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TMI Blog2021 (4) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... n found some incriminating material during the course of search, then the AO must have taken into cognizance while framing the assessment order but he did not refer to any incriminating materials/documents. Even the ld. CIT(A) in his order has not referred any incriminating material. He has simply made addition on adhoc basis as stated supra in para no.8. Further we notice that the AO has added the 20% of the aforesaid expenditure without referring to any seized/incriminating material. The impugned assessment year is abated assessment year and in case of abated assessment year for making addition there must be incriminating material as decided by various courts. Since these four years are unabated assessment years and no any incriminating material referred by the AO, therefore, the argument advanced by the ld. CITDR is not accepted. Thus the assessment is unabated and the Tribunal is bound by the judicial precedence we allow legal ground raised by the assessee for the assessment years 2009-2010 to 2012-2013 challenging the assessment framed u/s.153A of the Act in the absence of any incriminating materials nor observed by the AO while framing the assessment order. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(SS)A Nos. AYs. Original return filed u/s.139(1) Due date for issuance of Notice u/s.143(2) Whether noticed u/s.143(2) issued Date of Search 58/CTK/19 2009-10 30.09.09 30.09.10 No 28.05.14 59/CTK/19 2010-11 02.10.10 30.09.11 No 28.05.14 60/CTK/19 2011-12 29.09.11 30.09.12 No 28.05.14 61/CTK/19 2012-13 27.09.12 30.09.13 No 28.05.14 4. First we shall take up the appeals of the assessee for assessment years 2009-2010 to 2012-2013 in IT(SS)A Nos.58-61/CTK/2019, wherein the issue involved in all the appeals are similar. Since similar and identical grounds have been taken in the appeals for A.Y.2009-2010 to 2012-2013, therefore, for the sake of convenience and brevity, first we decide IT(SS)A No.58/CTK/2019 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds vide his letter dated 20.10.2020, which read as under :- Sub ; Application for admission of Additional Grounds. With reference to the above, I would like to state before Your Honours that while filing the aforesaid appeals the following grounds being legal in nature were escaped from inclusion which I came to know later that these go to the root of the assessment having a bearing on my tax liabilities: 1. That on the fact and circumstances of the case, no prior approval under section 153D has been granted by the Learned Joint commissioner of Income tax, Central Range, Bhubaneswar and the approval obtained as mentioned in the impugned assessment order under section 153A/144 of the I.T.Act,1961 by the Ld. A.O is no approval in the eye of law, and hence the assessment order rendering it to be held illegal and void ab-initio. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) is erred in law and facts in upholding the assessment order passed by the Ld. A.O u/s 153A/144 of the I.T.Act;1961 in spite of the facts that no incriminating documents and on concealed income whatsoever has been found and seized by the search team during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to films, drugs chemicals and salary to staff, which reads as under :- SI. No. Description of the expenses debited in the P L a/c Amount debited in the P L a/c (In Rs.) 20% of thereof (In Rs.) 1. Films, drugs chemicals 5,37,497/- 1,07,499/- 3. Salary to staff 8,02,060/- 1,60,412/- Total 13,39,557/- 2,67,911/- Further the AO after getting information from the various bank u/s.133(6) of the Act, found that the assessee has deposits in the respective accounts during the relevant financial year under consideration. The total deposits made in the following accounts has been worked out and mentioned against each account No., which is as follows :- SI. No. Bank a/c. No. Name of the bank Amount credited (Rs.) 1 1085937309 SBI 1,11,242/- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the ld. AR of the assessee and found that the issue involved in the present appeal has already been decided by the Tribunal in favour of the assessee after observing as under :- 8. We have heard the rival submissions and perused the material on record. Prima facie, the issue raised by both the assessees in their respective appeals for the assessment years under consideration is with regard to the assessment u/s.153A of the Act is not maintainable as no incriminating documents whatsoever has been found or seized by the search team during the search conducted u/s.132 of the Act. We found that the ld. AR vehemently emphasized that no incriminating material was found during the course of search, hence no addition can be made. It was also the contention of ld. AR that the CIT(A) relying on the decisions of Hon'ble Kerala and Allahabad High Courts has dismissed the additional ground raised by the assessee in respect of no incriminating material was found in the course of search and the assessment u/s.153A has to be completed as per the original assessment order. During the course of hearing, ld. AR drew our attention to the para 2 of the assessment order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been found and seized. Further, in the assessment order while making addition the AO has not referred to any loose sheet or any specific incriminating document found during the course of search enabling him to make such addition. 10. We find that the CIT(A) relying upon the decisions of the Hon ble High Court of Kerala in the case of E.N.Gopakumar Vs. CIT [2016] 75 taxmann.com 215 (Kerala) and the decision of Hon ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) has held that even if there is no incriminating material, the AO is empowered to make additions in an assessment framed u/s.153A of the Act. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision favouring the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout any relevance or nexus with the seized material. Obviously an assessment has to be made under this section only on the basis of seized material.' (v) In absence of any incriminating 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. (vi) 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. (vii) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search then, no addition can be made while framing the assessment under section 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also, as admittedly in the assessment years under consideration, while framing the assessment, the AO has not referred to any incriminating material. Therefore, it is clear that no incriminating material was found during the course of search, which could have been utilized for making assessment u/s.153A/144 of the Act. 14. Reliance can also be placed on the decision of coordinate bench of the Tribunal in the case of Midas Capital Pvt. Ltd. Vs. ACIT, IT(SS)A No.04 05/CTK/2018, order dated 23.03.2018 for the assessment years 2011-2012 2012-2013, where the decision relied on by the CIT(A) of Hon ble Kerala and Allahabad High Court was considered by the coordinate bench and observed as under :- 23. We have heard rival submissions and perused the orders of lower authorities and materials available on record. In the instant case, the assessee originally filed its return of income on 29.9.2011 for the assessment year 2011-12 and on 27.9.2012 for the assessment year 2012-13 disclosing total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(1)(a) Held, yes [Paras 7 and 8] [In favour of revenue). (b) Commissioner of Income-tax Central, Kanpur v. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) : Section 153A, read with section 143 of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Scope of assessment) - Assessment year 2000-01 - Whether Assessing Officer has power to reassess returns of assessee not only for undisclosed income, which was found during search operation but also with regard to material that was available at time of original assessment - Held, yes [Para 11] [In favour of revenue/Matter remanded] 27. On the other hand, the AR of the assessee relied upon the following decisions: (i) (1) CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2)All Cargo Global Logistics Ltd. (2015) 374 1TR 645 (Bom), where it was held that the notice u/s.153A of the Act was founded on searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were already disclosed, for one reason or the other. But such disallowances were not contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. In that view of the matter, we are unable to admit the appeal. The appeal is, therefore, dismissed. 28. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. 29. In the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO after giving several notices/opportunities then the AO can utilize the remedy provided in the Act. The AO has huge power to require the presence of the assessee before him as defined in the Income Tax Act. He can also impose the penalty but not done so. The books of accounts and other seized documents were available before him while completing the assessment. From the assessment order, it is clear that that in the opinion of the AO that there was no any incriminating material. Had it been found some incriminating material during the course of search, then the AO must have taken into cognizance while framing the assessment order but he did not refer to any incriminating materials/documents. Even the ld. CIT(A) in his order has not referred any incriminating material. He has simply made addition on adhoc basis as stated supra in para no.8. Further we notice that the AO has added the 20% of the aforesaid expenditure without referring to any seized/incriminating material. The impugned assessment year is abated assessment year and in case of abated assessment year for making addition there must be incriminating material as decided by various courts. The ld. CITDR has submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no incriminating documents whatsoever has been found and seized by the search team during the search U/S 132 of the I.T. Act, 1961 which is sine qua non for making the assessment U/S 153A thus making the assessment arbitrary, excessive, contrary to facts and bad in law. 2. That on the facts and in the circumstances of the case the Ld. CIT(A)-2, Bhubaneswar is erred in law and facts in upholding the assessment order passed by the Ld. ACIT, Central Circle-1, Bhubaneswar U/S 153A in spite of the facts that the assessment order passed by the Ld. Assessing Officer is barred by limitation as the same has been passed and issued beyond the prescribed date i.e. 31.12.2016 and dispatched by the Ld. A.O. on 7.1.2017 through speed post served on the appellant on 9.1.2017. 3. That on the facts and in the circumstances of the case the Ld. CIT(A)-2, Bhubaneswar is erred in law and facts in upholding the assessment order passed by the Ld. ACIT, Central Circle-I, Bhubaneswar U/S 144 in spite of the facts that the provisions of the said section along with the entire requirements of the notices u/s 142(1) and 143(2) have duly been complied during the assessment proceedings contrary to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Further, for the regular assessment made by the AO for assessment year 2015-2016, ld. AR also agreed that the 20% disallowance made by the AO may be restricted to 10%. He further submitted that all the bills and vouchers were available at the time of assessment. 23. On the other hand, ld. CIT-DR relied on the orders of lower authorities and submitted that the assessee did not furnish any details nor furnish bills/vouchers in respect of the expenses claimed, therefore, the CIT(A) has rightly upheld the 20% disallowance made by the AO on the expenditure claimed by the assessee. 24. After hearing both the sides and perusing the entire material available on record along with the orders of authorities below as well as the case laws cited by both the parties, we found that the assessee could not furnish the details for the expenditure claimed on account of films, drugs chemicals and salary to staffs, therefore, the AO restricted the disallowance to 20% of the total expenditure claimed, which has been upheld by the CIT(A) in the appellate order. Before us, the ld. AR of the assessee requested to restrict the disallowance to 10% as against 20% made by the AO, which has also not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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