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Income Tax Appellate Tribunal, DELHI BENCHES : “G” NEW DELHI
Before: SHRI J.SUDHAKAR REDDY & SHRI SUDHANSHU SRIVASTAVA&
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
ITA 2084/Del/2012 and ITA 2834/Del/2012 are Cross Appeals filed for the A.Y. 2004-05 against the common order of Ld.CIT(A)-XXXI dt. 30.3.2012 and ITA 2776/Del/12 is an appeal filed by the Revenue for the A.Y. 2005-06. As the issue that arises in all these appeals are common, for the sake of convenience, they are heard together and disposed of by way of this common order. The assessments for both these Assessment Years were passed u/s 153A r.w.s. 143(3) of the Income Tax Act 1961 (the Act).
The contention of the Ld.Counsel for the assessee Shri Rajeev Saxena, is that, the assessment for both these Assessment Years have not abated and that no incriminating material or information were found during the course of search and seizure operations and hence the assessments made are bad in law. Reliance was placed on a number of decisions.
The Ld.CIT, D.R. Shri Kartar Singh, opposed the contentions of the assesse and submitted that seizure or finding of incriminating material, is not a pre-requisite for assuming jurisdiction u/s 153A of the Act and that the assessment order can be framed dehors the seized material. He relied on the order of the First Appellate Authority.
After hearing rival contentions we find that the assessment order was framed for the A.Y. 2004-05 on 29.12.2006 inter alia making additions of Rs.1,81,94,984/- on account of alleged bogus accommodation entry, and disallowance of the claim of agricultural income of Rs.1 lakh and an addition on account of income from house property of Rs.5,69,361/-.
On appeal the First Appellate Authority granted part relief and this order of the Ld.CIT(A) was upheld both by the ITAT as well as the Jurisdictional High Court. Admittedly no incriminating material was found during the course of search. Hence the addition made in the ssessment order passed u/s 153A r.w.s. 143(3) on 30.12.2010 was not based on any seized material.
5.1. For the A.Y. 2005-06, the time limit for issual of notice u/s 143(2) has expired as on the date of search and hence the assessment in this case has not abated.
5.2. It is also not in dispute that no incriminating material was found during the course of search, for this year also and the assessment framed u/s 153A r.w.s. 143(3) on 30.12.2010 are not based on any material found or seized during the course of search.
5.3. The Jurisdictional High Court in the case of CIT vs. Kabul Chawla (in ITA 707/2014 , 709/2014, 713/2014 judgement dated 28.8.2015) at para 37 has held as follows. “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 afore mentioned 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 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. Conclusion 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.”
5.4. Respectfully following the binding decision of the Jurisdictional High Court, we dismiss both the appeals of the Revenue and allow the appeal of the assessee, by deleting all the additions which are not based on seizure or finding of any incriminating material during the course of search. 6. In the result Revenue’s appeals in for the A.Y. 2005-06 and ITA No.2834/Del/12 for the A.Y. 2004-05 are dismissed and assessee’s appeal ITA 2084/Del/12 for the A.Y. 2004-05 is allowed.
Order pronounced in the Open Court on 29th October, 2015.