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TMI Blog2016 (6) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction as per law and without obtaining requisite approval as per law and without complying with the other mandatory condition envisaged under the Act, more so when no incriminating material have been found as a result of search. 2. That having regard to the facts and circumstances of the case, Learned CIT(Appeals) has erred in law and on facts in making disallowance of Rs. 27,20,000 u/s. 40A(3) and too without considering the submissions/evidences of the assessee, more so when such disallowance could not have been made in the proceedings u/s. 153A of the Act. 3. That in any case and in any view of the matter, impugned disallowance and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion about the filing of return on 14.11.2007 in the first appellate order. She thus wanted to verify the correctness of the claimed filing of return under sec.139(1) of the Act on 14.11.2007 to enable her to counter the submission of assessee on the issue raised in ground Nos. 1 and 2 questioning the validity of assessment framed under sec. 153A/143(3) of the Act. 3. The Learned AR vehemently objected the above request with the submission that the issue raised is fully covered by the decision of Hon'ble jurisdictional High Court of Delhi in the case of CIT vs. Kabul Chawla (2016) 310 ITR 573 (Del.) and the hearing is being adjourned since long on one basis or the other. He submitted further that no such objection was raised by the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. In the said letter, the assessee has submitted that original return of income under section 139(1) of the Act filed vide acknowledgement No. 9149110141017 dated 14.11.2007 may be considered as a return of income furnished under provisions of sec. 153A of the Act in compliance of aforesaid notice. He submitted that since there was negative income during the year, hence, no income has been shown in the return of income filed under sec. 139(1) of the Act with computation of taxable income showing loss at Rs. 28,575. He submitted that the said return of income filed under sec. 139(1) of the Act was processed under sec. 143(1) of the Act and no notice under sec. 143(2) was issued within the time limit prescribed. On the date of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned AR reiterated the above contention that on the date of search, no incriminating material was found relating to the assessee and on that date no assessment was pending for the abatement. In this regard, he referred orders of the authorities below wherein nothing incriminating has been mentioned found during the course of search. The disallowance under sec. 40A(3) of the Act in the assessment has been made not on the basis of any incriminating material found during the course of search. He placed reliance on the above cited decision of the Hon'ble jurisdictional High Court of Delhi in the case of Kabul Chawla (supra) with this further submission that in that case also return was filed and processed under sec. 143(1) of the Act and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takes place under Section 132 of the Act, notice under Section 153 A (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment". 9. Respectfully following the ratios laid down in the above decision when we examine the facts of the present case, we find that like in the case of Kabul Chawla, in the present case return of income originally filed was processed under section 143(1) of the Act, undisputedly, no notice under sec. 143(2) was issued within the prescribed time limit and thus processing of original return of income under sec. 143(1) of the Act had acquired the status of assessment. On the date of search undisputedly no assessment was pending for the abatement and it is also an undispute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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