×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
Appeal No. - ITA No. 5696/Del/2014 & 3128/Del/2016
Asstt. Year - 2005-06
PER : PRASHANT MAHARISHI, A. M.
1. These are the bunch of four appeals pertaining to one assessee for two assessment years i.e. assessment year 2005 – 06 and 2006 – 07, therefore they are disposed of by this common order.
2. ITA number 5696/del/2014 for assessment year 2005 – 06 is filed by the assessee against the order of The Commissioner of Income Tax (Appeals), Meerut dated 19/8/2014. The brief facts of the case show that search and seizure operation u/s 132 of the income tax act 1961 was carried out at the residence of the assessee on 15/2/2008. Subsequently locker number 439 at HDFC bank Noida in the name of assessee was also searched on 20/2/2008. Therefore, the learned assessing officer issued notice u/s 153A of the income tax act on 11/8/2009. The assessee filed return on 22/9/2009 declaring an income of INR 5 142771/–. The assessment u/s 143 (3) of the act read with section 153A of the act was passed on 29/12/2009 wherein several additions were made and the income of the assessee was assessed at INR 1 4536692/–. The assessee preferred an appeal before the learned CIT – A. The learned CIT – A passed an order dated 17/3/2011 against which the cross appeals were filed before the coordinate bench. The coordinate bench per order dated 28/6/2012 set aside the appeal back to the file of the learned CIT – A holding that admission of the additional evidence in rule 46A has not been complied with and the learned CIT – A has not decided about the genuineness of the memorandum of understanding which is refuted by the learned assessing officer. Consequently, the learned CIT – A passed an order dated 19/8/2014 partly allowing the appeal of the assessee. Therefore, the assessee has challenged the above order in ITA number 5696/del/2014 and the learned AO has challenged that order in ITA number 5982/del/2014.
3. In ITA number 5696/del/2014, the assessee has challenged in the 1st ground of appeal that the learned assessing officer has failed to appreciate that no incriminating document was found in search in respect of assessment year 2005 – 06, and therefore no addition could have been made by the learned assessing officer in terms of the decision of the honourable Bombay High Court in case of All Cargo And Global Logistics Ltd vs. Deputy Commissioner Of Income Tax and other leading cases u/s 153A with section 143 (3) of the income tax act in absence of any incriminating material.
4. Adverting the 1st ground of appeal, the learned authorised representative submitted that there is no incriminating material found during the course of search based on which these additions have been made which are contested in the appeal of the assessee as well as in the appeal of the learned assessing officer. He therefore submitted that in view of the decision of the honourable Delhi High Court in case of CIT vs. Kabul Chawla  380 ITR 573 (Del) in concluded assessment no addition can be made without any incriminating material found during the course of search. He extensively read the orders of the learned assessing officer as well as the learned CIT – A and stated that both these additions have been made without reference to any incriminating material found during the course of search. Therefore, such additions could not have been made by the learned assessing officer in the 1st place itself.
5. The learned departmental representative relied upon the order of the learned assessing officer and the learned CIT – A and submitted that no such ground has been raised by the assessee before the lower authorities and therefore now the assessee cannot challenge the same. He submitted the copy of the panchanama and submitted that there are certain documents found in search.
6. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly, in this case, the search operation was carried out on 15/2/2008 and the last search was on the locker on 20/2/2008. The impugned assessment year before us is assessment year 2005 – 06. Thus on the date of search, no proceedings with respect to assessment year 2005 – 06 were pending. Hence, it was concluded assessment. Honourable Delhi High Court in para number 37 of the decision in case of CIT vs Kabul Chawla (supra) has held as under :-
37. On a conspectus of section 153A(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 assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. Page No : 0590
(ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise.
(iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer 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 assessment years "in which both the disclosed and the undisclosed income would be brought to tax".
(iv) Although section 153A 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 Assessing Officer 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 the seized material."
(v) In the 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 153A is relatable to abated pro ceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings.
(vi) In so far as the pending assessments are concerned, the jurisdic tion to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer.
(vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.