TMI Blog2022 (6) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... ground by the assessee is against the order of Ld. CIT(A) confirming the addition of Rs. 32,15,043/- and Rs. 17,50,000/- as made by the AO on account of long term capital gain and undisclosed cash income respectively in the assessment framed u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) by overlooking the fact that there was no incriminating documents/seized material found during the course of search. 3. Facts in brief are that the search action u/s 132 of the Act was conducted at the residence and business premises of Cygnus group on 23.12.2014 and the assessee has also covered in the search during the course of search and seizure operation. The books of account and incriminating documents having identical marks CG/1 to CG11 CG/HD/1 and KKS/1 have been seized. During the said search only KKS/1 was recovered from the assessee s premises. The assessee contention is that since the addition has made by the AO in respect to long term capital gain and undisclosed cash income was not arising out of the said incriminating material and therefore the addition made in the assessment framed u/s 143(3) read with Section 153A of the Act is without jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has got every right to state that the said documents does not belong to him / them . The ld AO if he is satisfied with such explanation, has got recourse to proceed on such other person (i.e. the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon ble Delhi High Court in the case of CIT vs Pinaki Misra and Sangeeta Misra reported in (2017) 392 ITR 347 (Del) dated 3.3.2017, wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and on the basis of statement or document received subsequent to search. Hence we hold that the said materials cannot be used in section 153A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: 10.2. We find that the Co-ordinate Bench of this tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL-167-ITAT-KOL had explained the aforesaid provisions as below:- 6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made 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 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man 223 (Del HC) ; CIT vs Murli Agro Products Ltd reported in (2014) 49 taxmann.com 172 (Bom HC) ; CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in (2015) 374 ITR 645 (Bom HC) and All Cargo Global Logistics Ltd vs DCIT reported in (2012) 137 ITD 287 (Mum ITAT) (SB). We also find that against the decision of the Hon ble Delhi High Court in 380 ITR 573 (Del), the revenue preferred Special Leave Petition before the Hon ble Supreme Court and the same was dismissed by the Hon ble Apex Court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 10.6. We also find that the Hon ble Jurisdictional High Court recently in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A. No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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