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TMI Blog2021 (7) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... onance with the settled position of law vis-à-vis search cases. 2. Because the learned CIT(A) has erred in law and on facts in upholding the assessment ignoring the settled position of law that provisions of section 153A, in case where proceedings are not pending, could not be applied in absence of any incriminating material." 2. Learned counsel for the assessee invited our attention to the facts of these cases and submitted that a search & seizure operation was carried out in the Chaurasia group on 27.11.2015 and accordingly the assessees were required to file their income tax returns u/s. 153A of the Act and which the assessees had duly filed. It was submitted that Assessing Officer in all these cases while making the additions has not referred to any incriminating documents but has made the additions on the basis of entries in the books of account which is not permissible under the law as in these cases the assessments stood completed before the date of search and under these circumstances the Hon'ble Delhi High Court in the case of Pr. CIT vs. Meeta Gultutia [2017] 395 ITR 526 has decided the issue in favour of assessee and the SLP filed by the Revenue against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 414 the ld. CIT(A) has dismissed such ground by wrongly holding that such ground was not pressed whereas the fact remains that assessee had requested the ld. CIT(A) to decide this ground on the basis of statement of facts and in this respect our attention was invited to paper book pages 53- 54 in AY 2011-12 and pages 66-67 in AY 2014-15 where copy of such request letter was placed and in view of the above it was prayed that since the ground raised by assessee is a legal ground and therefore the Tribunal may decide the same. 3. Learned CIT, D.R., on the other hand, heavily placed reliance on the orders of the authorities below. 4. We have heard the rival parties and have gone through the material placed on record. We find that in these cases the assessment year involved are 2014-15 and 2011-12. We find that in the case of Ashish Kumar Chaurasia (HUF) for AY 2014-15 the original return of income was filed on 31.07.2014 , a copy of acknowledgment of return of income is placed at Page 1 of the paper book and the processing of which was completed on 21.12.2014, a copy of the processing u/s. 143(1) is placed at Page2 of the paper book. No assessment order was passed u/s 143(3) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate or refer to any incriminating material. Before ld. CIT(A) the assessee took a specific ground that in the absence of incriminating material the additions cannot be made in the years where the assessments stood completed. The ld. CIT(A) in ITA Nos. 413 and 414 dismissed this ground as not pressed whereas the fact remains that assessee had requested to adjudicate this ground as is apparent from paper book pages 53-54 in AY 2011-12 and pages 66-67 in AY 2014-15. Since before us the assessee has taken this ground as a specific ground and is on a legal issue therefore, we are going to adjudicate this ground in ITA No. 413 & ITA No. 414 also alongwith ground in ITA No. 89 and in ITA No. 415. In ITA No.89 and in ITA No.415 similar findings has been made and learned CIT(A) has held that the law does not require the Assessing Officer to make addition in such cases only on the basis of incriminating material and therefore, he dismissed this ground. While holding so the learned CIT(A) has relied on a number of case laws. For the sake of completeness, the findings of learned CIT(A) in I.T.A. No.89 are reproduced below: "5.1 Ground No. 1,2&3 for assessment year 2010-11 to assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR 645/232 Taxman 270/58 taxmann.com 78 (Bom.) (iii) Principal CIT v. Kurele Paper Mills (P.) Ltd. [2016] 380 ITR 571 (Delhi) (iv) CIT v. Lancy Constructions [2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) (v) CTT v. ST. Francies Clay Decor Tiles [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) (vi) CIT v. Promy Kuriakose [2016] 386 ITR 597 (Ker.). Further, in the case of CIT Vs Raj Kumor Arora [2014] 52 taxmann.com 172 (Allahabad) [2014[ 367 ITR 517 (Allahabad)- Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. Similarly, in the case of CIT Vs Kesarwani Zarda Bhandar Sahson Alld. ITA No. 270 of 2014 (Allahabad)- Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. Also, in the case of CIT Vs St. Francis Clay Deco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the Hon'ble Delhi High Court has pronounced the case law in the case of Pr. CIT vs. Meeta Gulgutia in 2017 after considering the other case laws referred by learned CIT(A) and which has been confirmed by Hon'ble Supreme Court wherein the Hon'ble Supreme Court has dismissed the SLP filed by Revenue. Therefore, the case laws relied on by learned CIT(A) are of no help to Revenue. The Lucknow Bench of the Tribunal in a number of cases, after relying on the judgment of Hon'ble Supreme Court in the case of Pr. CIT vs. Meeta Gutgutia (supra) has allowed the appeals of various assessees in the following cases: (i) IT(SS)A No. 630 & 631/Lkw/2019, IT(SS)A No.633 & 634/Lkw/2019 and IT(SS)A No. 637 & 638/Lkw/2019 dated 01/02/2021 (ii) I.T.A. No.510 to 512/Lkw/2019, I.T.A. No. 513 & 514/Lkw/2019, I.T.A. No.515 & 516/Lkw/2019 and I.T.A. No.517/Lkw/2019 dated 16/12/2020 (iii) IT(SS)A No.130-143/Lkw/2018 dated 03/03/2020 (iv) I.T.A. No.430 to 433/Lkw/2016 dated 15/03/2018 (v) I.T.A. No.551, 553, 554, 99,100,113,115,92,93,94,95,96, 104 and 109 vide a consolidated order dated 27/05/2021 For the sake of completeness the findings of Lucknow Tribunal in I.T.A. No.630 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014-15 the return was filed on 30/11/2014 which is apparent from page No. 37 of the paper book and the date for issue of notice u/s 143(2) expired on 30/09/2015 and intimation u/s 143(1) was issued vide order dated 29/12/2014, a copy of which is placed in paper book at pages 40 to 48. Therefore, for assessment years 2012-13 & 2014-15 the additions are not sustainable as the additions have not been made on the basis of any seized material which is apparent from the assessment orders itself. 6. We have already held in our order dated 16/12/2020 in the case of the present assessees itself in other assessment years that additions were not made on the basis of any incriminating material as the Assessing Officer, while making the additions, had not relied on any seized material and had relied on the document marked as BK-2 which was seized by the search party from some other group and there the search took place almost one year before the date of search on the present assessees. The findings of the Tribunal are contained in para 5 of the order, which for the same of completeness, are reproduced below: "5. We have heard the rival parties and have gone through the material placed on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the companies controlled by Sh. Shashwat Agarwal." 5.1 The above observations, noted by the Assessing Officer, clearly demonstrate that a diary identified as BK-2 was impounded during search & seizure operation on 28/04/2015 in the case of search on the companies belonging to Shri Shashwat Agarwal wherein the name of Shri Navin Jain and his family members were mentioned. The Assessing Officer nowhere noted that the names of the assessees was also mentioned in such diary. Moreover, from the findings of the Assessing Officer, we find that the companies of Shri Shashwat Agarwal were engaged in providing accommodation entries of bogus Long Term Capital Gain, unsecured loans etc. to various parties and there is no mention of bogus transactions of cloth. Moreover, the above findings clearly indicate that the accommodation entries of Long Term Capital Gain and unsecured loans were obtained by the individuals mentioned in the assessment order and there is no mention that the assessees had taken any entry of Long Term Capital Gain or unsecured loans from the companies of Shri Shashwat Agarwal. This fact is further corroborated from the fact that the Assessing Officer in the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer passed separate orders in respect of the assessment years 2000-01 to 2003-04. For the assessment year 2004-05, as in the preceding years, the assessee had claimed deduction on account of franchisee commissions paid to various parties. The Assessing Officer held that the addresses of the franchisees were not revealed and that there were discrepancies in the details of the accounts of the franchisees filed by the assessee. Consequently, the franchisee commission payments claimed by the assessee were added back to her income. For the assessment year 2004-05, the Assessing Officer also made an addition on account of stock. The Assessing Officer estimated the undisclosed income, on account of franchisee fee, at a certain percentage for the assessment years 2001-02 to 2006-07. No addition was made for the assessment year 2006-07, although a disclosure was made. Before the Commissioner (Appeals), the assessee produced additional evidence under rule 46A of the Income-tax Rules, 1962, which included copies of franchisee agreements. A rejoinder was filed by the assessee. On analysis of the additional evidence, the Commissioner (Appeals) held that the accounts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but since Hon'ble Supreme Court has decided the issue in favour of the assessee in the case of Meeta Gutgutia therefore, the judgment of jurisdictional High Court will not help the Revenue. The contention of the Revenue that since the Department has not accepted the decision of Hon'ble Supreme Court in the case of Kabul Chawla and Meeta Gutgutia as SLP in the case of CIT vs. Continental Warehousing Corporation 235 Taxman 568 (SC) has been admitted is also of no help to Revenue. Therefore, in view of the above case laws, we hold that in case of completed assessments, the addition can be made only on the basis of incriminating material found during search. We have already held that no incriminating material was found from the premises of the assessee therefore, the additions cannot be made in the case of completed assessments which in this case is appeal for assessment year 2013- 14 wherein in I.T.A. No.510 the assessment order was already passed u/s 143(3) on 22/03/2016 which is before the search date of 23/08/2016, copy of assessment order is placed at pages 51 to 54 of the paper book. Similarly in I.T.A. No. 515, the assessment was completed u/s 143(3) vide order dated 23/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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