹ 1 ,90,100/- *2) including registry expenses and the source of investment can be verified from the fund flow statement. On examination of bank statement and the expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the return could have been selected for scrutiny by the issuance of notice u/s 143(2) of the Act expires on 31.10.2007. 16. Thus in the proceedings u/s 153A of the Act the additions seems to have been made only on the basis of assessment enquiry. Assessee had duly replied during the proceedings about the information asked in Question No. 14 15 that the transactions have been shown in the regular return of income. This facts remains un rebutted by the revenue authorities that apart from the questions asked there was no other incriminating material found during search relating to Assessment Year 2006-07. Thus the undisputed fact remains is that in assessment completed for Assessment Year 2005- 06, Assessment Year 2006-07 and Assessment Year 2009-10, additions were made by the Ld. A.O merely on the basis of enquiry during assessment proceedings having no direct or indirect nexus with any incriminating material found/seized during the course of search. In the given case where the return of income were originally filed u/s 139(1) of the Act and assessee s case was not selected for scrutiny u/s 143(2) of the Act, validity of such assessment u/s 153A of the Act needs to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 153A trigged and Assessing Officer is bound to issue notice u/ s 153A of the Act. Once notices are issued u/ s 153A of, the Act then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the Assessing Officer. It is also held by various Courts that once notice u/ s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then Assessing Officer acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessees. Thus assessments for these assessment years were completed on the date of search. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd/2010 vide order dated 18.1l.2015. The Hon'ble ITAT Indore Bench, Indore while arriving at the above decision has taken note of all the recent decisions on the issue of validity of assessment proceedings u/s 153A of the Income Tax Act, 1961 wherein assessments were made without reference to any incriminating documents/material/evidences found during the course of search and held that it is a settled legal position that when two views are possible on a particular issue then the view favourable to the assessee should be followed as held by the Hon'ble Apex Court in the case of CIT vs. Vegetable Products, 88 ITR 192. On perusal of the assessment order in the case it is seen that the additions made by the AO have been made without any reference to any evidences/ documents/material found as a result of search action. The appellant has also stated that no incriminating material was found during the course of search to justify any enquiry on the above issues. In view of the fact that no incriminating documents/material/evidences were found related to the issues considered in the assessment order during the search and keeping in view the decisions of the Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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