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TMI Blog2021 (9) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee is aggrieved by addition of Rs. 2.94 Lacs u/s 69C, addition of Rs. 21.03 Lacs u/s 69A & estimation of total income at Rs. 1.50 Lacs. 3. We have carefully heard the rival submissions and perused relevant material on record. The judicial pronouncements as cited during the course of hearing have been deliberated upon. Our adjudication to the appeal would be as given in succeeding paragraphs. The Ld. AR has not pressed the issue of service of notice u/s 143(2) in all the appeals. 4. Pursuant to search action on assessee group on 30/05/2008, an assessment was framed against the assessee u/s 153A / 144 on 28/12/2010. The assessee being resident individual is stated to be engaged in the trading of plywood, veneers, glass & aluminum etc. Though notice u/s 153A was issued by Ld. AO, however, the assessee did not file any return of income in response to the notice and failed to supply requisite details and documents as sought by Ld. AO during assessment proceedings. It is matter of record that the assessee had filed original return of income for this year on 01/11/2004 declaring business income of Rs. 1.29 Lacs. The following additions were made while framing the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were sold by the assessee during this year and the resultant gain / loss were taken into account while computing short-term capital gains and the same has already been offered to tax. This being so, the investments as mentioned on the seized document could not be termed as unexplained investment. The gains / loss on shares very much formed part of the computation of income and therefore, this addition is not sustainable. By deleting this addition, we allow this ground of appeal. 7. Estimation of business income 7.1 In the absence of any information forthcoming from the assessee, the business income was estimated at Rs. 1.50 Lacs which was confirmed by Ld. CIT(A). Aggrieved, the assessee is in further appeal before us. 7.2 We find that the assessee had filed the original return of income on 01/11/2004 declaring business income of Rs. 1,29,487/- and the search took place on assessee group on 30/05/2008. The statutory time limit for issuance of notice under Sec. 143(2) and already expired and thus, on the date of search, no proceedings were pending against the assessee for this year. In other words, this year was a non-abated year. Therefore, no addition could be made in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in subsection (2) of section 153, which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). 52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case law of Hon'ble Andhra Pradesh High Court in Gopal Lal Bhadruka V/s DCIT (346 ITR 106) as referred to by Ld. CIT(A), is distinguishable on facts since in this case, the question before the Hon'ble High Court was whether, for the purpose of computing income under section 153A / 153C of the Act, Ld. AO is required to confine himself only to the material found during the course of search or not. In reply to this question, the Hon'ble Court held that AO could take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. Thus, this decision is distinguishable from assessee's case on facts. 7.3 In view of the foregoing, we find that the addition which could be made, was to be only with reference to incriminating material found during the course of search action. Since this addition is not with reference to any incriminating material, the same is not sustainable. By deleting the addition, we allow this ground of appeal. The appeal stand partly allowed in terms of our above order. 8. ITA No.3798/Mum/2013, Assessment Year 2003-04 In this year, the assessee is aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me at Rs. 2,50,000/-. Another addition of Rs. 2 Lacs has been made on account of unaccounted expenditure on foreign trips. In response to notice u/s 153A dated 09/12/2009, the assessee had filed return on 19/11/2010 which was held to be invalid. The original return of income for the year was filed on 28/12/2006. Finally, the assessment was framed on similar lines as in earlier assessment years. The addition of unsecured loans was made since it was alleged by revenue that the assessee introduced bogus capital contribution in the companies controlled by him. Further, the assessee did not furnish the requisite details during assessment proceedings. The addition of Rs. 2 Lacs stem from the fact that certain documents were found during the course of search action which established assessee's visits to UAE two times during the year. The assessee could not explain the source of expenditure incurred on foreign visits and accordingly, estimated addition of Rs. 2 Lacs made in the hands of the assessee. The business income was estimated at Rs. 2.50 Lacs in the absence of any details forthcoming from the assessee. 10.2 During appellate proceedings, the assessee furnished additional evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 could be made in this year. We are in agreement of this plea since for application of Sec. 68, it is sine-qua-non that there should be credit in the books of accounts during the year. Therefore, we restore this issue back to the file of Ld. CIT(A) for reconsideration in the light of the submissions made before us. The assessee is directed to file the requisite details and substantiate the loans. The Ld. CIT(A) is directed to re-adjudicate this issue. The ground stand allowed for statistical purpose. 10.6 The appeal stands partly allowed. 11. Penalty appeals ITA Nos. 1475 to 1477/Mum/2016 for AYs 2004-05 to 2006-07 The assessee has saddled with penalty u/s 271(1)(c) for Rs. 8.12 Lacs for AY 2004-05 against quantum addition of Rs. 25.47 Lacs. The amount of penalty for AY 2005-06 is Rs. 6.43 Lacs against quantum addition of Rs. 19.96 Lacs. The amount of penalty for AY 2006-07 is Rs. 15.54 Lacs against quantum addition of Rs. 47.84 Lacs. Since we have deleted all the additions or restore the issue back to the file of Ld. CIT(A) except to the extent of sustaining addition of Rs. 2 Lacs representing unaccounted expenditure during foreign trips, the consequential penalty would not sur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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