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TMI Blog2024 (6) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings pending on the date of the search conducted i.e. 20.04.2017. In the case of the assessee, the AO has not referred to any incriminating document which was seized, during the course of search proceedings and the additions made in the Assessment Orders are not based upon any incriminating material or documents found during the course of search Further, we also find that the Hon ble Supreme Court in the case of Pr. CIT Vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] has affirmed the ratio of the Hon ble Delhi High Court laid down in the case of Kabul Chawla (supra). Since, the revenue has not brought anything on record to prove that the additions have been made on the basis of the material found and seized during the search conducted u/s 132 of the Income Tax Act, 1961, we find no reason to interfere with the order of the ld. CIT(A). Assessee appeal allowed. - Sh. Kul Bharat, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Dr. Shashwat Bajpai, Adv. For the Revenue : Sh. N. G. Joseph Gangte, CIT-DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeals have been filed by the Revenue against the orders of ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case are as under: Assessment Year : 2010-11 Date of search : 12.11.2013 Due date for issue of notice u/s 143(2) : 30.09.2011 5. Hence, there is no dispute that the assessment is not an abated assessment. Hence, the provisions of Section 153A of the Income Tax Act, 1961 are squarely applicable to the cases before us. On this issue, we are guided by the judgments of Hon ble Jurisdictional High Court as well as Hon ble Supreme Court. 6. The Hon ble Delhi High Court in the case of CIT vs Kabul Chawla, 380 ITR 573 held as under: 37. On a conspectus of Section 153(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered with. 59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India) v. Asstt. CIT (2013) 36 taxmann.com 523/219 Taxman 223. The said part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. 60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corpn (NhavaSheva) Ltd. 2015] 58 taxmann.com 78/232. Taxman. 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) as under: 37. On a conspectus of Section 153(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153(1)(b) in determining the total income of the Assessee of Rs. 14.5 crores against declared income of Rs. 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India) (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition' or disallowance can be made only on the basis of material collected during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer with respect to the sale transactions in the particular assessment year. 62. Subsequently, in Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. (supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in IBC Knowledge Park (P.) Ltd. (supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In Gurinder Singh Bawa (supra), the Bombay High Court held that: 6. ..... once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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