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Income Tax Appellate Tribunal, DELHI BENCH “H”: NEW DELHI
Before: SHRI I.C.SUDHIR & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. These appeals preferred by the revenue and cross objections 1. preferred by the assessee against the order of the ld. CIT (A)-III, New Delhi dated 17.12.2009 for the Assessment Year 2000-01 and 2001-02, wherein he has held that since for the Assessment Year under consideration the assessee filed return of income u/s 143(1) before the search and further no documents or other material found or seized during the course of search, there cannot be any addition u/s 80HHC as well as other additions made by AO. Revenue has challenged the order of CIT (A) raising following 2. grounds of appeal for both the years :-
Page 2 of 6 1. Whether on the facts and circumstances of the case , the CIT A(0 has erred in law and on facts in annulling the assessment by holding that no document was seized during the search pertaining to this Assessment Year? 2.
2. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts by relying upon the impugned orders of the ITAT.
3. Whether on the facts and in the circumstances of the case, CIT (A) has erred in law in following the circular no 7 f 2003 dated 5-9-2003 issued by the CBDT.
4. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law by not appreciating the facts that there is not precondition that documents pertaining to each of the assessment year falling under the provisions of section 153C /153A should be found.
The Orders of the CIT (A) is erogenous and not tenable in law and on facts 3. Mainly revenue has challenged order of Ld CIT (A) annulling the assessment order that there is no requirement of the documents unearthed during the course of search for each of the assessment year. In the same appeal assessee filed cross objections vide C.O.
No.115 & 166/Del/2010 challenging as per grounds of cross objection as under:- “1. On the facts and in the circumstances of the case and in law, the ld CIT(A) was incorrect and unjustified in holding that business and residential premise on the appellant were searched u/s 132 of the Act on 20.01.2006.
On the facts and in the circumstances of the case and in law, the ld CIT(A) was incorrect and unjustified in not holding the assessment as illegal invalid ab initio void since there cannot be any 153A assessment in the absence of search and conduct of the search.
On the facts and in the circumstances of the case and in law, the ld CIT(A) was incorrect and unjustified in not holding the assessment as illegal invalid ab initio void particularly when the AO himself agrees that it was a case of 153C and notices u/s 153A was only as a result of power u/s 153C which itself in this case was invalid.
DCIT V Ramavtar Verma A Y 2000-01 & 2001-02 & 1087 /Del/2010 & Co No 115 & 116/Del/2010 Page 3 of 6 5. Brief facts of the case are that the assessee is an individual earning salary income, income from house property and other source besides having business income from his proprietary concern. A search was carried out by revenue at the business and residential premises of the assessee on 20.01.2006. It is the contention of the assessee that during the course of search no incriminating documents were found and all the addition have been made based on the scrutiny of the accounts of the appellant. Therefore the ld CIT(A) held that no addition can be made in the hands of the assessee in absence of documents relevant for addition found during the course of search. Against this the revenue is in appeal before us. The assessee has filed cross objections contending that there is no search carried out at the address of the assessee etc.
Before us the LD DR submitted that there is no requirement that there should be some documents which are found during the course of search for making addition and AO is empowered to appreciate the material already on record. He relied on the order of AO and submitted that CIT (A) has erred in annulling the assessment erroneously.
Ld AR submitted that now this issue has been settled by the honourable Delhi High court in case of CIT V Kabul Chawla ( ITA 707/2014) dated 28.08.2015 that a there cannot be addition in the case of assessee in case of completed assessments if during the course of search no incriminating documents were found. He submitted that all these assessment years are completed assessment years. DCIT V Ramavtar Verma A Y 2000-01 & 2001-02 ITA No 1086 & 1087 /Del/2010 & Co No 115 & 116/Del/2010 Page 4 of 6 8. We have carefully perused the orders of the lower authorities. From the reading of the assessment order for AY 2000-01 we could note that following additions and disallowance have been made: a. deduction u/s 80HHC has been disallowed to the extent of Rs.43,94,953/- from export of jewellery. This disallowance has been made only because of the reason that net profit rate of 61.27% is very high. There is no reference of any incriminating material based on which the deduction is disallowed. b. There is disallowance of standard deduction claimed by the assessee of Rs.24,000/- against the remuneration received by the assessee as a Director of one Company where he has holding along with his family members entire share holding of the company. For the disallowance of this sum no reference has been made to any incriminating material c. Addition of Rs.2373378/- has been as unexplained investment in the shares of Ranbaxy Ltd. The computation of income as shown with this item has been discussed in the computation filed with the return of income and AO has not lead any evidence that this addition is because of some incriminating material found during the course of search. d. The addition of Rs.1,60,000/- has been based on the information contained in the balance sheet where DCIT V Ramavtar Verma A Y 2000-01 & 2001-02 & 1087 /Del/2010 & Co No 115 & 116/Del/2010 Page 5 of 6 unsecured loan from relatives is shown. In that addition also there is no reference to any material unearthed during the course of search. e. Addition of Rs.239769/- has been made in the hands of the assessee on account of low household withdrawal on estimate basis. For this addition also we could not find any reference to any incriminating material.