TMI Blog2019 (4) TMI 1971X X X X Extracts X X X X X X X X Extracts X X X X ..... sment was pending on 11.10.2012 and hence, no assessment gets abated. As per the judgment of Hon ble Delhi High Court rendered in the case of Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] , if no incriminating material is found in search and assessment is not abated, such a completed assessment cannot be reopened u/s 153A in the absence of incriminating material having been found in search. SLP filed by the revenue against this judgment of Hon ble Delhi High Court is dismissed by Hon ble apex court. But in order to apply the ratio of this judgment, this factual aspect has to be examined as to whether any incriminating material for any of these four assessment years was found or not in search. CIT (A) has not given any finding on this factual aspect because he proceeded on this basis that this is not material as per the judgment of Hon ble Karnataka High Court rendered in the case of Canara Housing Development Co. [ 2014 (8) TMI 642 - KARNATAKA HIGH COURT] but we have seen that this judgment is not relevant to decide this aspect as to whether section 153A can be invoked for a year prior to the year of search if no incriminating material is found in search for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting material / or undisclosed income is found in course of search assessment proceedings. 3. The CIT(A) has erred in not considering that having regard to the second proviso to section 153A, the completed assessment cannot be disturbed except only in the case where there is any undisclosed income found in the course of search or any incriminating documents pointing towards such undisclosed income is found in the course of search or in the course of assessment proceedings under section 153A of the Income-tax Act. 4. The Appellant therefore prays that the order passed by the Assessing Officer is contrary to the provisions of law and liable to be quashed since no undisclosed income is found in the course of search or in the course of proceedings under section 153A. Ground No.2: The Appellant craves leave to add, alter and/or amend all or any of the foregoing grounds of appeal. 3. The grounds raised by the assessee for Assessment Year 2009 10 in ITA No. 1307/Bang/2017 are as under. Ground No.1: Order passed under section 143(3) r.w.s. 153A is liable to be quashed 1. On the facts and circumstances of the case and in law, the learned CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that the order passed by the Assessing Officer is contrary to the provisions of law and liable to be quashed since no undisclosed income is found in the course of search or in the course of proceedings under section 153A. Ground No.2: Disallowance under section 37 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the Appellant has not set up his business and hence the expenditure of ₹ 31,60,275/- debited to Profit and Loss account cannot be allowed. 2. The CIT(A) has erred in treating the year of commencement of commercial operations i.e., financial year 2013-14 relevant to assessment year 2014-15 as the year of set-up of business. 3. The Appellant was incorporated on December 28, 2007, had set up its business, entered into contracts in the year 2008 for the purpose of its business and the construction of the Power Plant was under progress in the financial year 2009-10. The expenses incurred for the project has been debited to Capital work-in-progress. The expenses which have been debited to the profit and loss account are revenue in nature and are essential to run the business of the company in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate and ought to have held that a completed assessment cannot be re-examined / reviewed under section 153A where no incriminating material / or undisclosed income is found in course of search assessment proceedings. 3. The CIT(A) has erred in not considering that having regard to the second proviso to section 153A, the completed assessment cannot be disturbed except only in the case where there is any undisclosed income found in the course of search or any incriminating documents pointing towards such undisclosed income is found in the course of search or in the course of assessment proceedings under section 153A of the Income-tax Act. 4. The Appellant therefore prays that the order passed by the Assessing Officer is contrary to the provisions of law and liable to be quashed since no undisclosed income is found in the course of search or in the course of proceedings under section 153A. Ground No.2: Disallowance under section 37 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the Appellant has not set up his business and hence the expenditure of ₹ 8,66,882/- debited to Profit and Loss account cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s eligible for capitalisation and be added to the capital work-in-progress Ground No.4: The Appellant craves leave to add, alter and/or amend all or any of the foregoing grounds of appeal. 6. The grounds raised by the revenue for Assessment Year 2008 09 in ITA No. 1325/Bang/2017 are as under. 1. Whether the CIT(A) was right in holding that preliminary expenditure which was spent 06 years before the commencement of the business can be considered as capital expenditure though the assessee never established that the preliminary expenditure is related to any particular business asset? 7. The grounds raised by the revenue for Assessment Year 2009 10 in ITA No. 1326/Bang/2017 are as under. 1. Whether the CIT(A) was right in holding that preliminary expenditure which was spent 05 years before the commencement of the business can be considered as capital expenditure though the assessee never established that the preliminary expenditure is related to any particular business asset? 8. The grounds raised by the revenue for Assessment Year 2011 12 in ITA No. 1327/Bang/2017 are as under. 1. Whether the CIT(A) was right in holding that prelimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those assessment years for which no incriminating material was found in search and the SLP of revenue against this judgment is dismissed by Hon ble apex court and therefore, even if as per the judgment of Hon ble Karnataka High Court rendered in the case of Canara Housing Development Co. vs. DCIT (Supra), it was held that undisclosed income and incriminating material is not the precondition for issue of notice u/s 153A, now the judgment of Hon ble apex court rendered in the case of Meeta Gutgutia (Supra) should be followed. In reply, it was submitted by the learned DR of the revenue that in the case of Meeta Gutgutia (Supra), before Hon ble Delhi High Court, the judgment of Hon ble Karnataka High Court rendered in the case of Canara Housing Development Co. vs. DCIT (Supra) was not cited and therefore, not considered and hence, this judgment of Hon ble Karnataka High Court still holds the field. In rejoinder, it was submitted by the learned AR of the assessee that Hon ble Delhi High Court in the case Meeta Gutgutia (Supra) has considered its own earlier judgment rendered in the case of CIT vs. Kabul Chawla, 380 ITR 573 and in that case, the judgment of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,74,257/- and therefore, for this year also, the assessment was not completed before search. She submitted that similarly for A. Y. 2011 12 also, no assessment order was passed u/s 143 (3) and only intimation was issued for this year on 13.02.2012 against return filed on 25.09.2011 at returned income of ₹ 27,24,129/- and therefore, for this year also, the assessment was not completed before search. This was her argument that for these four years, assessment was pending on the date of search because no order was passed u/s 143 (3) and intimation issued u/s 143 (1) is not an assessment order. We find that as per second proviso to section 153A, the assessment pending as on the date of search shall abate. Now the question is this as to whether for all those assessment years for which no assessment order is passed u/s 143 (3), it can be said that the assessment is pending. In our considered opinion, the assessment can be said to be pending if notice u/s 143 (2) of the I. T. Act was validly issued by the AO and order u/s 143 (3) could not be passed before the date of search and time is available to the AO for passing the order u/s 143 (3). Similarly, in a case where no notice u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e four assessment years was found or not in search. Learned CIT (A) has not given any finding on this factual aspect because he proceeded on this basis that this is not material as per the judgment of Hon ble Karnataka High Court rendered in the case of Canara Housing Development Co. vs. DCIT (Supra) but we have seen that this judgment is not relevant to decide this aspect as to whether section 153A can be invoked for a year prior to the year of search if no incriminating material is found in search for that year and the assessment is not pending on the date of search. Hence, we feel it proper to restore the matter back to CIT (A) for a fresh decision on this aspect about validity of invocation of section 153A in the light of this judgment of Hon ble Delhi high Court rendered in the case of Meeta Gutgutia (Supra) against which, SLP is dismissed by Hon ble apex court after finding out the facts as to whether any incriminating material was found in search or not. If the assessee succeeds on this aspect then nothing remains to be decided on merit but if the assessee fails on this technical aspect then the issues on merit should be decided by CIT (A) afresh because in our opini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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