KRISHNA GHOSH,DAKSHIN DINAJPUR vs. ACIT, CC-XX, KOLKATA, KOLKATA

In this appeal the assessee has raised as many as six grounds, amongst which the only effective issue is ground no-1 questioning the assessment as completed and passed an order u/s. 153A/144 of the Act is bad in law. Therefore, taking into consideration the said ground as preliminary issue and ITA No. 1410/Kol/2014 Krishna Ghosh 1

The brief facts of this case are that the assessee is an individual and engaged in the business of manufacturing of bricks and conducting his business under the name & style as ‘Mukta Bricks’ and is a proprietary concern. He derives his income from such business. A search was conducted at the residential and business premises of the assessee on 09-03-2005 in pursuance of provision of section 132 of the Act. Notice u/s. 153A was issued on 19-01-2006 and, thereafter a letter was issued again on 20-09-2006 to file his return. Subsequently, notice u/s. 142(1) of the Act along with a questionnaire was also issued to file the return. However, the assessee filed his return on 13-12-06 showing total income of Rs.2,37,730/-. In response to notice issued u/s. 143(2) the ld.AR of the assessee appeared before the AO and expressed his inability to produce the books of accounts of the assesse, but, however, the assessee filed written explanation along with photocopies of the bank accounts of the assessee. According to AO, in absence of any specific evidence, he proceeded to determine the income of the assessee on the basis of documents, records and evidences as available before him by making additions to an extent of Rs.27,83,520/- by estimating the profit of business, gifts and unsecured loans by an order dated 29-12-06 passed u/s. 153A/144 of the Act.

In first appeal, the assessee challenged the assessment as framed u/s. 153A/144 of the Act and relied on the decisions of Co-ordinate Benches of ITAT Kolkata in the case of LMJ International Vs. DCIT reported in 119 TTJ 214 (Kol), ITAT Ahmadabad in the case of Meghmani Organics Ltd Vs. DCIT reported in 129 TTJ 255 and ITAT Delhi in the case of Anil Kumar Bhatia Vs.

Before us the ld.AR submits that all the additions made by the AO under 153A proceedings being normal addition and made not on the basis of incriminating material, which said to have been found by the respondent revenue during search proceedings. The ld.AR referred to page no- 3 of the order of CIT-A with reference to decisions as the assesse relied on and argued that the assessee was in the same business and that the turnover, gross profit and net profit from AYs.1999-2000 to 2003-04 suffered loss and further argued that the assessment made u/s. 153A is liable to be quashed in the absence of any incriminating material.

On the contrary, the ld.DR relied on the orders of the AO and the CIT-A.

Heard rival submissions and perused the material available on record. The dispute raised is regarding legal validity of additions made by AO under section 153A proceedings of the Act. Under the provisions of section 153A, in all cases, where search is conducted under section 132 of the Act, AO is empowered to assess or reassess total income of six assessment years preceding the assessment year in which search was conducted. The section also provides that assessment or reassessment relating to any assessment ITA No. 1410/Kol/2014 Krishna Ghosh 3

The Special bench in the case of Alcargo Global Logistics Ltd. supra, has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further held that in case assessment has abated, the AO retains the original jurisdiction as well as jurisdiction under section 153A for which assessment shall be made for each assessment year separately. Thus, the AO can make additions in the assessment in a case where assessment has abated, even if no incriminating material has been found. But in other cases the Special Bench held that the assessment under section 153A can be made on the basis of incriminating material which in the context of relevant provisions

In the present case, the AO had made assessment on the material information available in the return of income. Where, the AO has estimated the profit from brick business at a higher rate of profit on the basis analysing of earlier years and financial data of subsequent years of the assessee. The AO has brought no defect in the profit & loss account of the assessee. Similarly the information regarding the gift and unsecured loan was available in the return of income as capital account had been credited and balance sheet reflecting the loan. It is pertinent to note that all the details i.e ITR and some bank statements of donors are placed at page no’s 24 to 41 which clearly shows that the donors i.e Smt.Radha Ghosh donated Rs.2,00,000/- in cash to Assessee, like wise Smt Minati Ghosh donated Rs.2,00,000/- by cheque, Brindavan Ghosh for Rs.50,000/-, Sambhu Ghosh for Rs.50,000/-, Ashwini Ghosh for Rs.2,00,000/- and Sita Ghosh for Rs.1,00,000/- and confirmed the said transactions by letter of confirmations. It is observed form the assessment order that the AO had not referred to any incriminating material found during the search based on which addition had been made. Therefore following the

In the result, appeal of the assessee is allowed.