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2013 (9) TMI 439 - AT - Income TaxReassessment pursuant to Search u/s 132 or 132A - Condition for invocation of section 153A of the Income Tax Act - Relying upon the judgment in the case of All Cargo Global Logistics Ltd 2012 (7) TMI 222 - ITAT MUMBAI(SB) , it was held that completed assessments falling within six year can only be reopened if some incriminating material is found during search Similar views were expressed in the case CIT vs Anil Kumar Bhatia 2012 (8) TMI 368 - DELHI HIGH COURT . In the present case the assessments for assessment year 2004-05 & 2005-06 were already completed - There was no incriminating material found during search for these years - There was no incriminating material found during search for these years as is apparent from arguments of Ld. AR and from records and Ld. Departmental Representative did not bring to our notice regarding any incriminating material having been found during search Decided in favor of Assessee.
Issues Involved:
1. Legality of the appellate order under the principles of natural justice and provisions of the IT Act, 1961. 2. Applicability of Section 153A in the absence of incriminating material found during the search. 3. Disallowance of set-off of accumulated losses and unabsorbed depreciation of the amalgamating company. 4. Confirmation of interest charged under various sections of the IT Act, 1961. Detailed Analysis: 1. Legality of the Appellate Order: The assessee argued that the appellate order passed by the CIT (A) was illegal as it was against the principles of natural justice and the provisions of the IT Act, 1961. The grounds included the non-applicability of Section 153A due to the absence of any valuable article or incriminating document found during the search, failure to consider case laws relied upon by the appellant, and reliance on an overruled judgment. 2. Applicability of Section 153A: The assessee contended that Section 153A was not applicable as no incriminating material was found during the search. The CIT (A) upheld the disallowance, citing that Section 153A mandates the reassessment of total income for six assessment years following a search, irrespective of the presence of incriminating material. The ITAT referenced multiple case laws, including "Harvey Heart Hospitals Ltd. vs. ACIT" and "Shivnath Rai Harnarain (India) Ltd. vs. DCIT," which supported the view that Section 153A assessments do not need to be based on seized material. 3. Disallowance of Set-off of Accumulated Losses and Unabsorbed Depreciation: The assessee argued that the disallowance of set-off of losses was incorrect, especially given the scheme of amalgamation approved by the jurisdictional High Court, which directed that the accumulated losses and unabsorbed depreciation of the amalgamating company be deemed as those of the amalgamated company. The Assessing Officer disallowed the set-off, stating that the assessee did not fulfill the conditions under Section 72A, which applies to industrial undertakings. The ITAT found that the original assessment had allowed the set-off and that the reassessment under Section 153A, in the absence of incriminating material, should not disturb the originally assessed income. The ITAT referenced the case of "All Cargo Global Logistics Ltd. vs. DIT" and "CIT vs. Anil Kumar Bhatia," which supported the view that completed assessments should not be reopened without incriminating material. 4. Confirmation of Interest Charged: The CIT (A) confirmed the charging of interest under various sections of the IT Act, 1961. However, this ground was deemed consequential and did not require separate adjudication due to the findings on the primary issues. Conclusion: The ITAT concluded that the assessments for the years in question were reopened without any incriminating material found during the search. Therefore, the additions made were invalid. The appeals filed by the assessee were partly allowed, with the assessment orders for the years under consideration being declared null and void ab initio. The other grounds of appeal were rendered infructuous or general in nature and did not require further adjudication. Order Pronounced: The order was pronounced in open court on 28th June 2013.
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