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TMI Blog2014 (6) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the assessee then no addition can be made in the assessment framed u/s 153A of the Act – Relying upon Kusum Gupta Versus DCIT, Central Circle-15 New Delhi [2013 (11) TMI 665 - ITAT DELHI] - merely because a search is conducted and even though no incriminating material is found as a result, the original assessment of the assessee cannot be reviewed or substituted by a change of opinion about any claim of deduction, allowance or claim of exempt income - addition cannot be made u/s 153A as there was no material which could show that share application money received was not genuine or it has come out of the coffers of the assessee’s unaccounted income. Revenue has not doubted the identity of the share applicant - All the share applicants were on income-tax record having PAN - The ITR details of the same were submitted by the assessee - various documents related to these persons were submitted, which include share application, bank statement, balance sheet and profit & loss account of the shareholders, confirmations, PA, certificate of incorporation, etc. - The AO has not taken any pain to investigate the veracity of the documents - The identity of the share applicants was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A against the appellant are in violation of the statutory conditions and the procedure prescribed under the law and as such the same is bad in law and likely to be quashed. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in rejecting the contention of the assessee that the notice issued under Section 153A by the AO is bad both in the eye of law and facts as no search was carried on in assessee's case, as such the assessment framed in consequence thereof is also bad and liable to be quashed. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the notice issued under Section 153A by the AO is in violation of the provisions of the Act and as such the assessment framed in consequence thereof is bad. 4. On the facts and circumstances of the case, the assessment framed under Section 153A/143(3) being against the statutory provision of the Act and the procedure prescribed under the law, is bad and the same is liable to be quashed. 5. That the appellant craves leave to add, amend or alter any of the grounds of cross objection. 3. The main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A is baseless. It was also held that provisions of section 153A are only applicable in case valid search is conducted against the assessee u/s 132 of the Act and ITAT held that proceedings u/s 143(3) read with section 153A of the Act were null and void and the same were cancelled. Ld. AR also relied on the decision of ITAT, Ahmedabad in the case of Dr. Mansukh Kanjibhai Shah vs. ACIT reported in 129 ITD 376 (Ahmedabad) for the proposition that when the warrant of authorization in the name of trust and the assessee stands unexecuted in the case of assessee individual. When only survey action u/s 133A is conducted in the premises of the assessee s trust, it would not satisfy the requirements of section 153A and the AO was not justified in initiating proceedings or assuming valid jurisdiction u/s 153A of the Act against the assessee. He further submitted that when there was no incriminating material found during the search pertaining to the assessee then also the addition made by the AO in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 19.12.2012; (v) ACIT vs. PACL India Ltd. ITA No.2637/Del/2010 dt. 20.06.2013; (vi) SSP Aviation Ltd. vs. DCIT 346 ITR 177 (Del.) dt. 29.03.2012; (vii) M/s. Marigodl Merchandise (P) Ltd. vs. DCIT, Cen. Circle, Faridabad; and (viii) Mr. Vinay Chhadwa vs. ACIT. He also pleaded that the AO has sought clarification regarding the facts mentioned in the appraisal report vide his letter dated 10.08.2010 addressed to the ADIT (Inv.), Unit III (3), New Delhi. In this letter, Assessing Officer clearly mentioned that assessments in seven assessees in which the assessee has one of the names cannot be made under the provisions of section 153A of the Act. Ld. AR also submitted that Form No.49 warrant of authorization does not contain the name of the assessee. This warrant has been executed at the premises, 1 2, Central Market, West Punjabi Bagh, New Delhi. He submitted that annexure claimed to be part of Form No.45 does not contain any signature of any witnesses or the persons on whom the warrant was executed. Further, panchnama also does not contain name of the assessee. The premises on which this warrant was executed also not belong to the assessee. 5. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that whether an error committed by officer in seizing documents which may ultimately be found not to be useful for or relevant to proceedings under the Act will not by itself vitiate search, nor will it entitle aggrieved person to an omnibus order releasing all documents seized. Such issue was also decided in favour of the revenue by the Apex Court in the case of ITO vs. Seth Brothers reported in 74 ITR 836. He submitted that in view of these factual matrix and legal position, cross objections filed by the assessee deserve to be dismissed. 6. While pleading on the revenue s appeals, ld. DR relied on the orders of the Assessing Officer and submitted that assessee company has shown share capital from various companies. All these companies were showing nominal income to the Income-tax Department which is evident from their return of income filed with the Income Tax Department. The same has been mentioned at the Assessing Officer s order at page 3. He submitted that all these companies showing the return of income below Rs.10,000/- but have shown substantial amount of investment in the assessee s company. He submitted that no human being shall invest so much amount in a priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments :- (i) CIT vs Sophia Finance Ltd 205 ITR 98(Del) (ii) CIT vs Achal Investment Ltd 268 ITR 211 (Del) (iii) CIT vs Stellar Investments Ltd 192 ITR 298(Del) (iv) CIT vs Stellar Investments Ltd 251 ITR 263 (SC) (v) CIT vs Divine Leasing Finance Ltd 299 ITR 268(Del) (vi) CIT vs Value Capital Services P Ltd 307 ITR 334 (Del) (vii) CIT vs Lovely Exports P Ltd 319 ITR 5 (SC) (viii) CIT vs Oasis Hospitalities P Ltd 333 ITR 119 (Del) (ix) CIT vs Kamdhenu Steels and Alloy Ltd 248 CTR 33 (Del) (x) CIT vs K C Fibres Ltd 332 ITR 481 (Del) (xi) CIT vs Winstral Petrochemicals Ltd 330 ITR 603 (Del) (xii) CIT vs Dwarkadhish Investment P Ltd 330 ITR 298 (Del) (xiii) CIT vs Antartica Investments P Ltd 262 ITR 493 (Del) (xiv) CIT vs Makhani Tyagi P Ltd 267 ITR 433 (Del) (xv) CIT vs Dolphin Canpack Ltd 283 ITR 190 (Del) Finally, he submitted that the revenue s reliance on the order of Hon'ble Delhi High Court in the case of CIT vs. Nova Promoters and Finlease P. Ltd. reported in 342 ITR 169 (Del.) is misplaced. Rather this case favours assessee s case as assessee s case is covered by para 39 of the judgment, as the evidences or material adduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any of such premises occupied by the various group companies. In view of these facts, we find no merits in assessee s pleadings and the case laws relied upon are having different facts. In the case of J.M. Trading Corporation, the premises were occupied by tenants. In other case, the warrant was not executed. In assessee s case, warrant was issued and executed. If the assessee s contention is accepted with regard to premises as mentioned by assessee for correspondence or registered office then valid search can be conducted only at the assessee s premises and then it will amount not to conduct the search at the premises where various incriminating documents or wealth have been hidden but it does not belong to the assessee. Therefore, this argument of the assessee has no merits and deserves to be rejected. Considering the factual and legal position, the cross objections filed have no merits. Once a valid search is conducted u/s 132 against the assessee then the Assessing Officer has jurisdiction to issue notices u/s 153A and to complete the assessment. The cross objections filed by the assessee stand dismissed. 9. The other aspect of pleading is with regard to completion of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer's order. In this regard, we further placed reliance the Order of the Special Bench of the ITA T in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287. In this case with reference to the assessment u/s. 153A of the I. T. Act, it was held that any assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for which assessment shall be made for each assessment year separately. In other cases in addition to the income that have already been assessed, the assessment u/s. 153A will be made on the basis of incriminating material which in the context of relevant provisions means (i) books of accounts, other documents found in the course of search, but not produced in the course of original assessment and (ii) undisclosed income or property discovered during the course of search. 12. In the background of the aforesaid discussions and precedents, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A). Accordingly, we affirm the same on the issue. In the case of CIT vs. Lachman Dass Bhatia 77 DTR 17 (Del.) dated 07.05.2012, the Hon'ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the Revenue. In the case of Gurinder Singh Bawa vs. DCIT ITA No.2075/Mum/2010 dated 16.11.2012, the ITAT, Mumbai Bench held as under :- 6.1 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 retains the original jurisdiction as well as jurisdiction under section 153A for which assessment shall be made for each assessment year separately. Thus in case where assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. But in other cases the Special Bench held that the assessment under section 153A can be made on the basis of incriminating material which in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited before us, three possible circumstances emerge on the date of initiation of search under section 132(1) of the Income Tax Act, (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found in the course of search, indicating some income and/or assets not disclosed in the return and (c) proceedings are not pending and no incriminating material has been found. 42. When we tread to trace the correct and logical answers to the above circumstances, circumstance (a) is answered by the Act itself, that is, since the proceedings are still pending, all those pending proceedings are abated and the AO gets a free hand to make the assessment. Circumstance (b) has been answered by the Courts, interpreting 2nd Proviso along with clause (b) to section 153A, wherein the Hon'ble Delhi Court observes and hold, where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- The issues arises from those processed return can be raised only when some materials found against the assessee. The Hon'ble Delhi High Court in the case of Anil Kr. Bhatia sited it supra held that assessment u/s 153(A) would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that has escaped assessment are clubbed together and assessed as the total income. The expiry of time for issuing notice u/s 143(2) of the Act takes away the jurisdiction of the AO for issuing notice u/s 143(2). It is jurisdictional power available with the AO to be exercised in a given period. Once, it is exercised then it can be completed only by making order u/s 143(3) of the Act within the time available u/s 153(1) of the Act. Once search takes place u/s 132(1) of the Act and completion of proceeding is pending on that date then such proceedings abate. Thus, the scope of assessment u/s 153A depends upon whether any assessment or reassessment proceedings were pending or completed on the date of the search. Whenever the abated proceedings are merged with the proceedings u/s 153A then scope of assessment is v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts for six years could be reopened and this requirement postulates that the provisions of Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under Section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has reached the satisfaction that the document relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A of the act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139(return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first provision provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the aid provision in isolation and not I the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of intimation of the search or making of requisition an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to file return of income for earlier six years, in response to the notice under section 153A and the assessment has to be completed for these six years. In the present case, the issue is entirely different as there is no dispute that notice under section 153A cannot be issued or no assessment can be made. The main issue involved is, whether the addition can De made in the order passed under section 153A once the subject matter of addition has already been discussed and income has been assessed under section 143 (3) then the same cannot be roped in again under section 153A, without there being nay incriminating material found during the course of search. Thus, the ground raised by the assessee is treated as allowed. In view of these facts, we hold that such addition cannot be made u/s 153A as there was no material which could show that share application money received was not genuine or it has come out of the coffers of the assessee s unaccounted income. 10. The issue raised in the revenue s appeals is with regard to the creditworthiness of investors and genuineness of transaction. The revenue has not doubted the identity of the share applicant. The only issue raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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