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TMI Blog2022 (9) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in the show cause notice of DRI but has proceeded to consider the same as incriminating material warranting the addition. There can be no presumption based on a document has come to the notice of the AO since nothing incriminating is found during the course of search in support of the alleged removal of marble slabs into DTA. We hold that the addition made by the assessing officer towards unaccounted sales is not sustainable and therefore delete the said additions. This issue is allowed in favour of the assessee. - ITA Nos.756 to 762/Bang/2021 - - - Dated:- 20-9-2022 - Shri N.V. Vasudevan, Vice President And Ms Padmavathy S, Accountant Member For the Appellant : Shri V. Srinivasan, Advocate For the Respondent : Shri Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru. ORDER PER PADMAVATHY S., ACCOUNTANT MEMBER ITA No. 756/Bang/2021 to 762/Bang/2021 are 7 appeals by the Assessee against 5 orders of CIT(A)-11, Bangalore, all dated 26.02.2021 in relation to AY 2009-10 to 2015-16. Since common issues are involved, these appeals were taken up together for hearing. We deem it convenient to pass a common order. 2. The common issues in all these app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 132 of the income tax act 1961 (the act) was carried out in the case of the M/s. Hindustan marble and granite and residential premises of the assessee on 25.11.2014. Thereafter a notice u/s.153A of the Act was issued on 12.08.2015 for the AY 2009-10 to AY 2014-15 and notice u/s.143(2) was issued om 23.02.2016 for AY 2015-16. The assessee filed the return of income for AY 2009-10 to AY 2014-15 in response to notice under section 153A declaring the same income offered in the original return of income filed by the assessee. There was also a search conducted by the Directorate of Revenue Intelligence (DRI) on 03.04.2012 and on 05.04.2012 in the factory premises, office premises and the residents. Based on several documents seized during the search, the DRI issued a show cause notice to the assessee on 12.08.2015 alleging that the assessee has diverted the imported stock of marble and granite into the Domestic Tariff Area (DTA) in violation of the Foreign Trade Policy (FTP). The assessing officer during the proceedings under section 153A took cognizance of the show cause notice issued by the DRI where it is stated that the marble slabs manufactured by M/s. Hindustan Granite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 30.11.2013 30.09.2014 No notice u/s. 143(2) issued 7. The submission of the ld. AR was that the above addition made by the AO in all the aforesaid assessment years are not based on any incriminating material found in the course of search of the Assessee. It is submitted that the assessing office has made the impugned addition based on the show cause notice issued by DRI which is issued after the completion of the assessee. Therefore the ld AR contended that the impugned additions cannot be said to be made based any incriminating material found during the course of search. Our attention was drawn to a decision of the Bangalore Bench of the Tribunal in the case of Yunus Zia v. DCIT, ITA Nos.126 to 130/Bang/2013 for AYs 2003-04 to 2007-08 order dated 20.3.2020 wherein the Tribunal has after analysis of the legal position come to the conclusion that where an assessment has already been completed for an AY and subsequently an assessment is made for the same AY u/s.153A of the Act, any addition u/s. 153A of the Act for that AY, cannot be made de hors incriminating material found in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of search. Since the addition in question have been made without any reference to any incriminating material found as a result of search, both the additions made by the AO deserves to be deleted. 8. The learned DR relied on the order of the CIT(A) and submitted that the scope of assessment proceedings u/s.153A of the Act is not limited to material found in the course of search and in this regard reiterated the ratio laid down by Hon ble Karnataka High Court in the case of Canara Housing Development Vs. DCIT (2014) 49 Taxxman.com 98 (Karn.). 9. We have considered the rival submissions. In the present case, the assessment in all the five AYs 2009-10 to 2013-14 have already been completed prior to the date of search in the sense that for AY 2009-10 to 2011-12, the assessment u/s.143(3) is completed and for AY 2012-13 and 2013-14, the return filed by the Assessee was accepted and no notice u/s.143(2) of the Act was issued within the time limit laid down under those provisions to make an assessment u/s.143(3) of the Act within the time contemplated in law. The proceedings for these Assessment years were not pending and did not abated by virtue of the second provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14. We will now take up ITA No.761 and 762/Bang/2021 , relating to AY 2014-15 and 2015-16 for adjudication. In these assessment years similar addition relating unaccounted sales to the income declared in the return of income filed u/s.153A of the Act was made by the AO. These additions in these two AYs will not fall within the ambit of the ratio laid down by the Hon ble Karnataka High Court in the case of M/S.Delhi International Airport Ltd. (supra). Therefore we will adjudicate these two appeals based on merits. 15. In the assessment for AY 2014-15 and 2015-16, the assessing officer has made the addition towards unaccounted sales by holding that the assessee has diverted the imported stock of marbles and granites in violation of the FTP and sold the same in the DTA instead of re-exporting the said material after processing for which concessional rate of duty was prescribed. The assessing officer based on based on the show cause notice issued by DRI dated 12.08.2015 tabulated the deviations as given in the show cause notice and arrived at the assessable value of the transaction at Rs.180,56,39,456 on which he applied the gross profit ratio to arrive at the addition. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRI. The assessing officer has tabulated the deviations in the marble slabs manufactured which are considered to be diverted into DTA according to the DRI to arrive at the assessable value of the marble slabs at Rs.180,56,39,456 and has apportioned the amount based on the turnover of the assessee for each of the assessment years. The assessing office then applied the profit ratio on the amount so apportioned to make the additions in each of the years. Though the search was conducted on 24.11.2014, the assessing officer issued a notice under section 153A on the same date when the show cause notice was issued by DRI. It is an admitted fact that during the course of search by the revenue no incriminating material was found and that the entire addition in the order under section 143(3) r.w.s.153A is based on the show cause notice issued by DRI. Therefore whether the show cause notice issued by DRI after the date of search but before the conclusion of the proceedings can be used for making the addition is the issue for our consideration. In the given case the assessing officer has used the material that is not seized during the course of such under section 132 but has used a material wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Commissioner or Commissioner may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer (hereafter in this section and in subsection (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. Explanation.-For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. (2) On a requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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