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TMI Blog2014 (5) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Govind Jhaveri For the Respondent : Shri Girija Dayal, DR ORDER Per D. Karunakara Rao, AM: There are 10 appeals under consideration involving assessment years 2002- 03 to 2005-06. Out of 10 appeals, there are 4 appeals by the Revenue and the rest of them are by the assessee. Assessee s appeals include raising the legal issue relating to the sustainability of additions which are not supported by the seized or incriminating material u/s 153A of the Act. Considering the legal nature of the issue raised in the cross appeals, first we undertake the legal issue for adjudication. 2. The assessee filed the Cross Objection, which involves the said legal issue, vide C.O.No.183/M/2012 (Arising out of appeal ITA No.9199/M/2010) for AY 2002- 2003 on 9.8.2012 and the effective ground raised by the assessee in this cross objection reads as under: On the facts and in the circumstances of the case, the Assessment Order passed under section 153A of the I.T. Act is bad in law as the assessment was not pending at the time of search and there is no nexus between following additions made and any information material found during the search. 1. Addition u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of Atul Barot vs. DCIT [2014] 44 Taxmann.com 167 (Mumbai Trib) dated 26.2.2014 for the identical proposition. This is the case where the assessment was originally completed under section 143(1) of the Act. 4. On the other hand, Ld DR fairly mentioned that the orders of the Revenue Authorities do not indicate the existence of any incriminating material. However, he explained the provisions of the Act to point that summary assessments cannot be really considered as concluded assessments. However, he agreed to the fact that this issue was already considered in the cited decisions in favour of the assessee. 5. We have heard both the parties on the legal issue and perused the orders of the Revenue Authorities as well as the judgments of the Hon ble High Court of Rajasthan in the case of Jai Steel (India) (supra) and other decisions of the coordinate Bench of the ITAT Mumbai cited above. For the sake of completeness of the order, we find it relevant to import the relevant paras from the said coordinate Bench decision in the case of Shri Govind Agarwal (supra) which read as under: Decision of the Tribunal: 9. We have heard both the parties on the legal issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet of the assessee ₹ 31,33,070/-; and (ii) disallowance u/s 14A: ₹ 23,31,469/-. Admittedly, there is no incriminating material before the AO to support the above additions. The valuation report, which is garnered by the authorities constitutes mere estimates and the provisions of section 132 is not required to obtain such report from the DVO. As such, for making aforesaid additions of ₹ 31,33,070/-, AO has not used even the said valuation report and the AO disallowed what is reported in the books. Similar is the case with the additions u/s 14A of the Act. Therefore, undisputedly, the impugned quantum additions are made merely based on the entries in the accounted books and certainly not based on either the unaccounted books of accounts of the assessee or books not produced to the AO earlier or the incriminating material gathered by the investigation wing of the revenue. Considering the legal propositions place before us by the assessee s counsel, we are of the opinion, such assessments or additions are unsustainable in law. 13. For the sake completeness of the assessee, we insert here some of the extracts from relevant judgments and they are: A. [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. B. [2012] 28 Taxmann.com 328 (Mumbai Trib.) in the case of Gurinder Singh Bava vs. DCIT . Whether since assessment under section 153A was passed by Assessing Officer on basis of material available in return of income and there was no reference to any incriminating material found during search and since no assessment was abated, assessment under section 153A was to be quashed being made without jurisdiction available under section 153A - Held, yes [Para 6.2] [In favour of assessee] Para 6.1 of the Order: The Special bench in the case of Alcargo Global Logistics Ltd. (supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further held that in case assessment has abated, the AO retai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal are not sustainable. Further, for the sake completeness of the order, we have perused the orders/judgments relied upon by Ld DR for the revenue and found they are distinguishable on facts for one reason or other. To start with, we have perused the judgment of Honble Hon ble Delhi High Court in the case of Madugula Venu (supra) and find that, though explained the provisions in plain language, it does not dealt with the relevance or factum of incriminating material. Further, the judgment of Andhra Pradesh High Court in the case of Gopal Lal Bhadruka (supra) is not on the notices issued u/s 153A of the Act and the same is pronounced in the context of the notice u/s 153C of the Act. Further, also, the Coordinate Bench decision in the case of Scope (P) Ltd (supra) has granted relief to the assessee though the notice issued u/s 153A of the Act was upheld. However, this order has not considered the then existing decision of the Coordinate Bench decision in the case of Pratibha Industries Ltd (supra) which is relevant for the proposition that the completed assessment may not be disturbed in the absence of any incriminating material specific to the assessee. In fact, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity Ventures P. Ltd were in progress or not, at the point of time and that the AO during the course of that proceedings recorded this satisfaction. The procedure contemplated under the Act was not followed. (c) The satisfaction is recorded on 23rd July, 2010. The relevant AY would be 2011- 12. The six preceding AYs relevant to this AY would be 2005-06 / 2006-07 / 2007-08 / 2008-09 / 2010-11. Thus, the notice issued u/s 153 C for the AY 2004-05 is clearly barred by limitation. (d) Even otherwise, as there is no incriminating material found during the course of search, the AO should have dropped the proceedings initiated u/s 153 C of the Act. (e) As there is no dispute that no assessment or reassessment has abated in this case for the reason, that the date of search, the date of search which in the case on hand would be 25.3.2010, by virtue of First Proviso to section 153 C , i.e., the date of passing an order u/s 127 transferring the cases of the assessee to the present Assessing Officer no assessment or reassessment was pending. When no assessment has abated, the question of making any addition or making disallowance which are not based on only material found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment in the case of the Jai Steel Ltd (supra), the arguments on the legal issue raised before us stands covered. Therefore, considering the Rajasthan High Court s judgment in the case of Jai Steels Ltd, supra, we have no difficulty in (i) upholding the issue of notice u/s 153A of the Act and (2) in disapproving the making of the impugned additions u/s 68 and 14A of the Act, which are not backed by the incriminating materials. In the absence of incriminating material, the role of the AO is only to reiterate the returned income filed in response to the notice u/s 153A of the Act. Accordingly, in substance, the common legal issue raised in the grounds for both the appeals of the assessee (ITA NO 3389 3390/M/2011) is allowed. 6. We have also examined the said para 7 from the order of the AO and the relevant lines read as under: 7. Unexplained sundry creditors: The assessee is engaged in the sale and purchase of Steel Coils / Sheet / Plates Structurals / Bars. The transaction recorded in Balance Sheet, P L A/c were examined. On perusal of the P L A/c, it is found that there is purchase of ₹ 84.50 Crore, sale of ₹ 72.52 Crs and closing stock of ₹ 13.28 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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