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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 ..... ioner of Income Tax (Departmental Representative) also could not controvert this position of completion of assessment. As both the conditions laid down in the decision of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT ]have been satisfied in the case of the assessee in the year under consideration, respectfully following it, we hold that no addition could have been made in the case of the assessee in the instant assessment year. - Decided in favour of assessee - ITA Nos. 3555 & 3554/Del/2012, C.O. No. 309/Del/2012, C.O. No. 310/Del/2012 - - - Dated:- 30-9-2016 - SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Department : Sh. Sunil Chander Sharma, CIT(DR) For The Assessee : Sh. Gautam Jain Piyush Kumar Kamal, Advocates ORDER PER O.P. KANT, A.M.: These two appeals by the Revenue and two cross objections of the assessee have emanated from two separate orders dated 30.04.2011 of learned Commissioner of Incometax (Appeals)-XXXI, New Delhi for assessment year 2005-06 and assessment year 2006-07 respectively. In both the appeals of the Revenue identical grounds have been raised except change of amount involved. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restricted to assess only undisclosed income detected as a result of search overlooks the foundational submission that notice issued u/s 153C of the Act without satisfying the statutory preconditions is erroneous and thus not tenable. 1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the judgment of Gujarat High Court in the case of Vijaybhai N. Chandrani vs. ACIT reported in 333 ITR 436 wherein it has been held that, loose papers found as a result of search containing appellant s name cannot be a basis to assume that, such papers belong to the appellant and inabsence thereof, condition precedent for issuance of notice is not fulfilled and as such action taken u/s 153C of the Act stands vitiated. 1.5 That initiation of proceedings u/s 153C of the Act and, framing of assessment u/s 153A/143(3) of the Act is otherwise too bad in law and, without jurisdiction since a) there had been no search conducted on the assessee u/s 132(1) of the Act; b) there had been no valid satisfaction not recorded prior to issue of notice u/s 153C of the Act, as none has been confronted to the appellant; and c) there had been no money, bull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 131 of the Act and his statement was recorded on 17/10/2008, wherein he reiterated his earlier admission of cash sales of Supari to Rajdarbar Group . According to the Assessing Officer, Sh. Mahabir Prasad Gupta admitted unaccounted cash sales on the basis of incriminating documents seized during the course of search at the premises of M/s. Supariwala and Company. The Assessing Officer determined unaccounted cash purchases during the financial year 2004-05 corresponding to the assessment year under consideration, on the basis of statement of Sh. Mahabir Prasad Gupta and documents seized during search at M/s. Supariwala and Company which amounted to ₹ 2,09,20,200/-. The Assessing Officer also rejected books of accounts of the assessee. The Assessing Officer computed undisclosed income of ₹ 86,08,610/- corresponding to these unaccounted purchases of ₹ 2,09,20,200/-. The Assessing Officer also estimated undisclosed investment of ₹ 18,44,240/-. Thereafter, the Assessing Officer held that the assessee was manufacturing alongwith another person Sh. Manoj Hora, who was having 18 pouch packing machines, whereas the assessee was having only 15 pouch packing mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi) and Commissioner of Income Tax-7 Vs. RRJ Securities Ltd reported in (2015) 62 taxmann.com 391 (Delhi), no addition could have been made to the income already assessed in the case of the assessee. 5. The learned Commissioner of Income Tax (Departmental Representative), on the other hand, relied on the finding of the learned Commissioner of Income Tax (Appeals) on the issue in dispute. 5. We have heard the rival submissions and perused the material on record. In the case of Kabul Chawla (supra), Hon ble Delhi High Court has held that if on the date of search, the assessment already stood completed, and no incriminating material was unearthed during the search, no addition could have been made to the income already assessed. The relevant finding of the Hon ble High Court is reproduced as under: 37. 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 aforementioned decisions, the legal position that emerges is as under: i. Once a search 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 ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 6. Similarly, in the case of RRJ Securities (supra), in the reassessment completed u/s 153C/153A of the Act, purchases were held as unexplained by the Assessing Officer under section 69C of the Act on the basis of the statement of the third party. The question of law which was decided by the Hon ble High Court in the case of the RRJ securities (supra) was as under: whether the AO had jurisdiction to assess and reassess the income of the assessee under section 153C in respect of assessment year 2003-04 to 2008-09. 7. The Hon ble High Court after considering the judgment in the case of Kabul Chawla (supra) and judgment in the case of SSP Aviation Ltd. Vs. Deputy Commissioner of Income tax [2012] 346 ITR 177, held as under: 37. As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2005-06 1 Unaccounted purchase of Supari as per recorded statement of Mahabir Prasad Gupta and based on diary seized in his own case. Rs.2,09,20,000 2 For making the addition for A.y. 05-06, base of A.Y. 06- 07 is taken (Unaccounted Purchase AY 05-06 Profit AY 06- 07/Unaccounted Purchase AY 06-07) 3 Gross Profit as estimated by AO (2,09,20,000*4,63,80,1 31/11,27,10,598) Rs.86,08,610 4 Peak Figure in the Diary of Mahabir prasad Gupta of M/s Supariwala Co. ₹ 18,44,240 5 Total (Sr.no. 3 + Sr. no. 4) Rs.1,04,52,850 6 Profit appropriated in case of Manoj Hora based on 18 Manufacturing Machines of Gutka 7 Profit appropriated in case of Devender Kr. Arawal based on 15 Manufacturing Machine of Gutka ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153C of the Act have been initiated in the case of the assessee, in our opinion, the first condition of no incriminating material found in the case of the assessee, during the course of search, is satisfied. 11. Regarding the second condition, the assessee submitted that assessment for the year under consideration was not abated as the return of income under section 139(1) of the Act was filed on 30/10/2005 and limitation for issue of notice under section 143(2) was also over and no notice under section 143(2) of the Act was received before the date of search, thus the proceedings in the assessment year under consideration stood completed. The learned Commissioner of Income Tax (Departmental Representative) also could not controvert this position of completion of assessment. 12. As both the conditions laid down in the decision of Kabul Chawla (supra) have been satisfied in the case of the assessee in the year under consideration, respectfully following the findings of Hon ble High Court in the case of Kabul Chawla(supra), we hold that no addition could have been made in the case of the assessee in the instant assessment year. The ground No. 2 of the cross objection is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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