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TMI Blog2016 (11) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience and brevity. Ground of appeal and cross objections in appeal number 3555/Del/2012 and cross objection No. 309/Del/2012 are reproduced as under: Grounds of appeal in ITA No. 3555/Del/2012 i. The order of the Commissioner of Income Tax (Appeals) is not correct in law and on facts. ii. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 4751295/- made by the Assessing Officer on account of unaccounted purchases from M/s. Supariwala & Co. on the basis of statement given by its proprietor Sh. Mahabir Prasad Gupta recorded on 12.04.2006 u/s 132(4)/131 of Income-tax Act, 1961 (hereinafter referred to as "the Act"), 1961 during the course of search. iii. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. Cross objections raised in C.O. No. 309/Del/2012 1. That notice issued u/s 153C of the Act and, assessment framed u/s 153A/143(3) of the Act without satisfying the statutory preconditions contained in the Act were without jurisdiction and therefore, deserves to be quashed as such. 1.1 That while upholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Commissioner of Income Tax is perse without jurisdiction since the same is not based on any material found as a result of search on Rajdarbar Group of cases as has been held by Special Bench of Hon'ble Tribunal in the case of M/s All Cargo Global Logistics Ltd. vs. DCIT in ITA No(s) 5018 to 5022 and 5059/M/2010 for Assessment Years 2004-05 to 2009-10. It is therefore prayed that, it be held that, assumption of jurisdiction and, addition made of Rs. 47,51,295/- were illegal, invalid and unsustainable." ITA No. 3555/Del/2012 & C.O. No. 309/Del/2012 2. Facts in brief of the case are that a search and seizure operation under section 132 of the Income-tax Act, 1961 (in short 'the Act') was carried out on 31/07/2008 at the premises of "Rajdarbar Group" of cases. According to the Assessing Officer, certain documents belonging to the assessee were seized in the course of search operation, and accordingly notice under section 153C of the Act was issued on 21/07/2010. In response, the assessee filed return of income on 12/08/2010 and notice under section 143(2) of the Act was issued and served within stipulated period and the assessment was completed under section 153C/143(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner of Income-tax (Appeals), challenging the assessment order on legal grounds as well as on merit of the additions. The assessee challenged that the assessment order was bad in law as the assessment had not been framed on the material seized pursuant to the search action under section 132 of the Act at the premises of "Rajdarbar Group". The learned Commissioner of Income-tax (Appeals) was of the view that under section 153A both the original and reassessment proceedings are merged together, so the nature of additions to be made cannot be restricted to only undisclosed income detected as a result of such and accordingly, he upheld the validity of the re-assessment proceedings under section 153C of the Act. However, on merit he deleted the addition, holding that addition on the basis of statement of third party without any corroborative evidence was not tenable. 2.2 Aggrieved with the deletion of addition made by the Assessing Officer, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. The assessee is in cross objection against the validity of the reassessment proceedings under section 153C/153A of the Act, upheld by the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation in respect of the seized asset, could not be resorted to; the AO had no jurisdiction to make the reassessment under Section 153C of the Act. 39. In view of the above, the third question framed, whether the proceedings under Section 153C of the Act could be initiated against the Assessee, is answered in favour of the Assessee and against the Revenue." 8. In the light of the ratio laid down in above decisions, we find that no addition could be made u/s 153C/153A, if following two conditions are satisfied: i. No incriminating material belonging to the assessee found/seized in the search, on the basis of which proceedings u/s 153C are initiated. ii. The assessment in the year under consideration stood completed as on the date of search. 9. When we advert to the facts of the case in hand, we find from the order of the lower authorities that in this case reassessment proceeding under section 153C of the Act have been initiated on the ground that certain documents belonging to the assessee were found and seized during the search action under section 132 of the Act at the premises of "Rajdarbar Group" on 31st July, 2008. But from the orders of the Assessing Officer, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounted purchases of Supari into Gutka. He had applied certain GP rate to arrive at the figure of the profit which is further apportioned between the .two entities. It is very important to mention that no reference of seized material or any other evidences have been made to corroborate the findings of unaccounted production or sale. The whole addition hinges on serial no.1 i.e evidence gathered from third party document or statement. Now the issue is can third party statement or entry in absence of any corroborative evidence despite using ultimate weapon of search, can result in justified addition. The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from third party search but not belonging to the appellant this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A) can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Presumption regarding correct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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