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TMI Blog2021 (9) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... seized document could not be termed as unexplained investment. The gains / loss on shares very much formed part of the computation of income and therefore, this addition is not sustainable. By deleting this addition, we allow this ground of appeal. Estimation of business income - material available during the search and seizure operation for making an assessment of the undisclosed income of the assessee - HELD THAT:- For the purpose of computing income under section 153A / 153C of the Act, Ld. AO is required to confine himself only to the material found during the course of search or not. In reply to this question, the Hon ble Court held that AO could take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. Thus, this decision is distinguishable from assessee's case on facts - we find that the addition which could be made, was to be only with reference to incriminating material found during the course of search action. Since this addition is not with reference to any incriminating material, the same is not sustainable. By deleting the addition, we allow this g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for the sake of convenience brevity. 2. First, we take up quantum appeal ITA No.3799/Mum/2013 for AY 2004-05 which arises out of the order of Ld. Commissioner of Income-Tax (Appeals)-40, Mumbai [CIT(A)], dated 25/02/2013 in the matter of assessment framed by Ld. Assessing Officer (AO) on 28/12/2010 u/s 153A / 144 of the Act. In this appeal, the assessee is aggrieved by addition of ₹ 2.94 Lacs u/s 69C, addition of ₹ 21.03 Lacs u/s 69A estimation of total income at ₹ 1.50 Lacs. 3. We have carefully heard the rival submissions and perused relevant material on record. The judicial pronouncements as cited during the course of hearing have been deliberated upon. Our adjudication to the appeal would be as given in succeeding paragraphs. The Ld. AR has not pressed the issue of service of notice u/s 143(2) in all the appeals. 4. Pursuant to search action on assessee group on 30/05/2008, an assessment was framed against the assessee u/s 153A / 144 on 28/12/2010. The assessee being resident individual is stated to be engaged in the trading of plywood, veneers, glass aluminum etc. Though notice u/s 153A was issued by Ld. AO, however, the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be gathered that the assessee held various scrips for aggregate amount of ₹ 21.03 Lacs. Upon perusal of original return of income, computation of income and financial statements (as placed on page nos.14 to 33 of the paper-book), we find that the assessee has declared Short-Term Capital gain on sale of shares for ₹ 3.88 Lacs in the return of income. Upon perusal of computations, we find that all these shares were sold by the assessee during this year and the resultant gain / loss were taken into account while computing short-term capital gains and the same has already been offered to tax. This being so, the investments as mentioned on the seized document could not be termed as unexplained investment. The gains / loss on shares very much formed part of the computation of income and therefore, this addition is not sustainable. By deleting this addition, we allow this ground of appeal. 7. Estimation of business income 7.1 In the absence of any information forthcoming from the assessee, the business income was estimated at ₹ 1.50 Lacs which was confirmed by Ld. CIT(A). Aggrieved, the assessee is in further appeal before us. 7.2 We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. It may cause hardship to some assesses where one or more of such assessments has or have been completed before the date of initiation of search. This is hardly of any relevance in view of clear and unambiguous words used by the legislature. This interpretation does not cause any absurd etc. results. There is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). 52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is shall and, thus, there is no option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income or undisclosed property discovered in the course of search. The aforesaid decision has subsequently been followed by Hon ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) wherein the original return was processed u/s 143(1) and the time limit for issuing notice u/s 143(2) had already expired. The Hon ble Court chose to follow its own decision rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645]. The case law of Hon ble Andhra Pradesh High Court in Gopal Lal Bhadruka V/s DCIT (346 ITR 106) as referred to by Ld. CIT(A), is distinguishable on facts since in this case, the question before the Hon'ble High Court was whether, for the purpose of computing income under section 153A / 153C of the Act, Ld. AO is required to confine himself only to the material found during the course of search or not. In reply to this question, the Hon ble Court held that AO could take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. Thus, this decision is distinguishable from assessee's case on fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee from the lenders was its own unaccounted money. The unsecured loans very much formed part of the assessee s financial statements as placed on record. Therefore, respectfully following the binding judicial precedents of CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645], we delete both the additions. The appeal stands partly allowed. 10. ITA No.3801/Mum/2013, Assessment Year 2006-07 10.1 In this year, the assessee is aggrieved by addition of unsecured loan for ₹ 43,34,700/- addition of estimation of business income at ₹ 2,50,000/-. Another addition of ₹ 2 Lacs has been made on account of unaccounted expenditure on foreign trips. In response to notice u/s 153A dated 09/12/2009, the assessee had filed return on 19/11/2010 which was held to be invalid. The original return of income for the year was filed on 28/12/2006. Finally, the assessment was framed on similar lines as in earlier assessment years. The addition of unsecured loans was made since it was alleged by revenue that the assessee introduced bogus capital contribution in the companies controlled by him. Further, the assessee did not furnish the requisite details during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 553700/- 2 Keshavji Thavar Faria 404000/- 3 L. M. Furniture 35000/- 4 Loans Advances 1135000/- 5 Mahesh V. Faria 42000/- 6 Manjula Harilal Chheda 300000/- 7 Monglben Keshavji Faria 377000/- 8 Neelam Laxmichaand Hariya 150000/- 9 Nisha Laxmichaand Hariya 150000/- 10 Nutan Laxmichaand Hariya 200000/- 11 Rajendra Joshi 160000/- 12 Rajendra Joshi HUF 15000/- 13 Rsila Umarshi Chheda 100000/- 14 Tax Prints ..... X X X X Extracts X X X X X X X X Extracts X X X X
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