9911796707
TMI Blog2020 (8) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... both the returns submitted by the assessee with the income tax department, whereas the auditor and the date of audit report is also same in the both the returns. As observed that Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents 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. The case of the assessee clearly falls within the ambit of the observations in KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] towards undisclosed income . We, therefore, reject the contention of the assessee that there is no incriminating material found during the course of search by which the AO cannot interfere with the assessment completed originally while making the assessment u/s.153C of the Act. The dual policy taken by the assessee cannot be accepted. In the peculiar facts and circumstances of the case, the case law relied on by the ld. AR of the assessee is not applicable in the present case. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng section 41(1) of the Act, particularly when, there is no such liability claimed by the Assessee, as such the impugned addition being not sustainable in the eye of law, is liable to be deleted in the interest of justice. 2. The assessee is an individual deals in wholesale trading of fish, filed original return of income on 10.03.2012 showing total income of ₹ 7,52,329/-. A search and seizure operation u/s.132 of the Act, 1961 was conducted in the case of Tayab Khan Group of cases on 08.10.2013. During the course of search operation incriminating documents viz. purchase deeds belonging to the assessee were found and seized in the residence of Hapizur Raheman Khan one of the searched persons of the group. Subsequently, noticed u/s.153C of the Act was issued on 16.03.2015 requiring assessee to file return of income for the previous year within 30 days of the receipt of the noticed, after recording satisfaction note that the document identification marked HRKR-3 seized from the residence of Hapizur Raheman Khan, one of the searched persons of the group, have revenue implication. Accordingly, the AO issued notice u/s.142(1) of the Act with questionnaire. Thereafter the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, it is a completed / unabated Assessment. A search and seizure operation U/s. 132 of the Act was conducted in the case of Tayab Khan, Hapizur Raheman Khan and group of cases on 08.10.2013. As per the observation of the learned A.O., during course of search operation, incriminating documents i.e. purchase deeds belonging to the Appellant were found and seized in the residence of Hapizur Raheman Khan, one of the searched person of the group. 2. That, consequent to search operation, notice U/S.153C of the Act was issued. In response to such notice, Appellant filed return of income disclosing total income of ₹ 7,52,329.00. The total income declared in the original return is one and same. Thereafter, the learned A.O. completed Assessment U/S.153C by making following additions, Such as; 1. Income from commission ₹ 10,11,780.00 2. Bogus sundry creditor ₹ 4,00,000.00 3. Disallowance of expenditure U/s40A(3) of the Act ₹ 93,40,000.00 3. That, being aggrieved, the Appellant preferred appeal before the learned C.I.T.(A) challenging the legality and validity of 153C Assessment and consequential additions made therein on merit al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable in the eye of law needs to be quashed in the interest of justice. 2. That, the Appellant wants to draw kind attention of this Hon'ble Tribunal to the table drawn by the learned C.I.T(A) in page No.3 of his order. In the said table, the learned C.I.T(A) has given details of documents found and seized during course of search of Hapizur Raheman Khan (Searched person). On perusal of said table, at point No.2, 3 and 4, this Hon'ble Tribunal will find that, no such incriminating documents were found and seized except cash. From the table, it goes on saying without any iota of doubt that, there were no incriminating materials found which belong to the Appellant. Therefore, the learned A.O. has committed gross error of law in completing Assessment U/S.153C of the Act in absence of any incriminating material and the learned C.I.T.(A) has committed gross error of law in confirming it, as such, it needs to be quashed in the interest of justice. 3. That, the learned A.O. in paragraph No.2 at page-1 of the order of Assessment has observed that, during course of search operation, incriminating documents viz. purchase deeds belonging to the Assessee were found and seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncriminating in nature do not have any revenue implication, the authorities below have committed gross error of law in confirming the Assessment order, particularly when, law in this aspect is well settled by the Hon'ble Supreme Court in the case of Commissioner of Income Tax Versus- Sinhaad Technical Educational Society Supra Reported in 397 ITR 344 that, no Assessment U/S.153C of the Act can be made in absence of any incriminating material. In view of this, the impugned Assessment order so passed for this Assessment year being not sustainable in the eye of law, needs to be quashed in the interest of justice. Submission on merit: 6. That, even though the learned A.O. could not get any revenue implication from the alleged seized documents and even though the seized documents do not relate to this Assessment year, still the learned A.O. proceeded to complete the Assessment U/S.153C of the Act. While completing the Assessment, the learned A.O. made the following additions / disallowances ; SI No Head of Addition Amount Relief granted by C.I.T(A) Issue pending before this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .153C, when the Appellant came to know about this mistake and wrong declaration of sundry creditors, he corrected it in the Balance Sheet and filed the corrected balance sheet along with the Return filed U/S.153C of the Act. The learned A.O. even though has no power, authority and jurisdiction to refer to the original return however, he exceeded his jurisdiction and made this addition. The impugned additions, thus are completely illegal, without the authority of law and contrary to the statutory provisions of law, hence being not sustainable in the eye of law are liable to be quashed/deleted in the interest of justice. 7.3. That, on perusal of section 153C of the Act, it provides, the procedure for completion of Assessment in respect of income of any other person other than the person referred to in section 153A of the Act, where a search is initiated U/s.132 of the Act and books of account, and any money, bullion, jewellery or other valuable articles or things seized or re-questioned belongs to such other person. In such cases, the Assessing officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be the return filed U/s. 139(1) of the Act. In this regard, the Appellant relies upon the ruling of Hon'ble Pune IT AT in the case of Saniav Nandlal Vvas Vs ITO. (ITAT Pune) - IT A No 771 to 774/PN/201Q dated 23.12.2011 which directly covers the impugned issues in case of the Appellant. In the said case, the Hon'ble ITAT has held that, Return U/s. 153A of the Act on the basis of which Assessment was framed has replaced original return superseding earlier return and superseding the Assessment based upon that original return. A return filed U/s. 153A takes the place of the original return under Section 139 of the Act, for the purposes of all other provisions of the Act. Once the A.O. accepts the revised return filed U/s. 153A, the original return U/s. 139 abates and becomes non-est. In this regard, the appellant further relies x upon the decision of the Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-19 Vs Neeraf Jindal [2017] 393ITR 1 (Delhi), wherein their Lordships have held that; The position that emerges from the above- mentioned provision is that once the Assessee files a revised return U/s. 153A of the Act, for all purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Further Hon'hle Bombay High Court in the case of CIT vs B.G Shirke Construction Technology Pvt Ltd 120171 79 taxmann.com 306(BOM) held that: A return filed U/s. 153A is a return furnished U/s. 139 of the Act and therefore, provisions of the Act which apply to return filed in regular course U/s. 139(1), would also continue to apply in case of return filed U/s. 153A. In view of the above as the Appellant's return was filed and Assessed U/S.153A and this return is treated as a valid return for the said Assessment U/S.153A, it is a return U/s. 139(1) filed by the Appellant. As seen from the above, the claim of the Appellant is squarely covered by direct case laws of High Courts and Tribunal in his favour. As such, the same deserves to be followed in Appellant's favour. In view of the above, it is prayed that, since the Authorities below has no power to refer to the original return, the addition of commission income of ₹ 10,11,780.00 and sundry creditors of ₹ 4,00,000.00 on the basis of declaration made in the original return and order of learned C.I.T.(A) sustaining the same, being without the Authority of law, deserves to be quashed/deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has not been declared in pursuant of the return filed u/s.153C of the Act under the head undisclosed income which has been discovered by the AO during the course of assessment and he has also manipulated in the creditor shown in the original return by ₹ 4 lakhs. The income declared in the original return cannot be shown less than the income disclosed in the return filed in pursuant to the notice issued u/s.153C of the Act. The income declared in the original return can only be enhanced/reduced by way of revised return, which has not been done by the assessee in the present case. The case law relied on by the ld. AR is not application in the present facts of the case. 7. We have heard the arguments advanced by both the parties at length and perused the entire material available on record along with the orders of authorities below and case laws relied during the course of hearing before us. 8. First of all, we would like to add some more facts emanating from the record of the Tribunal for completeness of our order that against the addition deleted by the CIT(A), the Revenue filed an appeal before the Tribunal bearing IT(SS)A No.76/CTK/2018 for the assessment year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the assessee is accepted that the assessee has raised the legal ground before the CIT(A) in ground No.1 and the CIT(A) has not adjudicated the same mentioning that ground No.1 is general in nature and does not need separate consideration, then a question arises as to whether any application has been filed by the assessee before the CIT(A) for any rectification of mistake in his order. However, there is no such explanation on the part of the assessee in this regard before us. 9. Be that as it may, if we take into consideration of the legal ground as stated by the ld. AR in the written submission as well as in oral submissions, we found that, in fact, it is clear that the assessee has filed his return of income for the relevant Assessment Year on 14.03.2012 declaring at income of ₹ 7.52.329/- and the same income was also declared in pursuant to return filed u/s.153C of the Act on 05.02.2016. In the return u/s.153C of the Act, certain changes have been made viz. commission income not shown, difference in creditors, figures. We observed from the original return filed by the assessee in ITR-IV dated 10.03.2012 declaring income of ₹ 7,52,329/- after ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awla [2016] 380 ITR 573 (Delhi), submitted that as there is no incriminating material found during the course of search and seizure proceedings, the assessment order passed by the AO is not sustainable. For the sake of clarity we would like to reproduce the summary of the legal position drawn by the Hon ble Delhi High Court at para 37, which read 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court in the above para has observed that Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents 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. 13. In our opinion, the case of the assessee clearly falls within the ambit of the observations of the Hon ble High Court in para 37(vii) of the above decisions towards undisclosed income . We, therefore, reject the contention of the assessee that there is no incriminating material found during the course of search by which the AO cannot interfere with the assessment completed originally while making the assessment u/s.153C of the Act. 14. Apart from the above, it is also a fact that the ld. AR of the assessee, in one hand, supported the order of the CIT(A) in case of relief given by the CIT(A) against the addition made u/s.40A(3) of the Income Tax Act, which has been made by the AO in his order without referring to any incriminating materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income. If the appellant wants to reduce his income, he has to file revised return of income. This has not been done by the appellant. Considering these aspects, the addition of ₹ 10,11,780/- is confirmed. The grounds of appeal are dismissed. 6. Ground No. 7:- 6.1 In this ground, the appellant has contested the addition of ₹ 4,00,000/- on account of bogus sundry creditors. The appellant has stated that he has reduced his sundiy creditors by ₹ 4,00,000/- and amount is added in capital. During the course of appeal proceedings, the appellant has stated that he-has suo-moto reduced his sundry creditors by ₹ 4,00,000/- and therefore, the assessing officer should not have made this addition. 6.2 I have carefully examined the assessment order and the submissions of the appellant. Sundry creditors arise when the expenses are booked but payment is not made. The appellant's action clearly suggests that he had booked expenditure in the past which led to the liability. In the impugned assessment year the appellant has written off this liability. The provisions of section 41(1) of IT Act, 1961 are attracted as liability has ceased to exist. Consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
