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TMI Blog2022 (6) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... be made in absence of any incriminating material in those years where no assessment proceedings were pending and assessment had been made u/s. 143(1)/143 - See Malabuilders Private Limited In absence of any incriminating material found during the course of search with respect to the impugned transaction, the AO did not have any power to make the impugned addition. We set aside the order of the Ld. CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee. - ITA No. 197/Chd/2021 - - - Dated:- 23-5-2022 - SHRI N. K. SAINI, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For the Appellant : Ashwani Kumar, Aditya Kumar and Bhavesh Jindal, CAs For the Respondents : Ranjeet Kaur, Sr. DR ORDER Per Sudhanshu Srivastava , Judicial Member This appeal is preferred by the assessee against the order dated 28.07.2021 passed by the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon [in short the 'Ld. CIT(A)'], for the assessment year 2011-12. 2. The brief facts of the case are that a search and seizure operation in terms of section 132(1) of the Income Tax Act, 1961 (hereinafter called 'the Act') was carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO reached the conclusion that the assessee had failed to discharge his onus with respect to the creditworthiness, identity as well as the genuineness. Placing reliance on the concept of preponderance of probability, the AO proceeded to add the amount of Rs. 70 lacs u/s. 68 of the Act and completed the assessment at Rs. 85,45,490/-. 2.1. Aggrieved, the assessee carried the matter before the Ld. CIT(A), who dismissed the appeal of the assessee by upholding the order of the AO. 2.2. Aggrieved, the assessee has now approached the Tribunal challenging the confirmation of addition by the Ld. CIT(A) by raising the following grounds: 1. That order passed u/s. 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-S, Gurgaon is against law and facts on the file in as much as he was not justified to uphold an addition of Rs. 70,00,000/- which amount was received by the appellant as advance against sale of property from M/s. Namo Resorts Private Limited and which was forfeited due to non-fulfillment of the terms of the agreement as the same was capital receipts. 2. That the Learned CIT(A) was not justified to uphold the alleged addition to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee forfeited the amount received as advance. It was submitted that the allegation of the AO that the amount remained unexplained in terms u/s. 68 of the Act, was incorrect in as much as the same stood explained as being advance received and subsequently forfeited against the sale of property. 3.2. It was further argued that the allegation that the assessee had failed to substantiate the identity and creditworthiness of the said party as well as the genuineness of the transaction, was incorrect for the simple reason that the assessee had filed copy of agreement to sell, copy of Board Resolution of M/s. Namo Resorts Private Limited, copy of bank statement showing an amount of Rs. 70 lacs paid as advance to the assessee as well as proofs of attendance with the Registrar. Our attention was drawn to copies of these documents placed in the Paper Book filed by the assessee. The Ld. AR submitted that, therefore, the assessee had completely discharged the onus establishing the genuineness of the transaction as well as the identity and creditworthiness of the party. 4. In response to the arguments of the Ld. AR, the Ld. Sr. DR submitted that the assessee could not establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT reported in 75 Taxmann.com 215 (Kerala). However, we note that apart from the judgments cited by the Ld. CIT(A) in the impugned order and also relied upon by the Ld. Sr. DR, there are numerous judgments of other Hon'ble High Courts which are in favour of the assessee on the issue as to whether in the case of assessments framed u/s. 153A of the Act, addition could be made in absence of any incriminating material in those years where no assessment proceedings were pending and assessment had been made u/s. 143(1)/143 of the Act. In this regard it will be worthwhile to reproduce the relevant extract from the order of the Coordinate Bench of the ITAT Chandigarh Bench in the case of Malabuilders Private Limited Vs. ACIT reported in 51 ITR(T)272 (Chd.) as under: 15. The issue before us is, whether in case of assessments framed under section 153A of the Act, addition could be made in the absence of any incriminating material in those years where no assessment proceedings were pending and assessment had been made u/s. 143(1)/143(3) of the Act. 16. We are in complete agreement with the contention of the Ld. AR that the issue is no longer res integra in view of various deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. In case of those assessment years where an assessment order had already been passed under section 143(1)(a) or 143(3), those assessments could be reopened and the total income reassessed taking note of the undisclosed income if any unearthed during search, the fetters to reopening, being removed by insertion of the non-obstante clause to section 153A. The entire thrust of the judgment rested on the interpretation that there cannot be multiple assessment orders in case of search assessments under section 153A/B/C of the Act and, therefore, where assessments were pending they would abate to enable the Assessing officer to assess the total income including undisclosed income, and where assessments or reassessments had been completed, they would not abate and the Assessing Officer would only reopen the completed assessments and include therein undisclosed income. The High Court went on to hold that such determination would be similar to orders passed in any reassessment where the total income determined in the original assessment order and income that escaped assessment are clubbed together and assessed as total income. 19. The Bombay High Court in the case of CIT Vs. Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without 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 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed 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 AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, revision or rectification against finalized assessments/reassessments shall not abate. Reading the two together, the Courts have stated that as per section 153A, Assessments/reassessments already finalized do not abate, meaning thereby that they attain finality, which cannot be disturbed unless some incriminating materials are gathered during the course of search. 3. That the words assess or reassess has been used at more than one place in the section and a harmonious construction of the entire provision would lead to the conclusion that the word assess has been used in the context of abated proceedings and reassess has been used for completed proceedings which would not abate as they are not pending on the date of initiation of search or making of requisition. 23. We may add that the requirement of the section is limited to opening or reopening of the cases for the purpose of making assessment or reassessment of the total income of preceding six assessment years prior to the year of search. It does not contain any provision regarding the concept of making assessment of undisclosed income as was there in the earlier Block assessment regime under chapter XIVB. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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