TMI Blog2021 (9) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the order of Hon'ble Supreme Court in the case of Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] The existence of incriminating material for making additions u/s 153A is strengthened from the decision of Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society[ 2017 (8) TMI 1298 - SUPREME COURT] where Hon'ble Supreme Court in a case u/s 153C has again highlighted the importance of existence of incriminating material for making the additions. The Hon'ble Supreme Court went on to hold that the Assessing Officer, while relying on the incriminating material, has to make reference in the satisfaction note regarding year-wise existence of incriminating material. Since there is an interplay between section 153A and section 153C, the findings of Hon'ble Supreme Court in a case u/s 153C are also applicable for making additions u/s 153A of the Act. We find that in these appeals also the additions has not been made on the basis of any incriminating material and rather has been made on the basis of entries in the books of accounts. The dates of filing of returns as mentioned in the chart reproduced earlier in this order are found to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed by the Hon'ble Supreme Court in the case of Kabul Chawla and Meeta Gutguitia. The ld. AR of the assessee in this respect filed a chart showing therein serial number of appeals, related assessment years, and date of filing of original return. The chart also indicated as to whether the assessment has been completed u/s. 143(3) of the Act and in the case of assessment u/s. 143(1) of the Act, the time barring date for issue of notice u/s 143(2) of the Act. For the sake of completeness the chart filed by the ld. AR is reproduced below: 5. The ld. AR of the assessees inviting our attention to this chart submitted that assessment in these cases was made in u/s. 153A of the Act on account of search on the group on 31.08.2015 and the assessments in these years indicated in the chart stood completed and therefore addition, if any, could have been made only on the basis of incriminating material found during search. Inviting our attention to the copies of assessment orders in these cases, the ld. AR of the assessees submitted that Assessing Officer has made the addition on the basis of entries in the books of account and there is no whisper of any incriminating ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this year u/s. 143(3) of the Act. Therefore, in this year the additions if any could have been made only on the basis of incriminating material found during the search. The additions made by the Assessing Officer does not rely on any incriminating material found during search and rather the Assessing Officer has made the additions on the basis of examination of books of accounts. The fact that Assessing Officer has not based the additions on the basis of any incriminating material is also apparent from the findings of ld. CIT(A) wherein he has held that there is no requirement of any incriminating material for making addition u/s 153A of the Act. For the sake of completeness the findings of ld. CIT(A) are reproduced below: 5.1 Ground no. 1, 2 and 3 pertain to legal challenge to notice u/s 153A of the Act. IT is also submitted by the Id. A.R. of the appellant that order u/s 153A of the Act is invalid in absence of incriminating material found as a result of search for these relevant assessment years in appeals. Appellant also placed reliance on the following case laws. (i) CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi), (ii) CIT v. Deepak Kuniar Agarwal (2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 597 (Ker.). Further, in the case of CIT Vs Raj Kumar Arora [2014| 52 taxmann.com 172 (Allahabad) [2014] 367 ITR 517 (Allahabad)- Hon'ble Allahabad High Court held that Assessing Officer has power to reassess*returns of assesses not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. Similarly, in the case of CIT Vs Kesarwani Zarda Bhandar Sahson Alld. ITA No. 270 of 2014 (Allahabad)- Hon'bie Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard To material available at time of original assessment. Also, in the case of CIT Vs St. Francis Clay Decor Tiles (385 ITR 6240-Hon'ble Delhi Kerala Court held that notice ssued under section 153A- return must be filed even if no incriminating documents discovered during search. In the case of CIT Vs Anil Kumar Bhatia (24 taxmann.com 98. 211 Taxman 453. 352 ITR 493)- Hon'ble Delhi'High Court held that jurisdiction of AO under 153A is to assess total income for the year and not restricted to seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the material placed on record. We find that in this case the assessment years involved are 2010-11, 2011-12, 2012-13 and 2013-14. We find that in assessment year 2010-11, the original return was filed on 14/10/2010, a copy of the acknowledgement of the return of income is placed at page 1 of the paper book. The processing of such return was completed on 25/02/2011, the evidence of which is placed at page 2 of the paper book. No assessment order was passed u/s 143(3) in this case. However, the time limit for issue of notice u/s 143(2) expired on 30/09/2011 which is much before the date of search on the assessee which happens to be on 31/08/2015. Therefore, before the search took place, the assessment in this case already stood completed and, therefore, as per the settled legal position, the additions if any, could have been made on the basis of incriminating material only. The second year involved is assessment year 2011-12. In this year, the date of filing of original return is 29/09/2011, a copy of acknowledgement of return of income is placed at page 3 of the paper book and the ITR has been processed on 20/01/2012, the evidence of which is placed at page 4 of the paper book an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years. Appellant also placed reliance on the following case laws: (i) CIT v. Kabul Chawla [2016] 380 XTR 573 (Delhi), (ii) CIT v. beepak Kumar Agarwal (2017) 251 Taxmon 22 (Bom.)/86 taxrnann.com, (iii) CIT v. Vikas Sutgutia (2017) 396 ITR 691 (Del.), (iv) CIT v. bevangi (2017) 394 ITR 184 (Suj.), etc. 5.2 Undersigned has carefully considered the submission and the case laws cited by the appellant. However, considering the express provisions of section 153A of the Act, undersigned would like to differ with the submission of the appellant, because section 153A of the Act clearly provides the power to AO to assess/reassess the cases of person searched u/s 132(1) of the Act for immediately six preceding years. Section 153A of the Act does not provide existence of incriminating material as essential requirement. In the opinion of the undersigned, the action u/s 132/132A of the Act would automatically trigger the provisions of section 153A of the Act for computation of total income of the appellant. This provision does not restrict the Assessing Officer to take action in those cases where assessment has already been completed. Since, the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, 211 Taxman 453. 352 ITR 493)- Hon'ble Delhi High Court held that jurisdiction of AO under 153A is to assess total income for the year and not restricted to seized material. Post search reassessment in respect of all 6 years can be made even if original returns are already processed u/s 143(1)(a) - Assessing Officer has power u/s 153A to make assessment for all six years and compute total income of assessee, including undisclosed income, notwithstanding that returns for these years have already been processed u/s 143(l)(a). Even if assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(l)(a) or section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. In the case of Filatex India Ltd Vs CIT (49 Taxmann.com 465)- Hon'ble Delhi High Court held that during assessment under section 153/4, additions need not be restricted or limited to incriminating material, found during course of search. 5.4 In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 and in the earlier appeals which were decided by the Tribunal vide order dated 16/12/2020, the Tribunal had made a finding of fact that in assessment year 2013-14, the additions could not have been made as additions were not made on the basis of material found during the course of search and the assessments in those years had already stood completed. In the present case, the years involved are assessment years 2012-13 and 2014-15. In respect of I.T.A. No.633 634 for assessment years 2012-13 and 2014-15, the assessments stood completed on the date of search i.e. on 23/08/2016 as for assessment year 2012-13 the return was filed on 29/09/2012 which is apparent from page No. 48 of the paper book and the time for issue of notice u/s 143(2) expired on 30/09/2013 and intimation u/s 143(1) was issued vide order dated 22/05/2013, a copy of which is placed in paper book pages 51 to 69. Similarly, for assessment year 2014-15 in I.T.A. No.634/Lkw/2019, the return was filed on 26/11/2014 which is apparent from page No. 38 of the paper book and the time for issue of notice u/s 143(2) expired on 30/09/2015 and intimation u/s 143(1) was issued vide order dated 04/08/2015, a copy of which is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had submitted that in the year 2013-14 and 2015-16 the assessments stood completed and there was no incriminating material found during the search. In this respect the Bench had asked both the parties to furnish the material which was impounded during the search and which both the parties had filed with the Bench which we have examined and have compared with the material used by Assessing Officer in assessment order. We found that none of the material seized during the search was used by the Assessing Officer for making addition and instead had relied on a document marked as BK-2, which was seized during a search operation on a different group of company and that too on 28/04/2015 that is more than one year before the date of search on assessees. This fact is further strengthened from the assessment order wherein the Assessing Officer, at page 8, has observed as under: In this context, it is noteworthy that a search seizure operation u/s 132 of the I.T. Act, 1961 conducted upon the companies of Shmshwat Agarwal on 28.04.2015 by the Investigation Wing, Kanpur. The incriminating documents which were found and seized are the premises also include a diary identified as B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus. All these facts demonstrate that the Assessing Officer had not made the addition on the basis of any incriminating document but had made the addition on account of bogus sale and purchase of cloth for which no document was found during the course of search. Even otherwise, the documents relied on by the Assessing Officer were found at the premises of the companies of Shri Shashwat Agarwal wherein the search was carried out on 28/04/2015 and there too the incriminating material, as mentioned in the assessment order, was a diary identified as BK-2 wherein the names of some promoters/directors of the assessees were mentioned. Nowhere therein the names of the assessees have been mentioned. Learned counsel for the assessee had relied on a number of case laws for the proposition that in case no incriminating material is found, the additions cannot be made in the case of completed assessments. Particular reliance was placed on the judgment of Hon'ble Delhi High Court in the case of Kabul Chawla (supra) wherein the SLP filed by the Department was dismissed by Hon'ble Supreme Court. Learned counsel for the assessee had also relied on case law of Pr. CIT vs. Meeta Gutgutia (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of the franchisee commissions paid were unsustainable and deleted the additions made. He deleted the additions made on account of payment of rent, non-refundable security, income from self-controlled outlets and reduced the addition made on account of closing stock. He also deleted the additions of undisclosed income, made on account of franchisee fee, accepting the contention of the assessee that there was no disclosure made for earlier years, or any evidence unearthed during the search by the Department that such franchisee fee income was not disclosed by her. Both the Department and the assessee filed appeals before the Appellate Tribunal. Accepting the contention of the assessee that for the assessment years 2000-01 to 2003-04, there was no incriminating material seized during the course of search, and therefore, the assessment orders in respect of those years ought to be quashed, the Appellate Tribunal held that the assumption of jurisdiction under section 153 A for those assessment years was illegal. In respect of the assessment year 2004-05, the Appellate Tribunal held that the additions made were based on seized documents and, therefore, the assessment under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is placed in paper book at pages 52 to 56. Therefore, the assessments in these cases stood completed. Learned counsel for the assessee had though argued that the assessment for assessment year 2015-16 also stood completed but in our opinion the appeals for assessment year 2015-16 cannot be said to be completed as time for issue of notice u/s 143(2) was still available to the Department which was upto 30/09/2016 whereas the search took place on 23/08/2016 which means that there was time available to the Department to issue notice u/s 143(2) therefore, the appeals filed for assessment year 2015-16 cannot be said to have completed. In view of the above discussion, ground No. 2 7 of the appeals in I.T.A. No.510, 515 517 are allowed. 7. In view of the above Tribunal orders, first legal issue raised by assessee vide ground numbers 1 2 in I.T.A. No.630 and 631, ground numbers 1 to 4 in I.T.A. No. 633, 634, 637 and 638 are allowed. Since we have allowed the above appeals on ground No. 1 2, other grounds of appeal are not adjudicated. In view of the above, the appeals filed by the assessee in I.T.A. No.630, 631, 633, 634, 637 and 638 are partly allowed. 8. Now comi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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