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Order under section 254(1) of Income Tax Act PER PAWAN SINGH JUDICIAL MEMBER; 1. This appeal by assessee filed under section 253 of Income tax Act (‘Act’)t is directed against the order of Commissioner of income tax (Appeals) dated 18th of December 2015 for assessment year 2004-05. The assessee has raised following grounds of appeal: (i) The ld CIT (Appeals) erred in confirming the disallowance of depreciation of Rs.3,65,934 /- claimed on premises at Commerce Centre. (ii) The ld CIT(A) erred in holding that the premises at Commerce Centre was let out and not premises at Eldora apartments thereby confirming the disallowance of depreciation of Rs. 3,64,934/-. The assessee vide its application dated 19th April 2016 raised the following additional grounds of appeal: (iii) The learned CIT(A) failed to appreciate that no disallowance of depreciation of Rs. 3,65,934/- could have been made while completing assessment under section 153A of the Income Tax Act 1961.
2. Brief facts of the case are that assessment for the relevant assessment year was completed under section 143(3) on 27th December 2006. Search and survey M/s Cineyug operation under section 132 and 133A of the Act was carried out on 25 Nov 2009 in case of Cieyug Groups and others persons and entities connected with Cinyug groups. Consequent upon the assessee’s case was covered as per the provisions of section 153A. A notice under section 153A was issued on 02.08.2010 requiring the assessee to file return of income. In response to the notice under section 153A the assessee filed return of income on 6 September 2010 declaring total income of Rs. 89,460/-. The assessee in the return of income filed on 29 October 2004 declared the similar income as declared in the original return of income filed u/s 139(1) of the Act. The AO while framing assessment under section 153A r.w.s.143(3) besides the other addition and disallowance disallowed the depreciation of Rs. 3,65,934/-in his order dated 29thDecember 2011. On appeal before Commissioner (Appeals) the disallowance was sustained. Further, aggrieved by the order of ld. Commissioner (Appeals) the assessee filed present appeal before us.
First we shall discuss the Additional Ground of appeal
raised by assessee which is purely legal in nature and goes to the root of the case. We have heard the ld. AR of the assessee and the ld. DR for the revenue and perused the material available on record. The ld. AR of the assessee argued that assessment for the relevant assessment year was completed under section 143(3) on 27th December 2006. There was no incriminating material found during the search concerning the disallowance of depreciation and hence no addition can be made in the assessment under section 153A r.w.s 143(3) of the Act. There is no reference in the entire assessment order or in the order passed by ld. Commissioner (Appeals) that any incriminating material was found while making any addition against the assessee. The ld. AR for the assessee further relied upon the decisions of Delhi High Court in CIT Vs Anil Kumar Bhatia [2013] 352 ITR 493(Delhi) and of jurisdictional High Court in CIT Vs Continental Warehousing [2015] 374 ITR 645 (Bombay). On the other hand ld. DR for the revenue supported the order of authorities below and argued that neither under section 132 nor under section153A, the phraseology of ‘incriminating’ is used by the legislature, therefore any material unearthed during the search operation or any statement M/s Cineyug during the course of search by the assessee is valuable piece of evidence in order to invoke section 153A of the Act. The ld. DR for the revenue further relied upon the decision of Kerala High Court in CIT Versus St Francis Clay Decor Tiles [2016] taxman.com 234(Kerala), the decision ITAT Delhi in Ms Shyam Lata Kaushik Vs ACIT [2008] 114 ITD 305 (Delhi) and also filed the photocopy of a page of Law Lexicon dictionary, containing the word “incriminating” as define therein.
4. We have considered the rival contentions of the parties and further gone through the orders of authorities below. The assessment for the relevant assessment year under section 143(3) was completed on 27th December 2006. Thus, when notice under section 153A was issued on 02.08.2010 the assessment was completed. In other words the assessment for the relevant assessment year under consideration remains unabated. In response to the notice under section 153A the assessee filed return of income on 6th September 2010 declaring the same income as declared originally while furnishing return of income. In the entire assessment order the AO has not made any whisper that any ‘incriminating’ evidence was found during the search action carried under section 132 on the basis of which the disallowance of depreciation was made. The Hon’ble jurisdictional High Court in CIT Vs Continental Warehousing (supra) held that no addition can be made in respect of unabated assessment which has become final if no incriminating material is found during the search. Further the Hon’ble Delhi High Court in CIT Vs Anil Kumar Bhatia (supra) held that the assessment contemplated by section 153A of the Act is not a de novo assessment and the additions made therein had to be necessarily restricted to the undisclosed income unearthed during the search. The section has to be strictly interpreted. It is not an assessment such a normal or regular scrutiny assessment. The sum and substance of these two decisions are that the completed assessments should not be disturbed unless the fresh evidence is unearthed during the search and seizure.
5. Now let us examine the word ‘incriminating’ used by various higher judicial forums while discussing the scope of the Section 153A of the Act. No doubt the