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TMI Blog2015 (10) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... erations admittedly no incriminating material belonging to this assessee was found. It is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. There is no justifiable basis to disbelieve the assessee's contention that the books of accounts could not be produced as they were in the custody of Shri Atul Burman who also replied that he has left the company. Besides ld. CIT(A) in AY 2007-08 has endorsed the fact of disputes between directors and assessee's sufficient cause in not producing the books of accounts. Assessee's contention that in search assessments of other group cases which were in their control, all the documents and books were duly produced is not rebutted. There is no reason to assume as to why assessee will not produce the books of a loss making concern. This also indicate that non production of books was non deliberate. Except non production of books, no reason or basis whatsoever has been assigned by authorities below in disallowing the entire loss. Thus disallowance is based on pure guesswork and not on any cogent reason. Hon'ble Apex Court in Hindustan Steels Ltd. Vs. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice u/s 153A assessee filed its return declaring same loss of ₹ 16,96,113/-. By that time assessment was taken up, dispute arose between the directors due to various reasons. Ld. AO in 153A assessment asked for production of books of accounts. Assessee explained the factual position that computerized books were maintained at Mumbai office under the control of working Director Shri Atul Burman and due to impeding disputes, the responding director i.e. Shri Radhey Shyam Mittal was not able to produce them. Consequently ld. AO framed best judgment order u/s 144 of Income Tax Act by summarily disallowing the entire loss of ₹ 16,96,113/- claimed in return. Assessee claims to have not filed the appeal as there were continuous losses and the future was bleak due to disputes. Carry forwarding of losses was of no avail as in the subsequent years business operations were closed. Penalty proceedings were initiated; in reply thereto assessee filed detailed explanation dated 18-03-2011 along with various case laws. Ld. A.O. without any objective consideration of reply imposed the penalty under section 271(1)(c) qua the summary disallowance of loss. 2.2 Aggrieved, assessee preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated revenue or inflated expenses. The ld AO has only disallowed the loss for the reason the books of account were not produced before him. Ld. Counsel for the assessee vehemently argued that penalty proceedings being separate and independent of quantum proceedings, the assessee can raise the issue about validity of 153A assessment and merits of quantum additions in penalty proceedings. It is obligatory on the part of A.O. to consider the issues and explanation from judicial perspective in penalty proceedings. Reliance is placed on the case of Tidewater Marine International Inc Vs DCIT 96 ITD 406 (Delhi). In the case of Deep Chand Kothari V. CIT (1988) 171 ITR 381 (Raj) the Hon'ble High Court has held that an order passed by an authority without jurisdiction is a nullity and its invalidity can be challenged whenever and wherever it is sought to be enforced or relied upon. In the case of Jaidayal Pyarelal V. CIT 1973 Tax LR 880 the Allahabad High Court held with reference to a new plea taken in the penalty proceedings which was not taken in the regular assessment proceedings as under:- It is thus clear that the regular assessment order is not a final word upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued till the last date of limitation for issue of such notice i.e. 30.09.2006. Consequently by operation of the provisions impugned assessment for AY 2005-06 of the assessee stands abated. In these circumstances notice u/s 153A cannot be issued for an abetted assessment, more particularly where no incriminating documents as a result of search are discovered by search seizure operations on 27-08-2008. c. Reliance is placed on the decision of Hon'ble Jurisdictional High Court in the case of Jai Steel (India) Vs Astt Commissioner of Income Tax (2013) 88 DTR (Raj) 1 : (2013) 259 CTR (Raj) 281 : (2013) 219 TAXMAN 223 (Rajasthan). ITAT Jodhpur Bench relying on this decision has accordingly held in the case of Vishal Dembla Vs Deputy Commissioner of Income Tax ITA 308/Jd/2013; 22nd July, 2013 (2013) 93 DTR (Jd)(Trib) 1 (2013) 36 CCH 484 JodhTrib (2014) 61 SOT 10 (Jodhpur)(URO). 2.5 It is contended that:- (i) Assessee was suffering continuous losses in subsequent years also and ultimately, the business operations of the assessee were closed. Therefore, there can be no design to show loss. Besides in case of disallowance of loss there is no loss to the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) on following facts, reasoning and observations: (i) In assessment order, no incriminating document is alleged to be discovered as a result of search or has been relied on by AO in assessment order to disallow the loss. There is no finding of the AO alleging any document showing unaccounted sales or purchases or inflation of expenses or any other unaccounted income. (ii) Assessee's contention about non service of notice u/s 143(2) till the last date of limitation has not been rebutted. Consequently the impugned assessment stands deemed as abetted. In view thereof there is merit in assessee's plea that notice u/s 153A cannot be issued for an abetted assessment, based on search seizure operations on 27-08-2008 where no incriminating documents as a result of search are discovered. (iii) Reliance is placed on the decision of Hon'ble Jurisdictional High Court in the case of Jai Steel (India) Vs ACIT (2013) 259 CTR (Raj) 281 and it is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. In search and seizure operations admittedly no incriminating material belonging to this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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