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TMI Blog2020 (10) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... red in facts and circumstances and in law in confirming addition of Rs. 37,07,242/- on merit out of total addition of Rs. 4,11,06,995/- made by the A.O. on account of sale of shares treated as unexplained receipt in spit of the Ld. CIT(A) deleting the entire addition in the same order on legal ground following the binding decision of Hon'ble Gujarat High Court in the case of CIT- 4 vs. Saumya Construction Pvt. Ltd. (387 ITR 529) (Guj.) as no incriminating document was found during the search." IT(SS)A No. 265/Ahd/2018 (Revenue's appeal) 3. The ground of appeal raised by Revenue reads hereunder: "1 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and/ or on facts in deleting the addition of Rs. 4,11,06, 995/- made by the AO on account of unexplained receipts from share transactions." 4. Both assessee and Revenue are in cross appeals against the order of the CIT(A). Whereas the Revenue has challenged the action of the CIT(A) for deletion of the additions made by the AO towards unexplained share transactions, the assessee has challenged the action of the CIT(A) in confirming the partial additions made by the AO. 5. The cause of actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, it is noticed that the assessee has purchased and sold shares of various scrips amounting to Rs. 3,83,99,753/- and Rs. 4,11,06,995/- respectively mainly through Archi Shares & Stock Brokers Pvt. Ltd. In response to the query raised by AO on the transactions, the assessee submitted that business operation of Archi Shares & Stock Brokers Pvt. Ltd. is hitherto closed where the shares were kept in pool account. The bank account of the assessee was however filed. The AO was dissatisfied with the lack of explanation on the purchase and sale transactions and accordingly added a sum of Rs. 4,11,06,995/- being gross value of sale of shares as recorded in ITS statement by a very brief order and without any cross verifications from Exchange or the broker. 11. Aggrieved by the aforesaid action, the assessee preferred appeal against the assessment order before the CIT(A). The CIT(A) found merit in the legal submissions made by the assessee on lack of jurisdiction of the AO to assess such alleged unexplained share transactions in the hands of the assessee in the proceedings under s.153A of the Act totally unconnected to any incriminating material found in the course of search where original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of search in the assessment order, on the basis of which additions have been made. Additions have been made on the basis of ITS data, which was already available with the department. As decided by various higher judicial authorities & mentioned in the appellant' s submission, addition in the assessment made- u/ s.153 A/ 153C cannot be made, if no incriminating document is found during the course of search. By following the binding judgement of Hon' ble High Court of Gujarat, Ahmedabad in the case of CIT-4 v/ s Saumya Construction P Ltd 387 ITR 529 (Guj), the additions made by the AO are not found legally sustainable, hence, deleted." 12. The CIT(A) however also simultaneously addressed the grievance of the assessee on merits. It was observed by the CIT(A) that the difference between the sale and purchase of share stands at Rs. 27,07,242/- which is unreported profit liable to be taxed. In the similar vein, the CIT(A) also estimated unexplained investment to the tune of Rs. 10 Lakhs in relation to such transactions reported in ITS statement. Thus, on merit, the CIT(A) sustained the additions of Rs. 37,07,242/- and remaining addition of Rs. 3,73,99,753/- was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act for AY 2009-10 in appeal, the assessment was entirely based on appreciation of transactions figured in ITS statement. The learned AR asserted that this kind of addition, if any, based on routine information in possession of the department from various sources are subject matter of regular assessment. Such action does not resonate with the Scheme of search assessment under s.153A of the Act de hors reference to any incriminating material in this regard. The learned AR further emphasized that in the absence of incriminating material, no adjustment in the returned income is permissible under s.153A of the Act in a concluded assessment. 13.3 Expanding further, the learned AR next submitted that the return for the AY 2009-10 in question had become timebarred and was not pending for assessment at the time of search. Therefore, the regular assessment/deemed assessment stood concluded at the time of search relating to AY 2009-10 in question survived and did not get abated. The learned AR submitted that in these facts, it is not permissible for AO to invoke authority vested under s.153A of the Act to indulge in making routine examination of various items income and expenditure which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch in this regard. It is further the case of the assessee that the additions/disallowances made have no nexus whatsoever with any material of incriminating nature found in the course of search which is the genesis of proceedings under s.153A of the Act in the present case. The additions have been made based on a contemporaneous ITS statement where certain data are routinely collected and collated as a matter of course independent of the search. 14.1 The plea of the assessee thus hinges around one pertinent legal point as to whether while making assessment under s.153A of the Act, the Revenue is entitled to interfere with the assessment concluded either under s.143(1) or under s.143(3) of the Act and not pending at the time of search in the absence of any incriminating material unearthed as a result of search. 14.2 On a bare perusal of the assessment order and the appellate order passed by the CIT(A), we find total absence of reference to any incriminating material which may have any bearing to impugn additions/disallowances. On the contrary, it is manifest that the impugned addition has been made based on appreciation of certain data routinely poured into the department system ..... X X X X Extracts X X X X X X X X Extracts X X X X
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