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2023 (1) TMI 10 - AT - Income TaxAssessment u/s 153A - Necessity to have seized material to frame assessment u/s. 153A - contention of the Ld. A.R. is that assessment for these assessment years were already completed u/s. 143(3) before the date of search i.e. on 23.8.2016 and the assessment is not pending as on the date of search - as per CIT earlier assessment cannot be added again in the reassessment proceedings u/s. 153A, in as much it will amount to an addition being made twice as the assessment in which the addition was originally made had not abated - HELD THAT - We do not find any infirmity and these findings of Ld. CIT(A) is in conformity with the judgement of Kabul Chawla cited 2015 (9) TMI 80 - DELHI HIGH COURT . Before us, Ld. A.R. made one more plea that the department enforced the demand created in these assessment years consequent to assessment u/s. 143(3) of the Act and also demand created as a result of assessment framed u/s.153A of the Act and he also filed copies of demand notices for these assessment years stating that department is enforcing both the demands which amount to double taxation of same income. We make it clear that the department cannot enforce both the demands, which is created vide assessment u/s. 143(3) of the Act and assessment framed u/s. 153A of the Act. As held by Hon'ble Delhi High Court in the case of Kabul Chawla cited (supra), department has to ensure the enforcement of only one demand created consequent to the search action and framing of assessment u/s. 153A of the Act and we direct accordingly. Addition under the terminology 'Unaccounted Fees Received in Cash' - addition was made based on certain notings found impounded material labelled as GEF(M)/133A/5 which are loose sheets as, holding the same to be fees received in cash - HELD THAT - Adverting to the facts of present case, AO relied upon the statement recorded and loose sheets impounded during the survey u/s. 133(1A) for making addition. The statement of D.V. Guruprasad cannot be relied in its entirety and this is not supported by any corroborated evidence. In such circumstances, we are not in a position to uphold the addition made on that basis. Accordingly, the Ld. CIT(A) is justified in deleting the addition. The order of the Ld. CIT(A) on this issue is confirmed. Addition based on loose sheets - CIT-A observed that the AO has relied upon the sworn statements of Mr. D.V. Guruprasad which are ambivalent in nature which certainly necessitates further inquiry and gathering of clinching/formidable evidence to justify the addition - HELD THAT - CIT(A) observed that inquiry from persons, students who allegedly paid the money was essential to corroborate loose sheets as required by the decision in the case of CBI vs VC Shukla 1998 (3) TMI 675 - SUPREME COURT and Common Cause (A Registered Society) and Others vs Union of India 2017 (1) TMI 1164 - SUPREME COURT - And since such corroborative evidence is not found, one is constrained from sustaining an addition so made in view of the decisions of the Hon'ble Supreme Court cited supra. Hence the addition is found to be unsustainable. There is no corroborated evidence other than the statement of Shri D.V. Guru Prasad to support the entries in the loose sheets. Accordingly, as discussed in earlier para, we delete the addition.
Issues Involved:
1. Validity of the assumption of jurisdiction under section 153A of the Income Tax Act. 2. Nature and validity of the search conducted under section 132 of the Income Tax Act. 3. Proper issuance and format of the notice under section 143(2) of the Income Tax Act. 4. Assessment of income as an AOP versus AOP (Trust). 5. Evidentiary value of impounded materials and statements recorded during the survey. 6. Double taxation and enforcement of demands created under sections 143(3) and 153A of the Income Tax Act. 7. Deletion of additions based on unaccounted cash receipts and fees received from students. Detailed Analysis: 1. Validity of the Assumption of Jurisdiction under Section 153A: The appellant questioned the validity of the jurisdiction assumed by the AO under section 153A, contending that no incriminating material was found during the search. The CIT(A) rejected this objection, citing the Karnataka High Court's decision in Canara Housing Development Co Ltd. vs DCIT, which held that the finding and seizure of incriminating material is not a sine qua non for initiating proceedings under section 153A. The Tribunal upheld this view, noting that the AO's jurisdiction under section 153A is valid once a search is conducted. 2. Nature and Validity of the Search Conducted under Section 132: The appellant argued that the search was illegal and conducted without prior information, making the subsequent assessment under section 153A null and void. The CIT(A) rejected this argument, stating that the explanation to section 132(1) does not empower the CIT(A) to adjudicate the validity of the search warrant. The Tribunal upheld this view, noting that the CIT(A) has no jurisdiction to question the search's validity. 3. Proper Issuance and Format of the Notice under Section 143(2): The appellant contended that the notice under section 143(2) was defective as it did not specify the return of income and was issued to the Principal Officer instead of the appellant. The CIT(A) rejected this objection, stating that any defects in the notice are curable under section 292BB of the Act. The Tribunal upheld this view, confirming that the defects in the notice do not invalidate the assessment proceedings. 4. Assessment of Income as an AOP versus AOP (Trust): The appellant argued that the AO was not justified in assessing the income as an AOP instead of an AOP (Trust). The CIT(A) agreed, noting that the status change was not in order since the registration under section 12A was not canceled. The Tribunal upheld this view, confirming that the AO's assessment of the appellant as an AOP was incorrect and the status should remain as AOP (Trust). 5. Evidentiary Value of Impounded Materials and Statements Recorded during the Survey: The AO made additions based on impounded materials and statements recorded during the survey. The CIT(A) observed that the statements were ambivalent and not corroborated by independent evidence, making the additions unsustainable. The Tribunal upheld this view, citing the Supreme Court's decisions in VC Shukla and Common Cause, which emphasize the need for corroborative evidence to support entries in loose sheets or impounded materials. 6. Double Taxation and Enforcement of Demands Created under Sections 143(3) and 153A: The appellant argued that the department was enforcing demands created under both sections 143(3) and 153A, leading to double taxation. The Tribunal clarified that the department cannot enforce both demands and must ensure the enforcement of only one demand created consequent to the search action and framing of assessment under section 153A. 7. Deletion of Additions Based on Unaccounted Cash Receipts and Fees Received from Students: The AO made additions for unaccounted fees and cash receipts based on impounded materials and statements. The CIT(A) deleted these additions, noting the lack of corroborative evidence and the necessity of inquiry from the students who allegedly paid the money. The Tribunal upheld this view, confirming that the additions were unsustainable without corroborative evidence. Conclusion: The Tribunal dismissed the revenue's appeals and upheld the CIT(A)'s decisions, confirming the deletion of additions and the validity of the appellant's objections regarding the assumption of jurisdiction, the status of the appellant, and the evidentiary value of the impounded materials. The Tribunal also clarified that the department cannot enforce both demands created under sections 143(3) and 153A, ensuring no double taxation.
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