TMI Blog2021 (9) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... erial referred by the AO while making additions. Hence, the impugned additions are not sustainable. - IT(SS)A No. 45 and ITA No.204/Ahd/2020 - - - Dated:- 17-9-2021 - Shri Rajpal Yadav, Vice-President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Tushar Hemani, Sr.Adv, Parimal Singh B. Parmar, AR, Shri Vijay Govani, AR For the Revenue : Shri Virendra Ojha, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT: Present two appeals are filed by the assessee against the orders of the ld.CIT(A)-11, Ahmedabad dated 28.8.2019 and 27.2.2019 for the asstt.Year 2005-06. Both are disposed of by this common order. 2. IT(SS)A.No.45/Ahd/2020 emerges out of the assessment proceedings under section 143(3) read with section 153A of the Income Tax Act, 1961, whereas ITA No.204/Ahd/2020 emerges out of penalty proceedings initiated under section 271(1)(c) of the Act. 3. Registry has pointed out that ITA No.45/Ahd/2020 is time barred by 132 days whereas ITA No.204/Ahd/2020 is time barred by 282 days. The assessee has filed an application for condonation of delay in the form of an affidavit, which was sworn by the assessee. The contents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated, I request Your Honour to kindly condone the delay caused in filing Appeal before Your Honour, in the interest of Justice and the appeal may be heard and decided on merits to protect the rights and interest of the deponent. 4. The ld.counsel for the assessee submitted that due to his old age and chronic illness, could not understand and comprehend the contents of the order of the ld.CIT(A). The moment when he was appraised about the impugned order, the assessee approached his Chartered Accountant, however, the said CA did not put effort for further follow up diligently in time, resulting delay in filing the appeal before the Tribunal. Therefore, the reasons for delay in filing appeal before the Tribunal are not deliberate and occurred due to the reasons beyond his control. He prayed that delay in filing appeal be condoned and the appeal be decided on merits. 5. The ld.DR, on the other hand, contended that there is no material possessed by the assessee to substantiate this assertion of the facts. He has not deposed the name of the chartered accountant, while leveling allegations against the said CA. Therefore, explanation given by the assessee is not plausible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onouncement of Hon ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, but considering age of the assessee and the facts that the assessee would not gain anything by not filing the appeal in time, more so when he has good cause in hand for defending the case before the Tribunal, we condone the delay and proceed to decided both the appeals on merit. 9. First we take IT(SS)A.No.45/Ahd/2020 (Quantum appeal): 10. In this appeal, the assessee has taken one additional ground of appeal, whereby he has pleaded as under: The action of the ld.AO in framing the assessment u/s.153A r.w. section 143(3) of the Act is not tenable in the eyes of law since such assessment has been framed beyond the scope of material and evidences found during the course of search action carried out u/s.132 of the Act. Accordingly, such assessment order deserves to be quashed. 11. Since this is a jurisdictional issue, and going to affect taxability of the assessee, therefore, following decision of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., 229 ITR 383 (SC), we allow prayer of the assessee and entertain this additional ground of appeal for adjudication, because it does not call for discovery of any new evidence/facts which are requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the banks ₹ 4,48,378/- Total Income ₹ 10,53,891/- 14. Appeal to the CIT(A) did not bring any relief to the assessee. 15. The ld.counsel for the assessee at the very outset submitted that time limit for issuing the statutory notice under section 143(2) for passing scrutiny assessment under section 143(3) was expired much prior to the date of search relevant to this assessment year. He pointed out that search was conducted on 21.9.2010. This is assessment year 2005-06. Therefore, this is an unabated assessment order as provided in second proviso to section 153A of the Act. The addition can only be made if during the course of search any incriminating material was found. For buttressing his contentions, he relied upon the judgment of Hon ble Gujarat High Court in the case of PCIT Vs. Saumya Construction P.Ltd., 387 ITR 292 (Guj). He also emphasized that the AO has not made reference to any seized material for making addition in the hands of the assessee. This is not relevant assessment year where he can look into all this aspects. This is an assessment year which unabated as per the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l found in the search of any other person. 18. Order of the ITAT Delhi Bench in other cases viz. Asha Rani Lakhotia vs. ACIT and Subhag Khattar Vs. ACIT are on the same line. 19. Hon ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No.60 of 2017 has considered the following question of law: Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law? 20. After putting reliance upon its decision in the case of CIT Vs. Kabul Chawla (supra) has replied this question as under: 6. The Assessee went in appeal before the Commissioner of Income Tax (Appeals) who dismissed it by an order dated 27th November, 2014. A further appeal was filed by the Assessee before the ITAT. The ITAT, inter alia, found substance in the contention of the Assessee that the assessment under Section 153(A) of the Act, in the absence of any incriminating material found during the search on the premises of the Assessee was not sustainable in law. Reliance was placed on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions need not be restricted or limited to incriminating material found during the course of search? 22. Hon ble Court concurred with the decision of Hon ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: 16. Section 153A bears 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 of 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 be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of ₹ 11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed. 23. A perusal of the assessment order would indicate that there is no seized material referred by the AO while making additions. Hence, respectfully following proposition of law laid down by the Hon ble Supreme Court, Hon ble jurisdictional High Court in the cases cited (supra), which were followed by the ITAT in earlier similar other cases, the impugned additions are not sustainable. Hence, we allow both these grounds of appeal, and delete additions of ₹ 4,48,378/- and ₹ 5,13,883/-. 24. Now we take ITA No.204/Ahd/2020 (Penalty order) 25. Since additions on which impugned penalty has been levied, stand deleted by order of the Tribunal in the quantum appeal adjudicated hereinabove, impugned penalty levied by the AO and confirmed by the ld.CIT(A) is not sustainable, hence the same stands cancelled. 26. In the result, both appeals of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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