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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SMT DIVA SINGH & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the assessee against the order of the ld CIT (A)-XII, New Delhi, dated 08.11.2013 for the Assessment Year 2008-09. 2. The assessee has raised the following grounds of appeal:- “1. That the Order passed by Ld. CIT (A) is bad in law.
2. That the Ld, CIT (A) was not justified on facts and circumstances of the case, to uphold the order of Assessing officer in making addition of Rs40,000/- on account of unsecured loan received from Smt. Krishna Devi by treating the same as unexplained cash credit.
3. That the Ld. CIT (A) was not justified on facts and circumstances of the case, to uphold the order of Assessing officer in making addition of Rs4,55,284/-, in respect of alleged difference in capital gain on sale of property.
4. That the Ld. CIT (A) was not justified on facts and circumstances of the case and in law, in not giving proper opportunity of being heard to the applicant.
5. That the additions made by the Assessing officer and sustained by CIT (A) cannot be made in order passed u/s 153 A of the IT Act as no incriminating material pertaining to these additions was seized during the course of search proceedings.”
3. The assessee is an individual who filed his return of income on 30.07.2008 declaring a net income of Rs. 3212390/-. Subsequently, notice u/s 153A of the act was issued on 22.06.2010, in response to which assessee filed his return of income on 22.07.2010.
Page 2 of 4 4. Firstly, we decide ground No. 5 of appeal that is against the addition made by the Assessing Officer in absence of any incriminating material unearthed during the course of the search pertaining to these additions.
The ld AR submitted that in absence of incriminating material found during the course of search connected to the addition, assessment order passed u/s 153A of the act cannot be held to be valid. He relied on the decision of Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla.(
Against this ld DR submitted that the assessee has filed return of income first time u/s 153A of the Income Tax Act and therefore, as return u/s 139(1) was not filed by the assessee this plea cannot be taken by the assessee. Further he submitted that no such ground was also raised before the ld CIT(A). Therefore he vehemently opposed that decision of Hon Delhi high court in case of CIT V kabul Chawla does Not apply to the assessee.
We have carefully considered the rival contentions. It is apparent that search and seizure operation was carried out at the various business premises of M/s Today Home and Infrastructure Pvt. Ltd. on 26.11.2009, which was finally concluded on 25.01.2010. Pursuant to that notice u/s 153A of the Act was issued on 22.06.2010 to the assessee. In response to that the assessee submitted return of income on 22.07.2010. The facts stated by ld DR that assessee has filed first return only u/s 153A of the Act is not correct as per the details at page No. 3 of the order of the ld CIT(A), wherein the assessee has filed the original return of income on 30.07.2008. Further, the two additions made in order u/s 153A is with respect to addition u/s 68 of Rs. 40,000/- and second addition was with respect to addition of Rs. 455284/- on account of capital gain. On perusal of both the addition, ld AO has not mentioned about any documents, which were unearthed during the course of search and for which notice u/s 153A of the Act has been issued. Hon’ble Delhi High Court in case of CIT Vs. Kabul Chawla (supra) has held at para No. 37 as under:-
“Summary of the legal position 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, 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.
Page 3 of 4 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.”
The ld DR has submitted that this ground was not taken before the ld CIT(A) and therefore it cannot be raised by the assessee now. We have carefully perused the order of the ld CIT(A) in which ground No.1 is against order of the AO contested as bad in law and against the provisions of Income Tax Act. This ground was dismissed by the ld CIT(A) holding it to be general in nature. Therefore, it cannot be said that assessee has not raised grounds of the validity of the assessment. In any case it is a legal argument which can be raised at any time if no fresh facts are to be adduced. Further assessee has raised this ground before us in appeal memo.