TMI Blog2020 (8) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of low withdrawals cannot be made in the hands of the assessee as the revenue has not brought anything on record regarding incurring of such expenses. We note that no evidence was brought on record by the Revenue which may prove that the assessee has incurred expenses on the household drawing much more than what has been shown by her family members. The household drawing has merely been estimated by the AO without pointing out any specific expenditure being incurred by the assessee. We have gone through the provisions of section 69C of the Income Tax Act and we note that there must be evidence on record which may prove that the assessee had incurred expenses much more than what has been shown by the family members. It is for the revenue to prove that the expenses have indeed been incurred and then the onus shifts to the assessee to prove that the assessee has enough sources to incur such expenses or to prove that such expenses have not been incurred. Our aforesaid view is duly supported by the decision of the Hon' ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmall [ 1972 (9) TMI 9 - SUPREME COURT] . Hence, we hereby delete the addition made on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 was void ab- initio. 2. BECAUSE the' 'CIT(A) has erred in law and on facts in not accepting the appellant's contention that there was no abatement and in further holding that nowhere in this provision which restrict the Assessing Officer to take action in those cases where assessment has already been completed . 3. BECAUSE there being no incriminating material found during the course of search and seizure action which could impinge upon the correctness of the return that had been filed in the pre- search period (and accepted also), the authorities below have erred in law and on facts in making/upholding additions on account of the following:- (Rs.) a) Investment in acquiring shares in Mudrika Distributors Pvt. Ltd., (MDPL), Kolkata (₹ 9,72,422) and Vinayak Vyapar (P) Ltd. (WPL) Kolkata (₹ 4,77,072) 14, 49,494 b) On account of low household withdrawals 3,30,000 4. BECAUSE in any case addition for sums aggregating ₹ 14,49, 494/- is based on a wholly wrong premise, which was not ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Sundry creditor Not Mentioned (Sec. 68) e) TDS mismatch Not mentioned (Sec. 194A) Whether the additions were based any seized material. No Assessment Year 2012-13: Date of search. 25.06.2014 Date of issue of notice u/ s 153 A. 31.07.2014 Whether assessment for the year is pending/abated. No Section under which the addition was made. a) Household withdrawals. Not mentioned(Sec. 69C) b) Loss from house property. Not mentioned (Sec. 24) Whether the additions were based any seized material. No Assessment Year 2013-14: Date of search. 25.06.2014 Date of issue of notice u/ s 153 A. 31.07.2014 Whether assessment for the year is pending/abated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing questions of law: (i) Was the Revenue justified in invoking Section 153A of the Act in relation to AYs 2000 - 01 to AYs 2003- 04? (ii) With reference to AY 2004-05, was the IT AT correct in confirming the orders of the CIT(A) to the extent it deleted the additions made by the AO to the taxable income of the Assessee of franchisee commission in the sum of ₹ 88 lakhs and rent payment for the sum of ₹ 13.79 lakhs? xxx xxx xxx xxx xxx Invocation of Section 153A for AYs 2000-01 to 2003- 04 55. On the legal aspect of invocation of Section 153A in relation to AYs 2000- 01 to 2003-04, the central plank of the Revenues submission is the decision of this Court in Dayawanti Gupta (supra). Before beginning to examine the said decision, it is necessary to revisit the legal landscape in light of the elaborate arguments advanced by the Revenue. 56. Section 153A of the Act is titled Assessment in case of search or requisition . It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirmed by the ITAT, deleting the addition, was not interfered with. 55. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 Raj). The said part of the decision in Kabul Chawla (supra) in paras 33 and 34 reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based- on the incriminating material found during the course of search or requisition of documents. 60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [ 2015] 58 taxmann.com 78 (Bom) which accepted die plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) as under: 37. On a conspectus of Section I53A(1) of the Act, read with the provisos 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, notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Principal Commissioner of Income Tax v. Saumya Construction Pvt. Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153 A(1)(b) in determining the total income of the Assessee of ₹ 14.5 crores against declared come of ₹ 3.44 crores. The HAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132 A of the Act. Once a search or req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hears the heading Assessment in case of search or requisition . It. is well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub- section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. Subsequently, in Principal Commissioner of Income Tax- 1 v. Devangi has Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income hex v. Saumya Construction P. Ltd. (supra) and of this Court in Kabul Chawla supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. (supra) followed the decision of this Court in Kabul Chawla supra) and held that there had to he incriminating material qua each of the AYs in lich additions were sought to he made pursuant to search and seizure operation. Km Calcutta High Court in CIT-2 v. Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In CIT v. Gurinder Singh Bawa (supra), the Bombay High Court held that: 6..once an assessment has attained finality for a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Due date of filing of return 31.07.2014 Due date of issue of notice u/ s 143(2) 31.09.2015 Whether assessment for the year is pending/abated. Yes Section under which the addition was made. a) Household withdrawals. Not mentioned(Sec. 69C) b) Loss from house property. Not mentioned (Sec. 24) c) Unsecured Loans Not mentioned (Sec. 68) Whether the additions were based any seized material. No 9. Out of the above additions, the ld. CIT (A) has deleted the additions on account of loss from house property and unsecured loans. The ld. CIT (A) has confirmed addition of ₹ 4,16, 142/- made on account of low household withdrawals. The ld. CIT (A) held that the AO has specifically examined this issue keeping in view all aspects and circumstances of a person of status of the assessee. 10. Having heard the arguments, we have gone through the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above additions, the ld. CIT (A) has deleted the addition on account of loss from house property. The ld. CIT (A) has confirmed addition made on account of low household withdrawals and also confirmed addition of ₹ 10, 50,000/- out of loan of ₹ 12, 00,000/- received from one entity namely, Fair Plan Agency (FPA) as the creditworthiness of the lender remained unsubstantiated. 12. Regarding the addition on account of low household withdrawals, the ratio laid down while adjudicating the similar issue for the assessment year 2014-15 applies. The addition is directed to be deleted. 13. With regard to the loan from FPA, we find that the lender has got an amount of ₹ 12.24 crores as share capital which can be fairly assumed to be sufficient to lend an amount of ₹ 12,00,000/- to the assessee. The assessee has submitted all the relevant documents to prove the identity, genuineness and creditworthiness of the lending party. The revenue has not brought anything on record to prove that the share capital of the FPA is suspicious or not genuine. Hence, the ld. CIT (A) s decision to hold that the credibility of the assessee is doubtful cannot be upheld. The add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year is pending/abated. Yes Section under which the addition was made. a) Household withdrawals. Not mentioned(Sec. 69C) b) Loss from house property. Not mentioned (Sec. 24) Whether the additions were based any seized material. No 18. Out of the above additions, the ld. CIT (A) has deleted the addition on account of loss from house property and has confirmed addition of ₹ 4,22, 448/- made on account of low household withdrawals. 19. Regarding the addition on account of low household withdrawals, we hereby hold that the ratio laid down in the case of Indulata Gupta in ITA No.135/LKW/2018 for the assessment year 2014-15 shall apply. KALPANA GUPTA Assessment year 2009-10 to 2013- 14 20. For the assessment years 2009 - 10 to 2013 -14 ratio laid down in the case of Indulata Gupta (supra) for the assessment years 2009-10 to 2013 -14 shall apply mutatis mutandis. Assessment Year 2014-15: Date of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l apply. 25. The ld. CIT (A) has confirmed the addition of ₹ 11,90,400/- out of loan of ₹ 27,22,857/- received from one entity namely, Fair Plan Agency (FPA) as the creditworthiness of the lender remained unsubstantiated. 26. With regard to the loan from FPA, we find that the lender has got an amount of ₹ 12.24 crores as share capital which can be fairly assumed to be sufficient to lend an amount of ₹ 11,90,400/- to the assessee. The assessee has submitted all the relevant documents to prove the identity, genuineness and creditworthiness of the lending party. The revenue has not brought anything on record to prove that the share capital of the FPA is suspicious or not genuine. Hence, the ld. CIT (A) s decision to hold that the creditability of the assessee is doubtful cannot be upheld. The addition made by the AO is directed to be deleted. ANAND KUMAR GUPTA Assessment Year 2009-10 to 2013-14 27. For the assessment years 2009 - 10 to 2013 -14 ratio laid down in the case of Indulata Gupta for the assessment years 2009 -10 to 2013 -14 shall apply mutatis mutandis. Assessment Year 2014-15: Date of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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