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Income Tax Appellate Tribunal, DELHI BENCH “C” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
The aforesaid appeal has been filed by the Revenue against the impugned order dated 14.07.2017 passed by CIT (Appeals)-XXXIII, New Delhi for the quantum of assessment passed u/s.153A/143(3). In the grounds of appeal
, the Revenue has raised the following grounds:-
1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition by holding the additions made without any incriminating material found during the course of search are outside the scope of section 153A of the Act, when section 153A mandates the AO to assess or reassess the total income.
2. On the facts and in the circumstances of the case, the CIT(A) has erred in not deciding the issue of addition of Rs. 1.10 crores made in the assessment order on merits.
3. The order of the CIT(A) is erroneous and is not tenable on facts and in law.”
The facts in brief are that assessee has filed its return of income u/s. 139(1) on 30.03.2006 for the Assessment Year 2005-06. A search and seizure action was carried out on 15.11.2007 and accordingly, notice u/s.153A was issued for the Assessment Year 2005-06 on 02.12.2008, in response to which, assessee has filed his return of income. In the return of income filed on 30.03.2006 and again on 29.01.2009, assessee has included long term capital gain of Rs.1.10 crore against which exemption u/s.54F which was claimed in the following manner:-
Amount “Sale consideration of surrender of Tenancy Right 1,10,00,000/- (Land at viallge Sarhaul, Gurgaon) - Less: Cost of Acquisition (06.01.99) 1,10,00,000/- Long term capital gain
1,10,00,000/- Less: Exemption u/s.54F (Amount invested in Rs.1,10,00,000/-) Taxable capital gain”
The Assessing Officer on the perusal of the same computation of income filed along with original return of income, has held that claim of deduction u/s.54F is not available, because the amount which was received by the assessee for a sum of Rs.1,10,00,000/- on account of surrender of tenancy rights and further to prove the alleged tenancy rights, assessee could not give plausible explanation and accordingly, he held that income is to be assessed as income from other sources.
Before the ld. CIT (A), it was challenged that the impugned addition made by the Assessing Officer is not based on any incriminating material found during the course of search, and therefore, the impugned addition is beyond the scope of Section 153A, because the assessment for the Assessment Year 2005-06 had attained finality much before the date of search. Reliance was placed on catena of decisions which has been noted by the ld. CIT (A) in the impugned order. Ld. CIT (A) has deleted the addition on the ground that, since there is no incriminating material found in the course of search, therefore, addition cannot be made u/s.153A. The relevant finding of the ld. CIT (A) is reproduced hereunder:- “I have perused the assessment orders. The entire addition is on account of surrender of tenancy right shown as capital gain claimed as exempt u/s.54F of the IT Act, which is assessed as income from other source. Nowhere, there is reference of incriminating material/evidences seized during the action u/s 132 in the assessment order. Therefore, it is apparent that there is no incriminating material seized in the hands of the appellant company as a result of search action u/s 132 of l.T. Act. Ld. AR has relied upon various decisions of hon’ble ITAT, Delhi cited supra even after considering the decision of Hon’ble High Court of Delhi in the case of Anil Bhatia cited supra, where Hon’ble ITAT has held that no addition can be made u/s 153A in respect of assessment which were not pending at the time of initiation of search.
I have perused the decision of Hon’ble jurisdictional High Court of Delhi in the case of Anil Bhatia cited supra. In the said judgment, in my view, Hon’ble High Court has empowered the assessing officer to assess total income irrespective of seized material for various assessment year u/s 153A provided in any assessment year. Some incriminating material is found. Hon’ble High Court has not given opinion when there is no seized incriminating documents/evidences for any assessment year covered under the search. The relevant portion of judgment is reproduced as under:- “23 We are not concerned with a case where no incriminating material was found during the search conducted during under section 132 of the Act. We, therefore, express no opinion as to whether section 153A can he invoked even in such a situation. That question is therefore left open. ” In present case, apparently there is no incriminating seized incriminating document for any of the assessment year covered u/s 153 A. Therefore, the decision in the case of Anil Kumar Bhatia does not empower the assessing officer to make the addition u/s 153A. Hon’ble ITAT, Delhi in series of decision relied by Ld. AR such Parivar Properties (P) Ltd. PACL India Ltd., M/s. Marigold Merchandise (P) Ltd. Cited supra after considering the decision of hon’ble jurisdictional High Court have held that addition u/s 153A cannot be made without incriminating evidences in case of assessment which are not abated. Relying on the decision of Hon'ble ITAT, New Delhi in above cited case, in my view, in present case, addition cannot be made u/s 153A in case where the assessment are not abated or closed assessments, as no incriminating evidences were found as a result of search and seizure operation u/s 132 of the IT Act, Accordingly, the addition made is hereby deleted. Grounds of appeal are allowed.”
5. After hearing both the parties, we find that on the date of search, i.e., 15.11.2007, the assessment for the Assessment Year 2005-06 was not pending and hence it cannot be reckoned as abated assessment in terms of 2nd proviso to Section 153A. It is now a well settled law by the Hon'ble Jurisdictional High Court that in case of unabated assessment, if no incriminating material has been found or seized during the course of search, then no addition can be made merely based on information already available on record, i.e., in the return of income filed originally/original assessment. The Assessing Officer himself in the impugned assessment order has not referred to any seized documents or incriminating material found during the course of search albeit has proceeded on the perusal of the computation of income filed in the original return of income. The Hon'ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla, reported in (2016) 380 ITR 573 (Del.) after considering catena of decision has held that if in relation to any Assessment Year, no incriminating material is found then no addition or disallowance can be made in relation to that Assessment Year in exercise of power u/s.153A. This principle has been reiterated by the Hon'ble Jurisdictional High Court in the case of Pr.CIT vs. Meeta Gutgutia, reported in (2017), 395 ITR 526 and again in the case of Pr.CIT vs. Best Infrastructure (India) Pvt. Ltd. (2017) 84 taxmann.com 287 (Del.). In view of the binding judicial precedent of the Hon'ble Jurisdictional High Court, we hold that no addition can be roped in the assessment made u/s.153A in absence of any incriminating found during the course of search, especially in the case of unabated assessment. Thus, the observation and the finding of the ld. CIT (A) is affirmed and the appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 30th May, 2018.