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TMI Blog2018 (6) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri A. Srinivas For the Revenue : Shri J. Siri Kumar, DR ORDER Per Bench These appeals of the assessee as well as Revenue are against the common and consolidated order of the CIT (A)-I, Hyderabad, dated 30-09-2014 for the A.Ys 2002-03 to 2004-05 and orders dated 31.10.2014 for the A.Ys 2005-06 to 2006-07 respectively. 2. Brief facts of the case are that the assessee company, engaged in the construction business, filed its returns of income for the relevant A.Ys and the assessments for the A.Ys 2002-03 to 2005-06 were completed u/s 143(3) of the Act. The assessee had also filed returns of income for the A.Y 2006-07 on 28.11.2006 but no further proceedings were taken up by the respective AO. Thereafter, on 19.02.2008, there was a search and seizure operation u/s 132 of the Act on the business premises of its assessee and also the residential premises of the Directors and Partners. Consequent thereto, notices u/s 153A dated 24.10.2008 were issued and served on the assessee. In response to the notices, the assessee filed its returns of income. The AO asked the assessee to furnish the details of housing project(s) under section 80IB of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-02, but however, confirmed the additions made u/s 40A(3) and 68 of the Act. Aggrieved, the assessee is in second appeal before us by raising the following grounds of appeal for the A.Y 2002-03 (which are similar in other years also except for the quantum): 1. The order of the AO is contrary to law, facts circumstances of the case. 2. The AO. ought not to have made the additions in the assessment u/s.153A, when no fresh material was before him. 3. The Appellate Commissioner erred in concurring with the finding of the AO on the assessment made. 4. The AO. erred in disallowing an amount of ₹ 23,25,827/- u/s 40A(3). 5. The Appellate Commissioner erred in confirming the above disallowance made u/s 4OA(3). 6. The AO. erred in adding an amount of ₹ 1 ,93,91,192/- I u/s.68. 7. The Appellate Commissioner erred in confirming the above addition u/s.68 . 5. In the ground of appeal No.2, the assessee is challenging the validity of the assessment u/s 153A of the Act when no fresh material was before the AO after completing the assessments u/s 143(3) of the Act. The CIT (A) had dealt with this issue at Para 4.2 of his order and follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had agreed to the addition of ₹ 5.00 lakhs u/s 69 for the A.Y 2004-05 and though the assessee has raised a ground of appeal on this issue, it does not survive because of the agreement of the assessee to the said addition. 9. The learned Counsel for the assessee also placed reliance upon the following decisions in support of his contention that where an assessment u/s 143(3) was completed before the date of search, the fresh assessment u/s 153A can be made only on the basis of the material found during the course of search: i) CIT vs. Anil Kumar Bhatia (2013) 352 ITR 493 (Del.) ii) CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del.) iii) CIT vs.Soumya Con.(P) Ltd (2016) 387 ITR 529 (Guj.) iv) CIT vs. Devangi Alias Rupa (2017) 394 ITR 184 (Guj.) v) CIT vs. Meeta Gutgutia (2017) 395 ITR 526 (Del.) vi) CIT vs. Dipak Jashvant Lal (2017) 397 ITR 153(Guj.) vii) CIT vs. SRS Ispat Power Ltd (2017) 398 ITR 584(Bom.) viii) CIT vs. Deepak Kumar Agarwal (2017) 398 ITR 586 (Bom.) ix) CIT vs. Manoj Hora (2018) 402 ITR 175 (Del.) 10. The learned DR, on the other hand, supported the orders of the authorities below. 11. Having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 583 (Bom.) held as under: Held, dismissing the appeals, that the scope of assessment u/s 153A was limited to the incriminating evidence found during the search and no further. Section 153A of the I.T. Act, 1961 did not make any distinction between the assessment conducted u/s 143(1) and section 143(3). The issue was no longer res integra ii) Hon'ble Gujarat High Court in the case of Pr.CIT vs. Dipak Jashvantlal Panchal reported in (2017) 397 ITR 153 (Guj.) has held as under: Section 153A of the Income-tax Act, 1961, bears the heading assessment in case of search or requisition . The heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of the section the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section and if there is no ambiguity in the language or if it is plain and dear, then the heading used in the section strengthens that meaning. The trigger point for exercise of powers under section 153A is a search under section 132 or a requisition under section 132A of the Act. The assessment should be connected with something found during the search or requisition, i.e incriminating material which reveals undisclosed income. Where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search u/s 132 or making of requisition u/s 132A, while computing the total income of the assessee u/s 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition . vi) Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in (2016) 380 ITR 573 (Del.) held as under: The legal position that emerges on a perusal of section 153A and section 132 of the Income-tax Act, 1961, is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(l) will have to be mandatorily issued to the person in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed or made known in the course of original assessment. Held accordingly, that the matter related to the assessment years 2002-03, 2005-06 and 2006-07. On the date of the search the assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed 13. We find that in almost all the above decisions, the decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (cited Supra) was considered and in the case of Kabul Chawla, the Hon'ble Delhi High Court observed as under:- 9. The Assessee then appealed to the ITAT. One of the issues considered by the ITAT was whether the completed assessment on the date of the search would stand on the same footing as the pending assessments which in terms of the second proviso to Section 153A(1) of the Act would abate. It was noticed that in Anil Kumar Bhatia (supra), this Court had left open the question whether in order to frame an assessment in terms of the first proviso to Section 153A(1) of the Act in respect of those AYs for which the assessments had already been completed, there was a requirement that so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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