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TMI Blog2016 (6) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... he gifts that were considered by the assessee while crediting the capital account. Thus we are of the view that these assessments framed u/s.153A need to be quashed. Ordered accordingly. Legal issue has been decided in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... erred on facts and in law charging interest u/s 234A, 234B and 234C when no such interest is leviable. The appellant denies its liability to pay interest." IT(SS)A No.154/Ahd/2012 for A.Y. 2004-05 "1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in rejecting Grounds No.1 and 2 of the appellant's appeal before him challenging the validity of the assessment order passed u/s. 153A read with Section 143(3) of the Income Tax Act, 1961. 2. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has erred in confirming addition in respect of gifts received by assessee for ₹ 14,00,000/- by considering the same as unexplained gifts u/s. 68 of the Act. The same may kindly be deleted. 3. The Assessing Officer has erred on facts and in law charging interest u/s 234A, 234B and 234C when no such interest is leviable. The appellant denies its liability to pay interest." IT(SS)A No.155/Ahd/2012 for A.Y. 2005-06 "1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in rejecting Grounds No.1 and 2 of the appellant's appeal before him challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed under section 153A of the Act is not valid in view of the fact that no incriminating material indicating the unaccounted income was found at the time of search and therefore, the Assessing Officer was not justified in issuing notice under section 153A of the Act and passing the order. His second argument was that as per the mandate of s.153A, the completed assessments can be interfered only on the basis of some incriminating material unearthed during the course of search on undisclosed income or property disclosed in the course of search which are not produced or already not disclosed or made known in the course of original assessment and that the assessment under section 153A can be made only on the basis of evidence found in the course of search and in the absence of any incriminating material, the completed assessments could not be interfered. Learned Authorised Representative submitted that in the present case, the assessee had already accounted the gifts in the respective assessment years by crediting the capital account and the fact of the amount being reflected in the capital account is acknowledged by the Assessing Officer in para 5.3, page 2 of the order. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/03/2007 15 176/Ahd/2012 2006-07 30/03/2007 143(1) 31/03/2008 Santoshdevi V Agrawal 16 180/Ahd/2012 2003-04 27/09/2003 143(1) 30/09/2004 17 181/Ahd/2012 2004-05 01/11/2004 143(1) 30/11/2004 18 182/Ahd/2012 2005-06 27/03/2006 143(1) 31/03/2007 19 183/Ahd/2012 2006-07 24/03/2007 143(1) 31/03/2008 Vanita V Agrawal 20 187/Ahd/2012 2003-04 27/09/2003 143(1) 30/09/2004 21 188/Ahd/2012 2004-05 01/11/2004 143(1) 30/11/2005 22 189/Ahd/2012 2005-06 27/03/2006 143(1) 31/03/2007 23 190/Ahd/2012 2006-07 24/03/2006 143(1) 31/03/2007 Aruna A Agrawal 24 194/Ahd/2012 2003-04 24/11/2003 143(1) 30/11/2004 25 195/Ahd/2012 2004-05 05/08/2004 143(1) 31/08/2004 6. On the basis of the above chart, he pointed that in all the above cases, since the time limit of issuance of notice under section 143(2) had elapsed on the date of search and since there was no incriminating material found at the time of search, the assessment framed under section 153A was not valid and therefore the assessments framed under section 153A needs to be quashed. 7. On the issue that since the time limit of issuing the notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that Shri Mahavir Prasad Agrawal is stated to have given gift of ₹ 1,00,000/- whereas his total income as per copy of the return of income was ₹ 60,250/- only. He therefore submitted that on the basis of the material found during the course of search coupled with the post search inquiries by ADIT(I) indeed revealed that the document were incriminating and therefore the Assessing Officer was fully justified in framing assessment under section 153A of the Act. He further placed reliance on the decision of Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora reported in (2014) 367 ITR 517 (All). 9. Learned Authorised Representative, in the rejoinder to learned Departmental Representative's submission, submitted that the decision relied upon by the learned Authorised Representative in the case of Raj Kumar Arora (supra) is on different facts as it deals with the scope of s. 153A assessment and not that of assumption of jurisdiction and that this fact has also been noted by the Co-ordinate Bench of the Tribunal in the case of Intas Pharmaceuticals Limited - IT(SS)A Nos.807 to 809/Ahd/2010 & 20/Ahd/2011 order dated 14.08.2015. He pointed out the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itating transactions of gifts and therefore it was concluded by the AO that the gifts received by the assessee and his family members were bogus gifts and therefore the AO proceeded to make additions in respect of the gifts received in the assessment framed u/s 153A of the Act. It is also a fact that in the assessment order that is framed under 153A, AO in respect to the gifts that has been received by the assessee in various assessment years has at para 5.2 page 2 of the order has noted that the gifts were reflected in the capital account of the assessee in the various assessment years listed therein. The exact noting of the AO reads "On verification of the capital accounts, it is seen that the assessee has received substantial gifts from various persons as detailed hereunder" and then he proceeds to tabulate the details of gifts received by the assessee in various assessment years from AY 2003-04 to AY 2009-10. Before us, therefore it is Ld. AR's contention that the receipt of the gifts by the assessee has already been accounted for by the assessee in the respective assessment years and has also been reflected in the returns of income of the respective years. The material, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.] [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other postsearch material or information available with the AO which can be related to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gifts deeds and copies of return of income of the donors found at the time of search were different documents from those that were considered by the Assessee while claiming the amounts to be the gifts. 17. We find that in the case of CIT vs. Ashok Dua (2009) 177 Taxman 494 (Delhi), where the facts were that when assessee had disclosed gifts received by assessee and minor sons from NRI's and during the course of search gift deeds and affidavits of the donors were found and on the basis of these material AO held the gift to be bogus, the issue was decided in favour of the Assessee by Tribunal. In the appeal of Revenue against the order of Tribunal, the order of tribunal was upheld by the Hon'ble High court by holding as under: "6. As regards the gifts, the Tribunal Iclt that it was not necessary to go into the question as in whether the alleged gifts were genuine or represented the assessee's own money sought to be laundered by way of NRI gifts. The Tribunal noted that the fact of the matter was that no incriminating material was found during the course of search to indicate that the assessee's claim of gifts was not genuine. During the course of search, only affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial question of law arose for the consideration of this Court." 18. As far as the proposition that when the return has been processed u/s 143(1) and the time period of issuance of notice u/s 143(2) for selecting the return for scrutiny has elapsed and when no incriminating material has been found during the course of search then in such cases proceedings do not get abated by the virtue of proviso to s. 153A, we find that the co-ordinate Bench of Tribunal in the case of ACIT vs PACL India Ltd. (ITA No 2637/Del/2010 order dated 20th June 2013 has decided the issue in favour of the assessee by holding as under: "7. After hearing both the sides on the issue and taking into consideration, records available the following facts emerges as undisputed. The regular return of income was filed on 2.12.2003 and the same was processed u/s 143(1)(a) of the Act. The time period for issuing notice u/s 143(2) of the IT Act for selecting case for security expired on 31.12.2004. The first search was conducted on the premises of assessee on 22.9.2005 and the 2nd search was conducted on 25.8.2006 and in both the searches, no incriminating material, document, unaccounted assets and bogus of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x years shall become subject matter of assessment under section 153A the Assessing Officer shall have a free-hand, through abatement, only on the proceedings that are pending, to frame the assessments afresh. But in a case where the proceedings have reached finality, assessment under section 153A read with section 143(3) and certain incriminating documents have been found indicating undisclosed income, the addition shall only be restricted to those documents or incriminating material, and clubbed only to the assessment framed originally, as the law does not permit the Assessing Officer to disturb issues already concluded. Where on the date of initiation of search under section 132 or requisition of books, no proceeding is pending, but in the search, material is found indicating incriminating material, the Assessing Officer embarks on a jurisdiction, wherein he has to club the two sets of incomes, the returned income and the unearthed income and arrive at the total income. All CARGO GLOBAL LOGISTICS Ltd. Vs. Dy. CIT [2012] 18 ITR (Trib) 106 (Mumbai) [SB] and CIT Vs. ANIL KUMAR BHATIA [2013] 352 ITR 493 (Delhi) followed. Where in the search operation, no incriminating material is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arately; (b) In other cases, in addition to the income that has 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 account, other documents, found in the course of search but not produced in the course of original assessment. And (ii) undisclosed income or property discovered in the course of search." 12. From the finding of the Special Bench, it becomes clear that in case of assessment already completed, no addition can be made further while completing the assessment under Section 153A, if there is no incriminating material, which in the context of relevant provision, means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 13. In the present case, neither any incriminating material was found nor any other material or document along with books of accounts were found, which were not produced before the AO while completing the assessment originally. For assessment year 2001-02, no incriminating material was found o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready expired prior to the date of search. Therefore, the proceedings do not get abated by virtue of proviso to Section 153A. 10. Therefore, the question arises whether AO can make any addition in the reassessment proceedings u/s 153(A) after making inquiries which are not suggested by any document or asset seized during the search. It depends on the nature of addition. The facts and circumstances of the assessee clearly show that no incriminating document found relating to the land development expenses debited in the books of accounts. No material was on the record on that basis which income of assessee could be further assessed by Assessing Officer. Therefore, the assessing officer has no jurisdiction to make or to resort to roving and fishing inquiries to find out whether any income has escaped assessment during these reassessment proceedings. Particularly, when there is no incriminating material found and seized during the course of search u/s 132(1) of the Act and nothing is available in record to reassess the income of assessee. In view of the above, this is not a fit case for making the addition in the year under consideration, the same are deleted." 19. We also find th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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