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TMI Blog2018 (6) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27.03.2014 passed u/s. 263 of the Income tax Act, 1961 (hereinafter referred as the Act). The assessee has raised the following revised grounds:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (CIT) under Section 263 of the Act is bad, both in the eye of law and on facts. 2. On the facts and circumstances of the case, the order passed by the learned CIT under Section 263 is bad in law as the same is barred by limitation as provided under section 263(2) of the Act. 3. On the facts and circumstances of the case, the order passed by the learned CIT cancelling the assessment order passed by the A.O. is untenable in the absence of order of the A.O. being erroneous as well as prejudicial to the interest of the Revenue. 4.(i) On the facts and circumstances of the case, the initiation of proceedings u/s 263 is bad in law, in view of the assessment order, made u/s 153A which the CIT intended to revise u/s 263, itself being bad is law and a nullity. ( ii) That the order u/s 153A is null and void, as in the absence of any search having been carried out on the assessee, no proceedings u/s 153A can be init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to that, 153A notice was issued to the assessee to file the return in response thereto. The assessee filed the return u/s 153A on 15.10.2010. The AO completed the assessment u/s 153A vide order dated 28.12.2011. No additions were made in this reassessment in the absence of any incriminating material being found during the course of the search. The Ld. CIT however, issued a notice dated 19.03.2014, proposing to revise the reassessment order passed by the AO under Section 153A on the ground that said order is erroneous and prejudicial to the interest of the Revenue. It was alleged in the said notice that long term capital gain of ₹ 7,15,31,199/- should have been taxed at the rate of 20% as against the rate of tax of 10%. It was further alleged that a sum of ₹ 3,45,03,001/- received by the assessee during the year should have been assessed as income from house property. The assessee submitted a detailed reply where it was pointed out that assessee has not been subjected to any search and as such the proceeding under Section 153A per se are bad in law. Further, in the absence of any incriminating material being found during the search, the assessment originally complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee further placed reliance on the following judgments: - M/s Classic Flour and Food Processing Pvt. Ltd. vs CIT ITA No. 764 to 766/Kol/2014 dated 5th April 2017 - M/s Tanuj Holdings Pvt. Ltd. vs DCIT[2016] 46 ITR (Trib) 420 dated 20th January, 2016 - Paul John Delicious Cashew Company vs ITO (2005) 94 ITD 131 (Coch.) 3. On the contrary, the Ld. CIT(DR) submitted that Ld. CIT has all the powers u/s. 263 of the Act to revise the order passed by the AO. The Ld. DR placed reliance on the following judgments in support of his contention: Malabar Industrial Co. Ltd. Vs CIT (243 ITR 83) Rajmandir Estates (P.) Ltd. Vs PCIT 386 ITR 162 (Cal.) Rajmandir Estates (P.) Ltd. Vs PCIT [2017] 77 taxmann.com 285(SC) Deniel Merchants Pvt. Ltd. Vs. ITO (Appeal No. 2396/2017) dated 29.11.2017 4. We have heard both the parties and perused the records, especially the orders passed by the authorities below as well as the case laws relied upon by both the parties. We find that the issue here is whether Ld. CIT was within her rights to cancel the reassessment order passed under Section 153A of the Act on the ground that the said order is erroneous and prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and directing the AO to frame the assessment afresh is bad in law. Our aforesaid view is fortified by the decision of the Coordinate Bench of the ITAT in the case of Mahesh Kumar Gupta vs. CIT ITA No. 1347/Del/2014 dated 8.6.2016. In this case, the CIT had invoked revisionary powers u/s 263 holding an assessment u/s 153A to be erroneous and prejudicial to the interest of Revenue. However, during the course of search in pursuance of which the assessment u/s 153A was made, no incriminating material was found. In such circumstances as the AO in proceedings u/s 153A did not have jurisdiction to make addition in the absence of any incriminating material, the Tribunal held even the order u/s 263 revising such illegal order to be bad in law. The relevant findings of the ITAT read as under: Thus, in present case the issue of deemed dividend does not arise from the provisions of Section 153A of the Act and there is no seized material unearthed at the relevant time. Thus it is beyond Assessing Officer s power to address the said issue in proceedings initiated under Section 143(3) read with Section 152A of the Act. The CIT was wrong in directing the examination of taxability of deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered with that determination. 4. There is no dispute that the search and seizure proceedings in this case did not result in anything, therefore, material either in the form of books of account or other documents related to the issue of deemed dividend under Section 2(22) of the Act. The amounts paid were in fact originally declared in the assessment returns of the assessee. The CIT, therefore, had opportunity to exercise his powers as it were on the basis of returns as filed originally and validly under Section 263 of the Act. 5. In the circumstances in the absence of any material disclosing that the issue of deemed dividend had been wilfully derived or had been deemed or otherwise withheld from the assessment an addition under Section 153A was warranted based on the proposition taught by this Court in judgment dated 28.08.2015 in ITA 707/2014 titled: CIT vs Kabul Chawla. Therefore, we concur with the ITAT s opinion in this regard. The search and seizure proceedings in such cases are undoubtedly meant to bring to tax amount that are to be determined on the basis of materials seized in the course of such searches; permitting anything over and above that would virtually amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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