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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI BEFORE SHRI H.S. SIDHUH.S. SIDHUH.S. SIDHUH.S. SIDHUSHRI A SHRI A NADI N. MISHRA, A N. MISHRA
Per Anadi N. Mishra, Accountant Member Per Anadi N. Mishra, Accountant Member Per Anadi N. Mishra, Accountant Member Per Anadi N. Mishra, Accountant Member
ORDER ORDER ORDER ORDER
This appeal is filed the Revenue against the Order dated 17.2.2014 passed by the Ld.CIT(A)-IV, New Delhi for Assessment Year 2006-07 on the following grounds:
“1. That the CIT(A) has erred in law and on facts of the case in treating the addition made to be beyond the scope of section 153A of the I.T. Act.
2. That the CIT(A) erred in law and on facts of the case in holding that the original
assessment cannot be disturbed as there was no incriminating material found during search.
3. That the CIT(A) erred in law and on facts of the case deleting the addition of Rs.
46,24,000/- made by AO on account of unexplained investment in share application money u/s. 68 of the I.T. Act, 1961.
4.(a) The order of the CIT(A) is erroneous and not tenable in law and on facts.
(b) The appellant craves leaves to add, alter or amend any / all of the grounds of appeal or during the course of hearing of the appeal.
All the grounds of appeal are related to the addition of Rs. 46,24,000/- made by AO on account of unexplained investment in share application money u/s. 68 of the I.T. Act, 1961. For the sake of convenience, all the grounds of appeal are taken up together , as they are inter-related. The brief facts of the case are that assessee company was incorporated on 1.10.1999 as Bhim Polymers Pvt. Ltd. and subsequently its name was changed to 'Mahagun Technologies Pvt. Ltd.' It is one of the group companies of Mahagun Group of Companies. In this case Survey u/s 133A of the I.T. Act was conducted at the business premises of the Mahagun Group on 28.06.2008, which was later on converted into search u/s 132 of the Act at the corporate office of Mahagun Group of Companies and warrant of search was issued in the names of the 12 companies of the Mahagun Group including the appellant company. The Ld. AO issued notice u/s 153A of the Act on 02.03.2009 asking the appellant to file the return of income. The assessee filed return of income on 03.07.2009 declaring nil income. Thereafter, notice u/s 143(2)/142(1) along with the questionnaire was issued by the AO on 13.08.2010 in which the Ld. AO has asked the assessee to explain the contents of certain pages seized during the search on 27.08.2008. In response to the same, the assessee filed the reply and participated in the assessment proceedings. Ld. AO completed the assessment u/s. 153A read with section 143(3) of the I.T. Act, 1961 vide his order dated 28.12.2010 and made the addition of Rs. 46,24,000/- u/s. 68 of the I.T. Act, 1961 as unexplained investment in the share application money.
Aggrieved with the order of the Assessing Officer, assessee preferred an appeal before the Ld. CIT(A) and submitted that the jurisdiction assumed by the Ld. AO u/s 153 is not as per law. Ld. CIT(A) allowed the appeal by holding the additions made by the Ld. AO to be beyond the scope of provisions of Section 153A of the Act. Against the order of the Ld. CIT(A), Revenue is in appeal before the Tribunal.
Notice of hearing was sent to assessee. However, at the time of hearing, the assessee was not represented by any authorized representative.
We have heard the Ld. DR and also perused the material on record. The Ld. DR supported the order of Ld. AO. However on perusal of the order of Ld. CIT(A), we find that Ld. CIT(A) vide para no. 6.5 at page no. 13 he has stated that there is no dispute by the AO that as on the date of search on 26.8.2008 (on the basis of which the Ld. AO issued notice u/s. 153A), no assessment was pending for the year under consideration. The Ld. CIT(A) has further stated that it is also not disputed by the Ld. AO that during the course of search, no incriminating material was found and seized. Ld. CIT(A) further observed that the Ld. AO has made the addition on the basis of examination of return of income filed and balance sheet furnished by the assessee during the course of assessment proceedings. He relied upon the following decisions:- i) Special ITAT Bench decision in the case of All
Cargo Global Logistics Ltd. vs. DCIT (137 ITD 287) ii) Mumbai, ITAT Bench in the case of ACIT vs.
Pratibhs Industries Ltd. order dated 29.12.2012. iii) Mumbai ITAT Bench in the case of Gurinder
Singh Bawa vs. DCIT (2012) Taxmann.com 328. iv) ITAT, Delhi Bench decision in the case of Kusum Gupta vs. DCIT (ITA No. 4873/Del/2009,
2510, 2532, 2833/Del/2011) vide order dated
28.3.2013. In this case it was held that addition on account of alleged non-genuine gifts could not be made in the assessments made u/s. 153A when no incriminating materials was recovered or statement was recorded during the course of search suggesting non-genuineness of the claimed gifts.
3.1 Ld. CIT(A) further observed that Hon’ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (2013) 259 CTR 281 has held that where nothing incriminating is found during search, though Section 153A would be triggered and assessment / reassessment to ascertain the total income would be required to be done, the same should not result into any addition. Ld. CIT(A) held that addition made by the AO to be erroneous as they were beyond the scope of Section 153A and in view of that, he directed the addition to be deleted.
3.2 Thus, we find that learned CIT(Appeals) has given a specific finding of fact that no incriminating material was found or seized during the course of search and seizure operation u/s. 132 of the Act in the case of the assessee; as far as addition of Rs. 46,24,000/- u/s 68 of I.T. Act is concerned : and further, that as on the date of search on 26.8.2008 (on the basis of which the Ld. AO issued notice u/s. 153A), no assessment was pending for the year under consideration. These facts were not contested by the learned Departmental Representative in the course of hearing before us. Under these facts and circumstances, we find that the issue is also covered in favour of the assesee and against the Revenue by the decision dated 28.8.2015 of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla CIT vs. Kabul Chawla CIT vs. Kabul Chawla 380 ITR 573 CIT vs. Kabul Chawla (Delhi) wherein the Hon’ble jurisdictional High Court held as under:-
“37. 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 709 and 713 of 2014 of 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 709 and 713 of 2014 of 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.
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.”
3.2.1 We further find that issue is also covered by decision of Honorable jurisdictional High Court in the case of Principal Commissioner of Income Tax Principal Commissioner of Income Tax Principal Commissioner of Income Tax Principal Commissioner of Income Tax v/s. Kurele Paper Mills P. Ltd. 380 ITR 571 (Delhi) v/s. Kurele Paper Mills P. Ltd. 380 ITR 571 (Delhi) . Honourable Supreme v/s. Kurele Paper Mills P. Ltd. 380 ITR 571 (Delhi) v/s. Kurele Paper Mills P. Ltd. 380 ITR 571 (Delhi) Court has dismissed the Special Leave petition filed by the Department against this decision of Honourable Delhi High Court.
3.2.2 Respectfully following the binding precedents of the Hon’ble Jurisdictional High Court in CIT vs. Kabul Chawla CIT vs. Kabul Chawla CIT vs. Kabul Chawla ( supra) and in Principal CIT vs. Kabul Chawla Principal Principal Principal Commissioner of Income Tax v/s. Kurele Paper Mills P. Ltd. ( supra ) , we Commissioner of Income Tax v/s. Kurele Paper Mills P. Ltd. Commissioner of Income Tax v/s. Kurele Paper Mills P. Ltd. Commissioner of Income Tax v/s. Kurele Paper Mills P. Ltd. dismiss appeal of Revenue, as the addition of Rs. 46,24,000/- u/s. 68 of the I.T. Act, 1961 as unexplained investment in the share application money was not made, based on any incriminating material found or seized during the course of search; and the additions are beyond the scope of provisions of Section 153A of the Act. Hence, the impugned order does not require any interference on our part, Accordingly, we uphold the same.
In the result, the Appeal filed by the Revenue stands dismissed.