SAGA DEVELOPERS PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE, SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.3164/Del/2014 (ASSESSMENT YEAR 2007-08) M/s Saga Developers ACIT Pvt. Ltd. Vs. Central Circle-10 B-67, Sarita Vihar New Delhi New Delhi-110 076 PAN-AAJCS 4932K (Appellant) (Respondent) Assessee by Sh. M.P.Rastogi, Adv. Department by Sh. Binod Kumar, CIT-DR Date of Hearing 10/10/2023 Date of Pronouncement 13/10/2023

ORDER PER M. BALAGANESH AM: This appeal of the Assessee arises out of the order of the

Learned Commissioner of Income Tax (Appeals)-XXXII, New Delhi,

[hereinafter referred to as ‘Ld. CIT(A)’] in Appeal No.40/2011-12

dated 28/02/2014 against the order passed by Assistant

Commissioner of Income Tax, Central Circle-10, New Delhi

(hereinafter referred to as the ‘Ld. AO’) u/s 153A/143(3) of the

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ITA No.3164/Del/2014 M/s Saga Developers Pvt. Ltd. vs. ACIT Income Tax Act (hereinafter referred to as ‘the Act’) on 03/08/2011

for the Assessment Year 2006-07.

“1) The order passed u/s 153A of the Act is without jurisdiction. 2) The CIT(A) has erred in holding that "there is no requirement for an assessment u/s 153A of the Act to be based only on any material seized in the course of search. Such findings are opposed to presently prevailing settled legal positions. 3) The addition of Rs. 4,75,075/-on account of negative cash in hand, not being based on seized material, being based on regularly maintained books of accounts, the assessment being completed before the date of search, cannot be sustained u/s 153A of the Act. The CIT(A) has erred in confirming the disallowance of Rs. 4,75,075/-. 4. The CITIA) has erred in enhancing the income of the appellant by treating a sum of Rs. 29,06,914/- by invoking the provisions of sec. 2(2)(e) of the Act. 5. It is contended that the provisions of sec. 2(22)e) of the Act are not applicable to advances made in the course of conduct of business and for the purposes of business. 6. Without prejudice to the ground of appeal nos. 4 & 5, the addition of Rs.29,06,914/- not being based on seized materials, the assessments having been completed prior to date of search, is not sustainable u/s 153A of the Act. The appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing.”

pursuant to the permission granted by Hon’ble President. On

28/07/2023, the assessee was directed by the Bench to furnish an

affidavit confirming that the appeal has not been disposed of by this

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ITA No.3164/Del/2014 M/s Saga Developers Pvt. Ltd. vs. ACIT Tribunal on the basis of original memorandum of appeal. This

affidavit has been placed on record by the assessee wherein they

have duly confirmed that the appeal is still pending before this

Tribunal. Accordingly, we proceed to take up this appeal for hearing

based on the reconstructed file placed before us.

whether the additions/disallowances could be made in the search

assessment completed u/s 153A of the Act for the unabated

assessment year in the absence of any incriminating material found

during the course of search.

materials available on record. The assessee for the assessment year

2007-08 had originally filed its return of income on 30.03.2008. The

time limit for issuance of notice u/s 143(2) of the Act expired on

30.09.2008. A search and seizure operation u/s 132 of the IT act

was conducted in the case of M/s Saamag group of cases. The

assessee company’s business premises at B-67, Sarita Vihar, New

Delhi-110044 was also covered u/s 132 (1) of the Act. Accordingly,

notice u/s 153A of the Act was issued to the assessee on

10/07/2009. A search assessment was completed u/s 153A r.w.s Page 3 of 6

ITA No.3164/Del/2014 M/s Saga Developers Pvt. Ltd. vs. ACIT 143(3) of the Act on 03/08/2011 making certain additions /

disallowances. The additions/disallowances that are contested

before us are as under:

(a) addition on account of negative balance –Rs.4,75,075/-

(b) Enhancement made by the Ld. CIT(A) by making addition

towards deemed dividend u/s 2(22)(e) of the Act – Rs.29,06,914/-.

the Ld. CIT(A) wherein an enhancement to the total income was

made. It is pertinent to note that for none of the aforesaid two

additions, there is any reference to any seized documents or

incriminating material found during the course of search.

Admittedly, as on the date of search on 29/01/2009, the

assessment for the AY 2007-08 had already been

concluded/unabated in view of the fact that time limit for issuance

of notice u/s 143(2) of the Act had expired on 30/09/2008. Hence,

if the Ld. AO chooses to disturb the concluded assessment while

framing search assessment, then he should have recourse to any

seized document or incriminating material found during the course

of search qua the additions made thereon. As stated earlier, there is

absolutely no reference to any incriminating document qua these Page 4 of 6

ITA No.3164/Del/2014 M/s Saga Developers Pvt. Ltd. vs. ACIT additions found during the course of search. This issue has been

recently addressed by the Hon’ble Supreme Court in the case of

PCIT vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC)

dated 24/04/2023. Respectfully following the same, we hold that

the addition made by the ld. AO and enhancement made by the Ld.

CIT(A), which are in dispute before us, are not supported with any

incriminating documents found in the course of search and

accordingly, those additions are hereby directed to be deleted.

Accordingly, grounds raised by the assessee are allowed.

Sd/- Sd/- (ANUBHAV SHARMA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13/10/2023 Pk/sps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT, NEW DELHI

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ITA No.3164/Del/2014 M/s Saga Developers Pvt. Ltd. vs. ACIT

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