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TMI Blog2022 (7) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year and this assessment can be tinkered with only if incriminating material pertaining to this year has been found during the course of search. In view of the above discussion and respectfully following the judgments of various Hon ble High Courts and Co-ordinate Benches, we allow the preliminary ground of the appeal and delete the additions made in the assessment order dt. 30/03/2015 passed u/s 153A r.w.s. 143(3) of the Act. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 68 of the Act, regarding receipt of share capital including share premium. 4. The facts of the case are that the assessee has filed its original return of income u/s 139(1) of the Act on 31/10/2007, declaring total income at Rs.4,930/-. A search u/s 132 of the Act was carried out in the business premises of the assessee on 03/08/2012. During the course of search, cash of Rs.14,38,270/- was found. Out of that, Rs. 14,00,000/- was seized. Apart from that certain documents marked as AFL/1 to AFL/7 & AFL/HD/1 were found and seized. Similarly, a document inventorized as A-1 was found from Gurgaon office and backup of computers were taken in pen drive. The Assessing Officer had issued notice u/s 153A of the Act on 23/09/2013. The assessee filed its return of income in response to notice u/s 153A on 22/10/2013, declaring total income of Rs.12,572/-. The Assessing Officer has passed an assessment order u/s 143(3) r.w.s. 153A dt. 30/03/2015, determining the taxable income of the assessee at Rs.2,85,94,642/-. The Assessing Officer has mainly made an addition of Rs.2,85,00,000/- on account of share application money. The Assessing Officer further made disallowance u/s 14A of the Act, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(l) will have to be mandatorily issued to the person searched requiring him to fde returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii)Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. (iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person." Hon'ble Delhi High Court in the case of Subhag Khattar in Tax Appeal No.60 of 2017 has considered the following question of law: "Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the additions made under Section 153A read with Section 143(3) of the Income Tax Act, 1961 in the circumstances of the case, were not justified and supportable in law?" Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search? " 35. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed." 11. It is also pertinent to note that, in the case of Kabul Chawla (supra), the Hon'ble Delhi High Court in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006- 07 already stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. The following valuables and documents were found/seized during the course of search: Address of the premises where search was conducted Cash Identification Mark of the documents seized Found Seized 158, Lenin Sarani, 2nd Floor & 3rd Floor, Kolkata - 700013 14,38,270/- 14,00,000/- AFL/1 TO AFL/7 & AFL/HD/1 E-7, 2nd Floor, Opposite Gate No. 1, Pune Market Yard, Pune NIL NIL Backup of computers and pen drive 306, JMD Regent Square, 3rd Floor, DIF Phase - II, Gurgaon- 122002 NIL NIL A-1 2.2. Accordingly, notice u/s 153A of the Income-tax Act, 1961 was issued on 23.09.2013. The assessee filed its return of income for the Assessment Year 2007-08 in response to notice u/s 153A of the Income-tax Act, 196l on 22.10.2013 declaring a total income of Rs.12,572/-. Notice u/s 143(2) & 142(1) of the Income-tax Act, 1961 was issued on 07.05.2014. Shri Giriraj Lakhotia, A/R of the assessee appeared in response to the said notices, furnished the documents called for and explained the return. 3.1 During the year under consideration, Assessee Company raised Share Capital. To verify genuineness of transaction Notices u/s 133(6) of Income Tax Act, 1961 were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee u/s 68 of Income Tax Act, 1961. Penalty proceeding /s 271(1)(c) initiated separately. [Addition: 2,85,00,000] 14. A perusal of the above finding would indicate that the Assessing Officer has nowhere made reference to any seized material in the assessment order. The Assessing Officer has been examining the matter as if he is passing a regular assessment order u/s 143(3) or 147 of the Act. Under the scheme of assessment as propounded in the various judgments of the Hon'ble High Courts referred above, an addition can only be made if some incriminating material regarding receipt of bogus share application money was found during the course of search. The Assessing Officer did not make reference to this effect. The ld. CIT(A) is on the same line. The ld. CIT(A) has discussed the issue on merits but did not address whether the issue can be examined in an assessment framed u/s 153A of the Act or not. The judgment of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra) is very specific which has been discussed above. The time limit to issue notice u/s 143(2) of the Act has expired long back. Hence, it is an unabated assessment year and this assessment can be tin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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