TMI Blog2022 (5) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... amed u/s 153A - Decided in favour of assessee. - ITA Nos. 491 And 492/Hyd/2021 - - - Dated:- 5-5-2022 - Shri Laliet Kumar, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri P. Murali Mohan Rao For the Revenue : Shri T. Sunil Goutam ORDER PER L.P. SAHU, A.M.: Both these appeals filed by the assessee are directed against CIT(A) 11, Hyderabad s separate orders, both dated 14/10/2021 for AYs 2011-12 2012-13 involving proceedings u/s 143(3) r.w.s 153A of the Income Tax Act, 1961 ; in short the Act . As the facts and grounds are identical in both these appeals, the same were clubbed and heard together and, therefore, a common order is passed for the sake of convenience. 2. To dispose of these appeals, we refer to the facts from AY 2011-12 and the decision in this AY shall mutatis-mutandis apply to the AY 2012-13 as well. 3. The assessee has raised 26 grounds in this appeal, which are general, technical and against the additions made. 4. Briefly the facts of the case are that the appellant had filed its original return of income for A.Y 2011-12 on 28.09.2011 declaring income of Rs.93,20,506/- and the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany during the, course of search conducted u/s 132 in the residential premises of the individuals, who were happened [0 be the Directors of the said appellant company, cannot and shall not evolve any power, whatsoever, as vested with thee AO for issuing notice u/s 153A of the Act; That there is no provision in the Income Tax Act to accord power to the AO La issue notice u/ s 153A of the Act in respect of the connected group cases, wherein, search u/ s 132 of the Act was conducted in one of the cases of such connected group cases; That as per provisions of the section 153A it is clearly mentioned that: 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- And wherein it was clearly observed that no notice u/ s 153A can be issued wherein no search u/ s 132 of the Act was conducted; 4.1 A Warrant is in the nature of judicial writ to carry out the search of the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief at stage of issuing of authorization - Held, yes - Whether it is only at stage of commencement of assessment proceedings after completion of search and seizure, if any, that requisite material may have to be disclosed to assessee - Held, yes 4.3 It is, therefore, requested the Ld. Commissioner of Income Tax (Appeals) to treat the notice issued u/s 153A as invalid, and thereby the completion of assessment u/s 143(3) r.w.s. 153A di: 29-12-2017 is invalid and deserves to be annulled for this assessment as well as for the other assessment years viz., 2011-12 to 2015-16 and assessment year 2016-17. 4.4 Without prejudice to the above, it is to submit that when no search u/s 132 was conducted in the business premises of the appellant-company and as such the provisions of section 153-A of the Act are not applicable, the issue of statutory notice ul s 143(2) on 04.08.2016 is invalid, is without jurisdiction and thereby the assessment completed ul s 143(3) r.w.s 153A on 29-12-2017 is, thus, invalid, and is without jurisdiction 5. Proceedings u/s.153A of the Act are void as no incriminating material was found (Ground No. 2.3J: Books of accounts do not form part of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, return of income is more of a same the due reflection of books of accounts and in the present case the appellant has filed the return of income after duly complying with all of the provisions of the Act. 5.4 It is relevant to the search assessment proceedings that something germane need to be found in the course of search, such as other documents or deed or charter have to be taken into account while making assessment or reassessment of total income under the provisions of 132 r.w.s 153A of the Act. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will be that the assessment will be made on the basis of other documents or deeds not found or produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 5.5 Concluded Assessments: Further, in the case of the appellant, for the AY 2011-12, no incriminating material was found during the course of alleged search proceedings, whereas the AD has made certain additions basing on the return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the assessee clearly show that no incriminating document found relating to the land development expenses debited in the books of accounts. No material was on the record on that basis which income of assessee could be further assessed by Assessing Officer. Therefore, the assessing officer has no jurisdiction to make or to resort to roving and fishing inquiries to find out whether any income has escaped assessment during these reassessment proceedings. Particularly, when there is no incriminating material found and seized during the course of search u/ s 132(1 J of the Act and nothing is available in record to reassess the income of assessee. In view of the above, this is not a fit case for making the addition in the year under consideration, the same are deleted. M/s Midwest Gold Limited vs. DCIT in ITA No. 1288 to 1293/H/2014 : Where in it has been held as under: After considering the rival contentions, we do not see any reason to differ from the order of Ld. CIT(A). Clearly there is no incriminating material found in the course of search. As per provisions of section 153C, the proceedings can be initiated only where the A.D. is satisfied that any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessment for the Asst Year 2011-12 las originally completed u/ s 143(1) of the Act and hence it falls under concluded proceeding, as on the date of search. 5.8 It is submitted that, since the regular return of income was filed on 28.09.2011, and the same was processed u/s 143(l)(a) of the Act and as such no assessment was pending as on the day of alleged search i.e. as on 20-07-2015. Further, no notice u/ 143(2) was issued before the expiry of time limit. As no such notice was issued within the stipulated time, the proceedings in the appellant's case were not pending as on the date of alleged search. In a case where a return is filed and is processed u/s 143(1)(a) and no notice u/s 143(2) thereafter is served on the assessee within the stipulated period of 6 months as envisaged in the proviso, the assessment proceedings under section 143 would come to an end and the matter becomes final. Thus, the proceedings for assessment stands terminated. In the appellant's case, the return of income was processed u/s 143(1) and demand was issued. Thus, the proceedings for assessment stands terminated. 5.9 Also, the validity or other-wise of the issuance of notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law that no additions can be made to the income of the appellant u/s 153A of the Act without there being any incriminating material found during the course of search. Therefore, we humbly request your good selves to kindly consider the submissions of the appellant and quash the assessment order passed u/s 143(3) r.w.s 153A of the Act for the A Y 2011-12. 7.2 Further, the ld. AR of the assessee submitted that there was no search in the premises of the assessee and merely assessment framed u/s 153A for the reason that search was conducted in the case of Shri Imtiaz Farooqi, with whom the assessee has business dealings and, therefore, the issue of notice u/s 153A to the assessee is invalid. He submitted that when the warrant of authorization u/s 132 of the Act was not issued in the name of the assessee company, the question of drawing panchanama does not arise. He submitted that name of the appellant company as appearing in the panchanama is not a valid one when no search u/s 132 was conducted in the business premises of the appellant company. He submitted that when warrant of authorization u/ s 132 of the Act was not issued in the name of the appellant company, the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed computation of income at Rs. 92,90,980/-. Originally the assessee filed return of income U/s 139(1) on 28.09.2011 by admitting an income of Rs. 93,20,506/-. The scrutiny assessment was completed U/s 143(3) on 25.02.2014 determining the income at Rs. 1,16,83,780/-. On the date of search, there was no assessment pending for the impugned assessment year, therefore, this year shall be treated as unabated assessment. In case of unabated assessment for making addition there must be some incriminating material. On perusal of the entire order of the AO we do not find anywhere that seized material has been used by the AO for making the addition, which could be treated as incriminating material. As per the decision of various courts in case of completed assessments, the addition can be made only on the basis of incriminating material. In support of our observations, we rely on the judgment of the Hon ble High Court of Delhi in the case of CIT Vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) wherein it was held as under: On a conspectus of section l53A(l), read with the provisos thereto, and in the light of the law explained in various decisions, the legal position that emerge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 course of original assessment. [Para 37] The present appeals concern assessment years 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during search, no addition could have been made to the income already assessed. 9.1 On going through the judgments including the judgment in the case of Gopal Lal Bhadruka (supra) relied upon by the ld. DR, it is observed that while framing the assessment, the AO can take into consideration the material other than what was available during search operation for making an assessment of undisclosed income of assessee. On careful reading of para Nos. 9 10 in the case of Gopal Lal Bhadruka (supra), on money was received in the hands of assessee and held that there was sufficient evidence to show that the true sale proceeds had been suppressed and on money was received in respect of transactions. Therefore, the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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