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TMI Blog2016 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of assessment proceedings the Assessing Officer made additions of ₹ 2,00,000 on account of gift received by the assessee. The admitted facts on record are that the addition has been made in the absence of any seized documents. It is noted that the declaration was made by the assessee only for the assessment year 2007-08, and has been accepted as such by the Department. The facts on record suggest that nothing incriminating has been found indicating any undisclosed income for the year under consideration. Thus, the primary issue to be decided here by us is that whether an addition could be made under the law by the Assessing Officer in the absence of, or unconnected to, any material found during the course of search. It is noted by us that this issue is no more res-integra. Honourable co-ordinate Bench in the case of Vimal Kumar Rathi [2016 (1) TMI 215 - ITAT MUMBAI] held that no addition can be made in the absence of any adverse material found during the search. - Decided in favour of assessee Telescoping of the unaccounted brokerage and commission income against the amount offered in the return by the assessee - Held that:- In the assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income or expense ? Nothing is coming out from the perusal of this document, and, therefore, in our considered view, no addition could have been made simply relying on the basis of this document that too without bringing any material on record to explain and substantiate this document. Therefore, addition was wrongly made by the Assessing Officer, and, therefore, the same is hereby deleted.- Decided in favour of assessee Addition on account of unsecured loan - Held that:- The assessee has discharged its onus under section 68. Even otherwise, the impugned addition was made in the absence of incriminating material, and keeping in view all the facts and circumstances of the case, the addition being illegal, has rightly been deleted by the learned Commissioner of Income-tax (Appeals) - Decided in favour of assessee Unexplained jewellery treated as unexplained investment - Held that:- The learned Commissioner of Income-tax (Appeals) has given detailed findings accepting the claim of the assessee that the impugned investment in jewellery is covered under the offer made by the assessee under section 132(4) of ₹ 31,50,000 on account of diamond jewellery on the basis of seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel appearing on behalf of the assessee that in this case no jurisdiction as per law could have been assumed under section 153C because nothing incriminating was found against the assessee, in the case of search carried out at the premises of Shri Prakash H. Savla. It has been submitted that in any case additions made in the assessment order are illegal on the ground that these have been made without there being any incriminating material. Thus, additions are without any basis and without there being any adverse material against the assessee, and, thus, the addition made by the Assessing Officer is not only beyond the jurisdiction but contrary to law and facts on the merits also. 3.1. In support of his claim, the learned counsel has placed copy of the judgment in the case of Vimal Kumar Rathi v. Deputy CIT (ITA Nos. 3094-3096/Mum/2013 order dated October 16, 2015) passed by the honourable Mumbai Bench of the Income-tax Appellate Tribunal. He has also placed reliance on various judgments which have been relied upon in the case of Vimal Kumar Rathi (ITA Nos. 3094-3096/Mum/2013 order dated October 16, 2015). Reliance has also been placed on the judgment of the honour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities in framing the assessment and making the impugned additions. 3.3. We have heard both the sides very carefully and gone through the material placed, the orders of the lower authorities as well as the judg ments relied upon before us. The brief facts as culled out from the orders of the lower authorities are that during the search conducted at the residence of Shri Prakash H. Savla, documents related to the firm, M/s. Mahavir Builders, were found and seized. Subsequently, Shri Prakash H. Savla and Shri Pankaj Gangar (husband of the assessee) gave some declarations offering undisclosed income of some connected persons including the assessee, as per the chart given in the order of the learned Commissioner of Income-tax (Appeals), wherein an amount of ₹ 24.30 lakhs has been offered in the name of the assessee for the assessment year 2007-08 on account of some undisclosed share purchase transactions. Subsequently, notices were issued to the assessee by the Assessing Officer under section 153C, in pursuance of which the assessee filed the return on August 28, 2009. In the return filed for the impugned assessment year, no disclosure was made by the assessee, as the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment/reassessment with the routine additions under section 68 and section 14A of the Act based on the accounted transactions. The instant case for the assessment year 2002-03 deals with the case of disturbing the completed assessment . Earlier the assessment was completed under section 143(1) of the Act. Completeness of the summary assessment is considered and held in favour of the assessee, vide many judgments cited above. In the assessment under section 153A, the Assessing Officer made (i) addition under section 68 on account of artificially inflated investment in house duly disclosed in the balance-sheet of the assessee ₹ 31,33,070 ; and (ii) disallowance under section 14A : ₹ 23,31,469. Admittedly, there is no incriminating material before the Assessing Officer 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 the aforesaid additions of ₹ 31,33,070, the Assessing Officer has not used even the said valuation report and the Assessing Officer disallowed what is reported in the books. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 (paragraph 6.2) (In favour of assessee) Para 6.1 of the order : The Special Bench in the case of All Cargo Global Logistics Ltd. [2012] 18 ITR (Trib) 106 (Mumbai) [SB] ; [2012] 137 ITD 287 (Mum) ; [2012] 23 taxmann.com 103 (Mum.) [SB], has held that the provisions of section 153A come into operation if a search or requisition is initiated after May 31, 2003, and on satisfaction of this condition, the Assessing Officer 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 Assessing Officer 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal are not sustainable. Further, for the sake of completeness of the order, we have perused the orders/judgments relied upon by the learned Departmental representative for the Revenue and found they are distinguishable on facts for one reason or other. To start with, we have perused the judgment of the honourable Delhi High Court in the case of Madugula Venu v. DIT [2013] 29 taxmann.com 200 (Delhi), 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 the Andhra Pradesh High Court in the case of Gopal Lal Bhadruka v. Deputy CIT [2012] 346 ITR 106 (AP) ; [2012] 27 taxmann.com 167 (AP) is not on the notices issued under section 153A of the Act and the same is pronounced in the context of the notice under section 153C of the Act. Further, also, the co-ordinate Bench decision in the case of Scope (P) Ltd. v. Deputy CIT [2013] 33 taxmann.com 167 (Mumbai-Trib.) has granted relief to the assessee though the notice issued under section 153A of the Act was upheld. However, this order has not considered the then existing decision of the co-ordinate Bench decision in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2013] 1 ITR-OL 371 (Raj) ; [2013] 36 taxmann.com 523 (Raj), vide para 21, it is categorically mentioned that 'the requirement of assessment or reassessment under the said section (153A) has to be read in the context of sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration . . . .' Thus, the judgment of the honourable High Court in the case of Jai Steel (India) [2013] 1 ITR-OL 371 (Raj) ; [2013] 36 taxmann.com 523 (Raj) and above decisions of the Tribunal are categorical in concluding that, in case of the concluded assessments like the present one, the additions are made only based on the incriminating material discovered during the search action. The facts of the Jai Steel (India) [2013] 1 ITR-OL 371 (Raj) ; [2013] 36 taxmann.com 523 (Raj) are identical to the present one, i.e., Assessing Officer made additions by reassess ing under section 153A on the completed assessment under section 143(1) of the Act. Thus, considering the judgment in the case of the Jai Steel (India) [2013] 1 ITR-OL 371 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, we delete the same. Considering our decision on the legal issue in favour of the assessee, the other grounds demand no specific adjudication. Thus, on the legal ground the assessee succeeds and rest of the grounds are dismissed as academic. 3.5. The honourable Delhi High Court in the case of CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) (ITA Nos. 707/2014, decided on August 28, 2015) has held that completed assessments could only be interfered with by the Assessing Officer on the basis of any incriminating material unearthed during the course of the search or requisition of the documents. In the absence of any incriminating material, the Assessing Officer does not have any jurisdiction to interfere in the concluded assessments. The honourable court has summarised the legal position in respect of section 153A of the Act as under (page 589) : On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the afore mentioned decisions, the legal position that emerges is as under : (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 3.6. Similar view has been taken by the honourable Delhi High Court in a very recent judgment passed in the case of CIT v. RRJ Securities Ltd. [2016] 380 ITR 612 (Delhi) ; [2015] 62 taxmann.com 391 (Delhi) (order dated October 30, 2015). The relevant portion of the order is reproduced as under (page 636) : The decision in SSP Aviation Ltd. v. Deputy CIT [2012] 346 ITR 177 (Delhi) cannot be understood to mean that the Assessing Officer has the jurisdiction to make a reassessment in every case, where seized assets or documents are handed over to the Assessing Officer. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the Assessing Officer after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the Assessing Officer to be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional advice from the counsel the respondent/cross objector has within reasonable time filed this cross objection before this honourable Tribunal. It is submitted that the respondent/cross objector, inadvertently, due to lack of proper professional advice on this issue, could not filed the cross objections before this honourable Tribunal well in time, i.e., on or before December 26, 2012, and by the time the respondent/ cross objector sought the counsel's advice, there arose 54 days delay in filing the cross objection before the honourable Tribunal. 5.1. The aforesaid petition is also supported with an affidavit from the assessee. We have heard the learned counsel as well as the learned Commissioner of Income-tax-Departmental representative. After taking no objection from the learned Commissioner of Income-tax-Departmental representative we find it appropriate to condone the delay in filing of cross objections, in the interest of justice. Therefore, the cross objection is admitted for adjudication. 5.2. It is noted by us that the primary legal issue raised by the assessee is the same in this year also. The assessee has filed revised and concise grounds of appeal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 159/Mum/2012 (Revenue's appeal) and C. O. No. 36/Mum/2013 for assessment year 2005-06 9. In these appeals also there is a delay of 54 days in filing cross objection before the Tribunal by the assessee. The facts are identical to that of Ms.Chhaya Gangar for the assessment year 2005-06 above, thus following our order, the delay is condoned and cross objection is admitted for adjudication. 9.1. It is further noted that ground Nos. 4 and 5 of the cross objection are identical to the case of Ms. Chhaya Gangar and, therefore, these are allowed. The cross objection is treated as partly allowed. 9.2. In the Revenue's appeal, grounds Nos. 1, 2, 3 deal with the action of the Assessing Officer in treating the amount of capital gain earned by the assessee as a result of sale of shares, as income from other sources . This addition has been made without any incriminating material and, therefore, the facts being identical with the case of M/s. Chhaya Gangar for the assessment year 2005-06, following our order, we hold that the addition was beyond the jurisdiction, and, therefore, the same is hereby deleted. 10. In ground No. 4 of the Revenue's appeal, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of ₹ 35,831 and minus ₹ 23,670 has been given. Similarly other entries are mentioned on various dates and the total amounts of ₹ 1,88,555 against which the expense of ₹ 1,32,135 and the balance of ₹ 56,420 has been shown. The interpretation of these entries shows that the assessee has made payment of ₹ 1,88,555 against the expenses of ₹ 1,32,135 and the balance of ₹ 56,420 due from M/s. Vividham Sweets and Snacks Shop. It is also mentioned that the seized material notings are related to wedding of the daughter of Shri Prakash Savla and the declaration has been made under section 132(4) in the hands of the partnership firm where Shri Prakash Savla and the appellant is a partner. The expenditure incurred shown on these loose papers have been offered to tax in the hands of the partnership firm and due tax have been paid on this amount. On the other hand, the Assessing Officer has assumed that Vividham Sweets and Snacks Shop is belonging to the assessee and the assessee has received rent of ₹ 50,000 from M/s. Vividham Sweets and Snacks Shop and treated it unexplained rent received by the assessee and treated it as unexplained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals), and, therefore, we uphold the same. Accordingly, ground No. 4 of the Department's appeal is dismissed. 11. As a result, cross objection filed by the assessee is partly allowed and the appeal filed by the Revenue is dismissed. ITA No. 160/Mum/2012 (Revenue's appeal) and C. O. No. 37/Mum/2013 for assessment year 2006-07 12. It is noted that in this year also the facts are identical and, therefore, the cross objection is admitted for adjudication condoning the delay, following our order for the assessment year 2005-06. 12.1 Further, in consistency with our order for the assessment year 2005-06, ground Nos. 4 and 5 of the revised and concise grounds of cross objections filed by the assessee are allowed. 13. Grounds Nos. 1, 2, 3, of the Revenue's appeal are identical to grounds Nos. 1, 2 and 3 of the assessment year 2005-06, and, therefore, following our order, these grounds are dismissed. 14. Ground No. 4 is identical to ground No. 4 of the assessment year 2005- 06 and, therefore, following our order this ground is also dismissed. 15. In ground No. 5, the Revenue has challenged the action of the learned Commissioner of Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account of the assessee. The assessee submitted that this entry has already been considered in the offer of income made by the assessee for an aggregate amount of ₹ 30,00,000, and, therefore, it should be adjusted with that. Being not satisfied, the Assessing Officer made the addition. In the appeal before the learned Commissioner of Income-tax (Appeals) detailed arguments were made wherein the assessee reiterated its stand and requested for telescoping of this amount against the income offered. 18.2. In the order passed by the learned Commissioner of Income-tax (Appeals), he accepted the claim of the assessee and granted the benefit of telescoping. 18.3. Being aggrieved, the Revenue filed an appeal before the Tribunal. It has been argued by the learned Commissioner of Income-tax-Depart mental representative that there were no basis with the learned Commissioner of Income-tax (Appeals) to grant the benefit of telescoping. 18.4. We have carefully gone through the order of the learned Commissioner of Income-tax (Appeals). It is noted by us that in the assessment proceedings before the Assessing Officer, the assessee claimed that the entry of commission and br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer found that there was jotting on a document found during the course of search page, i.e., No. 16 of annexure GS4/A2. The assessee explained that he did not know Mr. Arun Bhai whose name was mentioned in the seized document, and that he had nothing to do with this document. But the Assessing Officer made addition of the same. 24.1. Being aggrieved, the assessee contested the matter before the learned Commissioner of Income-tax (Appeals) wherein the assessee made detailed submissions reiterating its stand but the learned Commissioner of Income-tax (Appeals) did not agree with the submission of the assessee on the ground that the assessee failed to produce Mr. Arunbhai before the Assessing Officer for his examination and also failed to submit any documentary evidences to explain this entry, and, accordingly, he confirmed the addition. 24.2. Before us, the learned counsel has vehemently argued that there is no evidence to show that the impugned document belongs to the asses see and it was not clear that whether the amount represents income or expenditure, and that it was merely a noting, and, therefore, nothing more could be proved from it. The alternative argument of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and financial capacity and genuineness of the loan. The Assessing Officer was not satisfied and, therefore, addition was made. Before the learned Commissioner of Income-tax (Appeals), the assessee made detailed submissions. The Commissioner of Income-tax (Appeals) has deleted this addition by recording detailed findings which are reproduced hereunder : I have considered the submissions of the appellant, the order of the Assessing Officer and the facts of the case carefully, it is noticed that the appellant has received loans and advances in the year under consideration. The Assessing Officer has asked to submit the confirmations of the creditors to prove the genuineness of the transactions. The confirmations and the bank pass book of the creditors was filed before the Assessing Officer but it was not accepted with the argument that the creditors were not having permanent account number because they were not Income-tax assessees. On the other hand, the authorised representative of the appellant has submitted that the loans received were disclosed in the Income-tax returns filed before the search operation. No incriminating document was found and seized during the course of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the taxable income. 27.2. Being aggrieved, the assessee carried the matter before the learned Commissioner of Income-tax (Appeals) and filed detailed submission. The learned Commissioner of Income-tax (Appeals) was satisfied with the submissions of the assessee and, accordingly, he deleted the addition after recording the following detailed findings : I have considered the submissions of the appellant, the order of the Assessing Officer and the facts of the case carefully, it is noticed that during the course of search jewellery of ₹ 31,29,480 was found out of which the diamond jewellery of ₹ 16,58,750 was seized. The Assessing Officer has given opportunity to the assessee to explain the source of jewellery. The appellant has submitted that as per the seized documents, the diamond jewellery of ₹ 31,50,000 was mentioned and payment of ₹ 10,00,000 each was shown as made and balance of ₹ 11,50,000 was pending. The appellant has accepted the payment of ₹ 20 lakhs and also to avoid litigation the diamond jewellery worth of ₹ 31,50,000 was declared under section 132(4) which covers the diamond jewellery worth of ₹ 16,58,750 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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