THE ACIT, CENTRAL CIRXLE-2(4), AHMEDABAD vs. SHRI HIRALAL DAYARAM THAKKAR, AHMEDABAD

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ITSSA 48/AHD/2021Status: DisposedITAT Ahmedabad01 February 2023AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that in the absence of any incriminating material unearthed during the course of search, no addition could be made to income that had already been assessed. It was an admitted position that the assessment years in question had already been completed on the date of the search, meaning the assessment proceedings were not abated. The Tribunal found no reference to any incriminating material in the Assessing Officer's order. The Ld. CIT(A) had correctly granted relief by deleting the additions, observing that the additions were based on entries in books of accounts, AIR/ITS information, and estimations, rather than any incriminating documents found during the search. Therefore, the additions made under Section 153A were not justified. The ratio decidendi is that for unabated assessments under Section 153A, additions can only be made if based on incriminating material found during search; otherwise, regular assessment principles apply. The appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue filed appeals against the orders dated 10.02.2019 of the CIT(A)-12, Ahmedabad, which had deleted additions made by the ACIT, Central Circle-2(4), Ahmedabad, under section 143(3) r.w.s. 153A of the Income Tax Act, 1961. A search under Section 132 was conducted on the Dharmadev Group on 15.10.2013, leading to the seizure of documents pertaining to the assessee. A notice under Section 153A was issued on 27.08.2014. The assessee filed a return on 07.10.2014 declaring a total income of Rs.4,25,340/-. The assessment was finalized with additions, which were subsequently deleted by the CIT(A). The assessment years under dispute are 2010-11 and 2011-12.

What were the issues?

1. Whether the addition made by the Assessing Officer under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961, is sustainable in an unabated assessment without reference to any incriminating material seized during the search? Assessee's contentions: The assessee argued that there was no reference to any incriminating material when the additions were made. The issue is covered by the judgment of the Hon'ble Jurisdictional High Court in PCIT vs. Saumya Construction (2016) 387 ITR 529 (Guj.). Reliance was also placed on the Mumbai Tribunal's decision in CIT-II, Thane vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 taxmann.com 78 and the Delhi High Court's judgment in CIT (Central)-III v. Kabul Chawla [2016] 380 ITR 573 (Delhi). Revenue's contentions: The Ld. DR was unable to controvert the submissions made by the Ld. AR.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SMT.ANNAPURNA GUPTA&

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I.T(SS).A. Nos. 48 & 49/Ahd/2021 (�नधा�रण वष� / Assessment Years : 2010-11 & 2011-12) Asstt. Commissioner of Shri Hiralal Dayaram बनाम/ Income-tax Thakkar Vs. Central Circle -2(4), Satkar Guest House, Ahmedabad Swaminarayan Kutir, S. G. Highway, Opp. YMCA Club, Nr. Nirma Farm, Ahmedabad-380051 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AANPT3721E .. (अपीलाथ� /Appellant) (��यथ� / Respondent) Shri Vijay Kumar Jaiswal, CIT.D.R. अपीलाथ� ओर से /Appellant by : ��यथ� क� ओर से/Respondent by : Shri Vivek Chavda & Shri Nishit Jesur, A.Rs. सुनवाई क� तार�ख / Date of 12/01/2023 Hearing घोषणा क� तार�ख /Date of 01/02/2023 Pronouncement O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeals filed by the Revenue are directed against the orders both dated 10.02.20219 passed by the Ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad arising out of the order dated 30.03.2016 passed by the ACIT, Central Circle-2(4), Ahmedabad under section 143(3) r.w.s. 153A

IT(SS)A Nos. 48 & 49/Ahd/2021 (ACIT vs. Shri Hiralal D. Thakkar) A.Ys.– 2010-11 & 2011-12 - 2 - of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Years 2010-11 & 2011-12.

2.

The deletion of addition made by the Ld. AO under Section 143(3) r.w.s. 153A of the Act is under challenge before us.

3.

We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record and considered the judicial pronouncements on this issue by different judicial forum.

4.

The brief facts leading to the case is this that a search under Section 132 of the Act was carried out in the group cases of Dharmadev Group on 15.10.2013 wherein certain incriminating documents were seized pertaining to the assessee. A notice under Section 153A of the Act was issued to the assessee on 27.08.2014 to file return of income within 30 days of receipt of said notice. Return was filed by the assessee in response to the same on 07.10.2014 declaring total income of Rs.4,25,340/- and the assessment was finalized upon making addition of very many counts, which was, in turn, deleted by the Ld. CIT(A). Hence, the instant appeal before us.

5.

The short point involved in this particular case as to whether the addition is sustainable in an unabated assessment without having reference to any incriminating material seized during the course of search. The Ld. AR appearing for the assessee submitted before us that there was no reference of any incriminating material while making adding and the issue is squarely covered by the judgment passed by the Hon’ble Jurisdictional High Court in

IT(SS)A Nos. 48 & 49/Ahd/2021 (ACIT vs. Shri Hiralal D. Thakkar) A.Ys.– 2010-11 & 2011-12 - 3 - the case of PCIT vs. Saumya Construction, reported in (2016) 387 ITR 529 (Guj.). Apart from that he has further relied upon the judgment of Mumbai Tribunal in the case of CIT-II, Thane vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 taxmann.com 78 and the judgment passed by the Hon’ble Delhi High Court in case of CIT (Central)-III v. Kabul Chawla [2016] 380 ITR 573 (Delhi). Such submissions made by Ld. AR was not able to be controverted by the Ld. DR. Under these circumstances, upon considering the judgments relied upon by the Ld. AR, the settled principle of law is this that in the absence of any incriminating material unearth during the course of search no addition could have been made to income already assessed. In this particular case, it is an admitted position that the assessment years in question had already been completed on the date of search. Moreso, we do not find any reference to any incriminating material in the order passed by the Ld. AO. We further find that having regard to this particular aspect of the matter, the Ld. CIT(A) while granting relief to the assessee by deleting the addition observed as follows: “7.6 It is an undisputed fact that on the date of initiation of the search no assessment proceedings were pending in this assessment year. Therefore, the proceedings were not abated in the case as mentioned in the second proviso to section 153A (1) of the Act. It seems that the AO lost sight of the fact that he was not making an assessment under section 153A (1) of the Act read with its second proviso. As discussed hereinabove, there is no indication in the contents of the assessment order that the addition was made on the basis of any incriminating material found and seized in search. 7.7 In view of the aforesaid findings and respectfully following the judgments/decisions of Jurisdictional High Court, Jurisdictional Tribunal and other Courts, wherein it has been held that in absence of incriminating material/ evidence, addition cannot be sustained within the pale of section 153A of the Act. The sole basis of additions in this year are entries in books of accounts, AIR / ITS information for sale of land / plots, estimation of suppression of profit on sale of land and estimation of profit of projects on percentage basis. In my considered opinion, the action of the AO for making additions under various heads is part of the regular books of accounts and not based upon any incriminating

IT(SS)A Nos. 48 & 49/Ahd/2021 (ACIT vs. Shri Hiralal D. Thakkar) A.Ys.– 2010-11 & 2011-12 - 4 - documents found during the course of search hence the additions made are not justified. Accordingly, the additions made in assessment completed u/s. 153A are deleted. In the result, the legal ground of appeal is allowed.” 6. As there is no reference of any incriminating material found during the course of search in the assessment order made by Ld. AO which is main criteria in making the addition in an unabated assessment like the assessment in hand, the deletion of addition in the absence of incriminating material, the addition not found sustainable in terms of the provisions of Section 153A of the Act by the Ld. CIT(A) is found to be absolutely just and proper so as to warrant interference. Hence, the appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed. 7. The same will also apply mutatis mutandis in IT(SS)A No. 49/Ahd/2021 for A.Y. 2011-12. 8. In the combined result, both appeals filed by the Revenue are dismissed. This Order pronounced on 01/02/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 01/02/2023 S. K. SINHA True Coy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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