TMI Blog2023 (8) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the Revenue and sustain the order of the Ld.CIT(Appeals). Decided against revenue. - Shri Challa Nagendra Prasad, Judicial Member And Shri M Balaganesh, Accountant Member For the Revenue : Shri Sunil Kumar Yadav, Sr. DR For the Assessee : Dr. Rakesh Gupta, Adv. ORDER PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-3, Gurgaon dated 13.09.2019 for the AY 2007-08 in deleting the addition of Rs. 5,30,62,000/- made protectively in respect of share capital in the absence of any incriminating material found in the course of search. 2. At the outset, the Ld. Counsel for the assessee submits that there was search and seizure operation carried on in the premises of the assessee on 09.05.2012. Pursuant to search the assessment was completed u/s 153A r.w.s. 143(3) of the Act on 30.03.2015 for the AY 2007-08 making an addition of Rs. 5,30,62,000/- on protective basis in respect of share capital received by the assessee. The ld. Counsel submits that this addition was deleted by the Ld.CIT(A) in the absence of any incriminating material found in the course of search in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and subsequently assessment proceedings initiated and order u/s 153A read with section 143(3) of the Act was passed on 31.03.2015 making additions as mentioned above. 5.3 It is an undisputed fact, apparent from the assessment order that no incriminating documents/ records or any other evidence was found or seized during the course of search proceedings which resulted in any addition in the case of the appellant. The only addition made in the assessment order under section 153A read with section 143(3) is on account of share capital received amounting Rs. 5,30,62,000/-. This addition is not borne out of search action on. 5.4 It is also undisputed fact that the appellant had submitted return of income originally u/s 139 of the Act on 24.10.2007 which was processed u/s 143(1) of the Act. At the time of search action on 09.05.2012, no assessment/reassessment proceedings were pending nor abated. 5.5 It is clear from the above that neither any incriminating material/ evidence were found and seized during the course of search in case of the appellant during the year under consideration nor any addition has been made emanating out of the search proceedings and no proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs were pending and assessment had been made u/s 143(1)/143(3) of the Act. 16. We are in complete agreement with the contention of the Ld.AR that the issue is no longer res integra in view of various decisions of the High Courts holding that completed assessments can be interfered with by the Assessing Officer 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 course of original assessment. 17. We find that the issue first came up for consideration before the High Court of Bombay in the case of CIT Vs. M/s Murli Agro Products Ltd. (supra), wherein on the issue of exercise of revisionary powers by the Commissioner of Income Tax u/s 263 of the Act, on the order passed by the Assessing Officer under section 153A, it was contended by the Revenue that the impugned order was erroneous and prejudicial to the interest of the Revenue since the Assessing Officer had only determined the undisclosed income and not the total income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the total income determined in the original assessment order and income that escaped assessment are clubbed together and assessed as total income. 19. The Bombay High Court in the case of CIT Vs. Continental Warehousing (supra) upheld the interpretation of the section by the Division Bench of the same Court in the case of Murli Agro (supra) and held that finalized assessments cannot be touched by resorting to the provision of section 153A and addition was to be made only on the basis of material unearthed during search, since 'search' and 'requisition' are the crucial words appearing in the substantive provision and proviso and they would throw light on the issue of applicability of the provision. The Court upheld the understanding of the legal provision of section 153A by the Special Bench in the I.T.A.T. in this case and further held that the Delhi High Court had in the case of Anil Kumar Bhatia also reached to the same conclusion. It also referred to the judgment of the Karnataka High Court in the case of Canara Housing Development Co. Vs. DCIT (2014) 49 Taxmann.,98 and stated that even as per that judgment, the scope of enquiry in search carried under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 course of original assessment 21. The Delhi High Court further reiterated the proposition laid down in Kabul Chawla (supra) in the case of CIT vs. RRJ Securities, 380 ITR 612 and Pr. CIT Vs. Lata Jain in ITA No.2 74/2016 dt. 29-04-2016. 22. On going through the above judgments, we find that the reason for upholding the proposition that addition u/s 153A, in case of earlier completed assessments, can be made only on the basis of incriminating material found during search or requisition is that: 1. Assessment u/s 153A can be framed only in cases where a search is initiated u/s 132 or Books of Accounts, other documents or any assets are requisitioned u/s 132A of the Act Moreover notices u/s 153A(1)(a) can be issued and income assessed or reassessed of six years preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Thus the crucial words search and requisition appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the nature of addition which can be made under this section. The section has provided, for the removal of doubts, by way of insertion of Explanation at the end of the section that save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to assessment made under this section. This implies that nature of assessment or reassessment made under this section shall be governed by the normal provisions of the Act In case it is an assessment made for the first time, all provisions of assessment which are applicable to assessments made u/s 143(3) shall apply and in case it is a reassessment being made all principles of reassessment which are applicable in case of proceedings u/s 147/148 shall become applicable. Thus in cases where assessment have already been made addition to be made in proceedings u/s 153A is to be restricted to incriminating material found if any. 24. It is amply evident from the above that the issue is settled, with a number of decisions of the High Courts holding that in the case of completed assessments, no addition can be made in the absence of any incriminating material. Though we do agree that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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