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TMI Blog2020 (12) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision made by the Ld. AO in treating the exempt long term capital gain as undisclosed income not sustainable under Section 153A of the Act and finally deleted the addition made by the AO based upon no incriminating documents found during the course of search at appellant s premises without any ambiguity so as to warrant interference. - Decided in favour of assessee. - I.T.(SS)A. No. 179/Ahd/2018, C.O. No. 107/Ahd/2019 - - - Dated:- 8-12-2020 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Shri S. N. Soparkar, Sr. Adv. For the Revenue : Shri O. P. Sharma, CIT DR ORDER PER Ms. MADHUMITA ROY - JM: The present appeal at the instance of the Revenue is directed against the order passed by the Ld. CIT(A)-11, Ahmedabad dated 16.03.2018 arising out of the order passed by the Ld. DCIT, Central Circle-1(4), Ahmedabad dated 30.03.2016 under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for the Assessment Year (A.Y.) 2011-12. Upon receipt of the notice on Revenue s appeal, the assessee also filed the aforesaid Cross Objection. Both are disposed of by this common orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus exempt long term capital gains on sale of shares of Chandni Textiles Engineering Ltd ignoring consistent, detailed statements of Shirish Shah at various points of time when accommodation entries arising from these statements the material seized from Shirish Shah had been basis of admittance of undisclosed income by H.N. Safal Group (of which assessee's husband is a promoter) before the Hon'ble Settlement Commission? 7. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made of ₹ 12,18,35,125/- on bogus exempt long term capital gains on sale of shares of Chandni Textiles Engineering Ltd as per the decision in Shamim M. Bharwani [2016] 69 taxmann.com 65 (Mumbai Trib.) whose facts were not only similar to that of assessee but assessee s case was even weaker since seized data from Shrish Shah corroborated exchange of unaccounted cash with commission for such transactions of assessee? 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instruction of the said Shri Shah. It was further stated by him that these companies are bogus companies formed for the purpose of executing trades through synchronized trading on the behest of Shri Shah. Further that the Directors of these companies are dummy and the entire activities of these companies are being managed by Shri Shah. Such alleged managed exempt capital gain purchased in lieu of cash had been treated as income from unaccounted source and added to the total income of the assessee by the Ld. Assessing Officer. The same was, in turn, deleted by the Ld. CIT(A). Hence, the instant appeal before us. 4. While raising the point of maintainability before us the Ld. Senior Counsel appearing for the assessee submitted that the provisions of Section 153A empowers the AO to assess or reassess the assessee s case based on evidences unearth during the course of search or hinted by the incriminating material found during search. In the case in hand the reassessment was not based on any incriminating material. Since no incriminating material was found during the search proceeding the order under Section 153A of the Act is bad in law for A.Y. 2011-12 as also submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 153A of the Act and the earlier assessment shall have to be reiterated. Since no incriminating material was unearth during search, no addition could be made to the income already assessed and consequentially impugned addition is liable to deleted as the case made out by the appellant. In support of his argument he further relied upon the following judgments:- (i) Commissioner of Income Tax (Central)-III vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) (ii) CIT vs. Saumya Construction Pvt. Ltd. (Tax Appeal No. 24 of 2016 dt. 14th March, 2016) (iii) PCIT vs. Sunrise Finlease Pvt. Ltd. (89 taxmann.com 1) (iv) Krishna Kumar Singhania vs. DCIT (88 taxmann.com 259(2017) 6. We have heard the rival submissions made by the respective parties and have also perused the relevant materials available on record. 7. In order to decide the issue as to whether in the absence of any incriminating material the completed assessment can be reiterated, we would like to consider the relevant statutory provision on this aspect. The provision of Section 153A deals with the issue in hand states as follows:- 153A. Notwithstanding anything contained in section 139, sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of the order of such annulment by the [Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.-For the removal of doubts, it is hereby declared that, - (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. Thus, it appears that the relevant provision reveals that pending assessment on the date of search in respect of preceding six assessment years abate as per the second proviso. But the same does not include those assessments which have already attained finality or wherein the assessment orders have already been passed. When pending assessment abate in case of a search, the AO retains the original jurisdiction as well as the one conferred upon him under Section 153A of the Act for which assessments shall be made for each of six assessment years separately. In case of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to complete assessment proceedings. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A 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. (Para 37] The present appeals concern assessment years 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussing the issue the Hon ble Court has been pleased to observe as follows:- (i) The Decision of Hon'ble Gujarat High Court in case of CIT Vs. Saumya Construction Pvt. Ltd (Tax appeal No. 24 of 2016) dated 14th March 2016, the facts and findings of which are restated as under: 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of ₹ 11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed. Thus, it is held that if in relation to any assessment year, no incriminating material is found no addition or disallowance can be made in respect to that assessment year in exercise of powers under Section 153A of the Act and the earlier assessment shall have to be reiterated. 12. We have further considered the particular fact of non-finding of incriminating material at the premises of the assessee during search proceeding as submitted by the Ld. AR. The provision of Section 153A cannot be made applicable if the incriminating material is not found at the time of search proceeding. Neither addition under Section 153A is permissible on the basis of incriminating material found from the place of third person or after completion of search proceeding as also the case made out by the appellant before us. This particular aspect has also been taken care of by the Ld. CIT(A) as we found from the order impugned. He has further relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A assessment were seized only from the office premises of 'C group of companies in which assessee was a director. In this regard, it would be pertinent to note that as per section 292C, there is a presumption that the documents, assets, books of account etc. found at the time of search in the premises of a person is always presumed to be belonging to him/them unless proved otherwise. This goes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn, has got every right to state that the said documents does not belong to him/them. The Assessing Officer if he is satisfied with such explanation, has got recourse to proceed on such other person (i.e., the person to whom the said documents actually belong to) in terms of section 153C by recording satisfaction to that effect by way of transfer of those materials to the Assessing Officer assessing the such other person. This is the mandate provided in section 153C. In the present case, if at all, the seized documents referred to in is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the Legislature had conferred powers on the Assessing Officer to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. This would be the correct understanding of the provisions of section 153A, as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A would become redundant and would lose its relevance. Hence, the arguments advanced by the revenue in this regard deserves to be dismissed, [Para 10.7] In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, the assessment already deemed to have been completed for the assessment year 2009-10, which was unabated/concluded assessment, on the date of search, deserves to be undisturbed in the absence of any incriminating material found in the course of search and, accordingly, no fresh addition could be made thereon without the existence of any incriminating materials found in the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assessee the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Subsection (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material is found. It would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. It in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of income-tax-1 v. Jayaben Ratiiai Sorathia (supra) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e third party. As we found that the similar set off facts the Hon ble High Court in the case of Saumya Construction Pvt. Ltd. (supra) has been pleased to upheld the order passed by the Ld. Tribunal in deleting addition made by the Ld. AR under Section 153A of the Act. 18. Thus, it appears that all along and all through the Ld. CIT(A) considered the relevant judgments applicable to the instant case as discussed hereinabove and rejected the decision made by the Ld. AO in treating the exempt long term capital gain as undisclosed income not sustainable under Section 153A of the Act and finally deleted the addition made by the AO based upon no incriminating documents found during the course of search at appellant s premises without any ambiguity so as to warrant interference. 19. We, therefore, upon being satisfied on the maintainability point itself reject such appeal preferred by the Revenue relying upon the judgments discussed above find no merit in usurping the jurisdiction confirmed by the provision of Section 153A of the Act by the Ld. AO to reassess the year under considerations in the absence of any incriminating materials found during the search proceeding from the premis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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