ACIT, NEW DELHI vs. M/S. SANDUR BYPASS PROJECTS PVT. LTD., NEW DELHI

PER KULDIP SINGH, JUDICIAL MEMBER :

Appellant, ACIT, Central Circle 14, New Delhi (hereinafter

referred to as ‘the Revenue’) by filing the present appeal sought to

set aside the impugned order dated 24.01.2017 passed by the

Commissioner of Income-tax (Appeals)-XXVI, New Delhi qua the

assessment year 2010-11 on the grounds inter alia that :-

“1. On the facts and in the circumstances of the case, the CIT(A) has erred in law in holding that the AO could not have proceeded to frame assessment u/s 153A of the Act as no incriminating documents/assets were found during the search

2 ITA No.1973/Del./2017

without appreciating that the provision of section 153A of the Act does not stipulates any such conditionality. 2. On the facts and in the .circumstances of the case, the CIT(A) has erred in law in allowing the appeal of the assessee without independently verifying the facts of the case, being a fact finding authority as mandated by the Delhi High Court in the case of CIT Vs Jansampark Advertising. 3. The CIT(A) has erred on facts and in law in deleting the addition of Rs.19,97,747/- by reworking the amount of amortization at Rs.55,77,987/- as against Rs.75,75,734/-. 4. The CIT(A) has erred on facts and in law in deleting the addition of Rs.38,56,433/- by disallowing 50% of interest on term loan debited to Profit & Loss account. 5. The CIT(A) has erred on facts and in law in deleting the addition of Rs.3,64,000, Rs.50,90,000/- ,Rs.l,43,22,782/- & Rs3,76,30,664 for assessment year 2007-08 to assessment year 2010-11. 6. The CIT(A) has erred on facts and in law in deleting the addition of disallowance of Rs.2,56,048/- on account of depreciation. 7. The CIT(A) has erred on facts and in law in deleting the addition of Rs.36,23,497, Rs.39,11,364/-, Rs.2,37,19,300/- and Rs.l,00,00,000/-”

controversy at hand are : On the basis of search and seizure

operation carried out on DSC Group including assessee on

28.08.2012, assessment has been framed u/s 153A/143(3) of the

Income-tax Act, 1961 (for short ‘the Act’) by making additions on

account of excess amortization, interest to the extent of 50% &

depreciation to the tune of Rs.19,97,747/-, Rs.38,56,433/- &

Rs.2,56,048/- respectively and thereby assessed the total income at

Rs.3,86,728/-.

3 ITA No.1973/Del./2017

filing appeal who has quashed the assessment framed u/s 153A of

the Act on the ground that no incriminating document/asset has

been found during the search operation pertaining to the year under

assessment and thereby allowed the appeal. Feeling aggrieved, the

Revenue has come up before the Tribunal by way of filing the

present appeal.

parties to the appeal, gone through the documents relied upon and

orders passed by the revenue authorities below in the light of the

facts and circumstances of the case.

(A) allowing the appeal filed by the assessee, operative part thereof

is extracted for ready perusal as under :-

“Summary of the legal position (xxiii) On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: a) Once a search takes place under Section 132 of the Act, notice under Section 153A (1) will have to be mandatory issued to. the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. b) Assessments and reassessments pending on the date of the search shall abate. The total income

4 ITA No.1973/Del./2017

for such AYs will have to be completed by the AOs as a fresh exercise.

c) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The 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."

d) 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 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."

e) 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 153A is relatable to abated proceedings [i.e. those pending on the date of search] and the word ‘reassess’ to completed assessment proceedings.

f) 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.

g) Completed assessments can be interfered with the AO while making the assessment under section 153A 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.

5 ITA No.1973/Del./2017

(xxiv) The present appeals concern AYs, 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 the search, no additions could have been made to the income already assessed. (xxv) The question framed by the Court is answered in favour of the Assessee and against the Revenue. (xxvi) The appeals are accordingly dismissed but in the circumstances no orders as to costs." 11. In view of above analysis of legal view on the issue, the AO couldn't have proceeded to frame assessment u/s 153A in respect of year under consideration as no incriminating documents/assets have been found during search operation pertaining to this year. This ground of appeal, is therefore, allowed. Since the assessment framed has been held to be without jurisdiction, the rest of the grounds of appeal become academic in nature and not adjudicated. In the result the appeal is allowed.”

passed by the ld. CIT(A) relied upon the assessment order passed

in this case and contended that addition on merit has not been

discussed and adjudicated upon by the ld. CIT(A).

to prove on file that no “incriminating material” was there to

support the additions made by the AO. It is settled principle of law

that when no incriminating material has come on record, very

initiation of assessment proceedings u/s 153A is not sustainable in

the eyes of law. Ld. DR for the Revenue has failed to rebut the

6 ITA No.1973/Del./2017

issue decided by the ld. CIT (A) that in the absence of any incriminating material, assumption of jurisdiction u/s 153A of the

Act is bad in law. Ld. CIT (A) has decided the factual issue in the light of the settled principle of law laid down by Hon’ble High Court as well as coordinate Bench of the Tribunal.

“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 there in the

course of original assessment”. 9. So, when there is no incriminating material unearthed during the search and seizure operation, ld. CIT (A) has legally and

validly deleted the additions. Resultantly, the appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 14th day of September, 2021.

Sd/- sd/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 14th day of September, 2021/TS

7 ITA No.1973/Del./2017