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Before: SHRI G. D. AGRAWAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against the order dated 8/12/2011 passed by CIT(A)-III, New Delhi. 2. The grounds of appeal are as follows:-
“1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs.2,00,00,000/- made by the Assessing Officer u/s 68 of the Income tax Act, 1961 on account of bogus share application money/share premium received by the assessee company.
The order of the CIT(A) is erroneous and is not tenable on facts and in law.”
The assessee company was formed to carry on the business of development of computer software, to establish and run computer data processing/computer entries etc. Search and seizure action was initiated on the assessee group on 6/11/2008 u/s 132 of the Income Tax Act, 1961. A search warrant was also issued and executed in the name of the appellant. The original return of income u/s 139 of the Act was filed by the assessee on 29/10/2005, at a total income of Rs. Nil. Thereafter, the case of the assessee was centralized in Central Circle-22 New Delhi and notice u/s 153A of the Income Tax Act, 1961 was issued on 30/10/2009 and the assessee filed the return of income u/s 153A of the Act on 27/11/2009 declaring nil income while the income of the assessee was assessed at Rs.2,00,00,000/-. The Assessing Officer made addition to that extent. The assessee filed appeal before the CIT(A).
The CIT(A) allowed the appeal of the assessee. The CIT(A) held in para 3.2 (extracts for perusal) that “…not only in the previous scrutiny assessment the genuineness of the share application money has accepted but also that during the course of search at the appellants’ premises nothing incriminating was found reference to the impugned share application money. Thus for this reason too, the addition made Rs.2,00,00,000/- is liable to be deleted. In a result the appeal is allowed.”
The Ld. AR at the time of hearing submitted that the present case is squarely covered by CIT Vs. Kabul Chawla 380 ITR 573. The Hon’ble High Court held in para 37 as under:
“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:
(i) Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily 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.
(ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
(iii) 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”.
(iv) Although Section 153 A 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.”
(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 date of search) and the word ‘reassess’ to completed assessment proceedings.
(vi) 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.
(vii) Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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.
Conclusion 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.”
6. The Ld. DR relied upon the earlier order prior to Kabul Chawla and relied on the order of the Assessing Officer.
We have heard both the parties and perused the material available on record and from the CIT(A)’s order there is a clear finding that no incriminating document or material was found related to the property which corroborates the allegation made by the Assessing Officer. In Para 3.2, the CIT(A) clearly mentioned that the documents were filed before the Assessing Officer. Thus, besides these documents there was nothing incriminating found by the Assessing Officer. The CIT(A) also observed that during the course of search at the appellants’ premises nothing incriminating was found reference to the impugned share application money.
There is no need to interfere with the order of the CIT(A). The present case is also squarely covered by the judgment of the Hon’ble Delhi High Court in case of Kabul Chawla.
In result, appeal is dismissed.
The order is pronounced in the open court 20th of October, 2016.
Sd/- Sd/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Dated: 20/10/2016 R. Naheed * Copy forwarded to:
1. 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date 1. Draft dictated on 17.08.2016 PS 2. Draft placed before author 18.08.2016 PS 3. Draft proposed & placed before .2016 JM/AM the second member 4. Draft discussed/approved by JM/AM Second Member.
5. Approved Draft comes to the 20.10.2016 PS/PS Sr.PS/PS
Kept for pronouncement on PS 7. File sent to the Bench Clerk 20.10.2016 PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.