ACIT, NEW DELHI vs. M/S. COMFORT NET TRADERS (I) PVT. LTD., NEW DELHI

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ITA 5574/DEL/2015Status: DisposedITAT Delhi03 September 2019AY 2009-104 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 since the assessment was concluded before the search and no notice under Section 143(2) was issued within the due date, additions under Section 153A could only be made based on seized material. In the absence of such material, the assessment was bad in law.

What were the facts?

Following a search and seizure operation, the assessee's income was assessed under Section 153A read with Section 143(3). The assessee contended that additions were made without incriminating material found during the search, as the assessment was already concluded. The CIT(A) granted relief on merits but upheld the AO's jurisdiction.

What were the issues?

Whether additions made under Section 153A are valid in a concluded assessment without any incriminating material found during the search, especially when the notice under Section 143(2) was not issued within the prescribed time.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 143(2)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH ‘C’NEW DELHI

Before: SHRI PRASHANT MAHARISHI & SHRI K. NARASIMHA CHARY

For Appellant: Shri Somi Aggarwal, Advocate, Dr. Rakesh Gupta, Advocate, Shri Sankalp Naik, Advocate
For Respondent: Ms. Sushma Singh, CIT DR
Hearing: 14/08/2019

Heard together (2 matters)

ITA. No.5574/Del/2015
C.O. No.374/Del/2015

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER Assessment Year: 2009-10 ACIT, Central Circle-17, vs Comfort Net Traders (I) P. Ltd. New Delhi. Shop No.26, Nathu SinghMarket, Masood Pur, Vasant Kunj New Delhi PAN AAACC3286D C.O. No.374/Del/2015 Assessment Year: 2009-10 Comfort Net Traders (I) P. Ltd. vs ACIT, Circle 4(1), Shop No.26, Nathu Singh Market, New Delhi. Masood Pur, Vasant Kunj New Delhi PAN AAACC3286D (Appellant) (Respondent) Assessee by: Shri Somi Aggarwal, Advocate Dr. Rakesh Gupta, Advocate Shri Sankalp Naik, Advocate Department by: Ms. Sushma Singh, CIT DR Date of hearing: 14/08/2019 Date of order : 03/09/2019 ORDER PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 24.07.2015 passed by the Commissioner of Income-tax (Appeals)-27(CIT(A)), New Delhi in Appeal No.52/13-14 for the Asstt. Year 2009-10, whereas revenue preferred CrossObjection No.374/Del/2015.

2.

Brief facts of the case are that assessee is a company is engaged in the trading of furniture, office equipment and various other allied items and applications. Pursuant to the search and seizure operation u/s 132 of the Income-tax Act, 1961 (‘the Act’) at the business/residential premises of the assessee on 19.10.2010, notice u/s 153A was issued on 19.9.2011. Notice u/s 143(2) was issued on 29.8.2012. Subsequently, order u/s 153A read with Section 143(3) of the Act was passed assessing the income of the assessee at Rs.1,84,25,408/- by making certain additions.

3.

Assessee preferred appeal before the learned CIT(A) and contended that the additions and disallowances were made without there being any material or evidence found as a result of search and the impugned additions were made on the basis of return of income already filed by the assessee company. The additions made in a concluded assessment without finding any incriminating material in the search are bad under law.

4.

Learned CIT(A) turned down the contention of the assessee while referring to the decision of the jurisdictional High Court in the case of Anil Kumar Bhatia. However, in so far as the merits are concerned, ld. CIT(A)

granted relief to the assessee by ordering the deletion of the additions made on account of tour and travel expenses, low gross profit ratio and unexplained purchases.

5.

Challenging the deletion of the additions, revenue preferred CIT(A) that the additions made in the assessment completed u/s 153A read with Section 143(3) of the Act was within the jurisdiction of the AO, the assessee filed Cross Objection No.374/Del/2015.

6.

In this case, admittedly the return of income was filed on 19.9.2009 and the due date for issuance of notice u/s 143(2) was 30.9.2010. It is an admitted fact that no notice u/s 143(2) was issued within this date and, therefore, the assessment had become concluded one. Search was on 19.10.2010 beyond the due date of issuance of notice u/s 143(2) and, therefore, vide the law laid down by the Hon’ble jurisdictional High Court in the case of CIT vs Kabul Chawla (2016) 380 ITR 573(Del) vide para 37(iv), the assessment has to be made under this section only on the basis of seized material in the case of a concluded assessment. Inview of this position of settled law, we are of the considered opinion that in the absence of any seized material, it is not open for the AO to assume jurisdiction to make any addition basing on the material which was already available before the conclusion of the assessment. Hence, we find force in the argument of the ld. AR and allow the Cross Objection. Consequently, the assessment is liable to be quashed and appeal of the revenue in stands dismissed.

7.

In the result, whereas appeal of the revenue is dismissed, the Cross Objection of the assessee is allowed.

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