Anurag Dalmia Vs DCIT (ITAT Delhi)
In the case of the unabated assessment which had attained finality on the date of search, which are reckoned as unabated assessments, no addition over and above the originally assessed income can be made sans any incriminating material found or unearthed during the course of search. The principle reiterated time and again is that something should be found as a result of search which is incriminating in nature so as to implicate the assessee and acquire jurisdiction to make the addition, because for the completed assessment, or in other words, assessment which are not abated, the Assessing Officer is required to make reassessment u/s.153A which is only possible when any incriminating material has been found during the course of search. If the Revenue has any information in its possession prior to the date of search and no corroborative evidence was found during the course of search so as to link the information already in hand with the material found during the course of search, then such an information for making any kind of addition ostensibly is outside the purview of Section 153A as per the binding judicial precedents of the Hon’ble Jurisdictional High Court. We again reiterate that if the Income Tax Department had any material information in its possession received from any external source and in wake of such an information search u/s 132 has been carried out and nothing incriminating has been found having live-link nexus with the said information already in hand, then the Revenue has other courses open to implicate the assessee or carry out further inquiry under the other provisions of the Act, but definitely not u/s.153A.
Thus, we hold that despite there being incriminating material in the possession of the Revenue which may implicate assessee, but same cannot be used within the scope of Section 153A when nothing has been found from the search, especially when assessee too has denied any such involvement and there is no material gathered during the search to rebut such a denial by the assessee. Accordingly, the addition made by the Assessing Officer for sum of Rs.28,24,48,860/- is deleted.
Here in this case as per the Assessing Officer still certain information are yet to be received and the material and information available with the department needs to be corroborated and needs to be further inquired into. Under these circumstances also in our opinion same cannot be done within the scope of Section 153A as we have already held that nothing has been found from the assessee during the course of search, which can preempt any post search inquiry. Albeit in abated assessments AO may have power to conduct further inquiry but not in case of unabated assessments.
ORDER
PER AMIT SHUKLA, J.M.:
The aforesaid appeals have been filed by the Assessee against the separate impugned order dated 11.08.2017, passed by the ld. CIT(Appeals)-29, New Delhi, for the quantum of assessment passed u/s.153A/143(3) for the Assessment Years 2006-07 & 2007-08. Since issues involved in both the appeals are common, arising out of identical set of facts, therefore, same were heard together and are being disposed of by way of this consolidated order.
2. We will first take up the appeal for the Assessment Year 2006-07, wherein following grounds have been raised.
“1. The impugned appellate / assessment orders are bad in law and on facts as those have been passed disregarding the codified law and as has been laid down by the jurisdictional courts besides ignoring the submissions of the appellant before the said authorities. Thus, the impugned orders of the authorities below must be annulled.
2. The CIT(A) erred in law and on facts in confirming the assessment order passed on the basis of an illegal and invalid notice issued u/s 143(2) of the Act for the first time on 21/10/2013 though the same should have been issued statutorily by 30/09/2013 as the return of income was filed before 31/03/2013. The appellant never received any notice before the said date as has been alleged by the CIT(A) by referring to the assessing officer. Thus the assessment should be annulled.
3. That the impugned assessment order dated 23/03/2015 is barred by limitation as the time to pass the assessment order had already expired on 31/03/2014 but the proposal for reference to seek information from the foreign jurisdictions u/s 153B( 1) Explanation (viii) of the Act was made by the assessing officer first time vide his letters dated 27/02/2015, i.e. much after expiry of the time to pass the assessment order. Thus the assessment order should be annulled.
4. Without prejudice to the above ground, the appellant was not informed in any manner before the alleged extension of limitation period by the assessing officer. Thus, this alleged extension of the limitation period in absence of the principles of natural justice and fair play is bad in law and the impugned assessment order deserves to be annulled.
5. That on the facts and circumstances of the case, the assessment order passed u/s 153 A of the Act making addition is bad in law as no incriminating material in any manner in respect of the same was found in and seized from the premises of the appellant during the course of search u/s 132 of the Act on 20/01/2012 as the earlier assessment proceeding was already completed and not abated. Thus, the assessment order should be annulled.
6. That in law and on facts, some unauthorized and unverified material sourced from a third country by the revenue authorities cannot be made a basis to pass an assessment order u/s 153 A of the Act in the case of the appellant and which needs to be cancelled.
7. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 27,91,72,017/- made u/s 69 of the Act is ‘unexplained investment’ in relation to an alleged offshore Bank account with HSBC Bank, Geneva, Switzerland without having on record any legally acceptable and credible evidence to support the same. The appellant prays that ne addition should be deleted.
8. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that the impugned assessment framed in pursuance to show cause notice issued to a Permanent Account Number not belonging to ne appellant vitiates the assessment. Accordingly, the assessment itself is invalid and non-est which should be cancelled.
9. That the allegation of the assessing officer that the assessee has not complied with notice issued u/s 142(1) of the Income-tax Act, 1961 on 18th July, 2013 is contrary to the facts of the case and deserves to be expunged.”
2. At the outset, ld. counsel for the assessee, Shri V.K. Bindal first pressing the legal issue raised vide ground no. 5, submitted that here in this case, the addition which has been made by the Assessing Officer is not based on any incriminating material found during the course of search, and therefore, no addition could have been made in the assessment framed u/s.153A/143(3) for the impugned Assessment Year, as on the date of search, i.e., 20.01.2012, the assessment for the Assessment Year 2006-07 was not pending and had attained finality. Accordingly, in view of the various judgments of the Hon’ble Jurisdictional High Court, especially in the case of CIT vs. Kabul Chawala (2016) 380 ITR 570; and Pr. CIT vs. Meeta Gutgutia, Prop. M/S. FERNS N’ PETALS, in ITA No. 306 and 310/2010, the additions made for the assessment years which are unabated assessments are beyond the scope of assessment u/s 153A. Since the aforesaid issue raised by the learned counsel before us goes to the very root of the addition, therefore, we are taking up this issue first.
3. The brief facts and background of the case are that, the assessee is an individual deriving income from salary, short term capital gain and income from other sources. He has filed his return of income for the Assessment Year 2006-07 in the month of July, 2006, declaring total income of Rs.27,86,027/-. The said return was duly accepted and processed u/s. 143(1) vide intimation dated 25.05.2007. Thereafter no notice u/s. 143(2) was issued and accordingly, such a return of income stood finally assessed and had attained finality under the provisions of the Income Tax Act. A search and seizure action u/s. 132(1) was carried out in the premises of the assessee and group cases on 20.01.2012 and in pursuance to such action, notices u/s.153A were issued on 17.10.2012 for the six assessment years prior to the year in which search took place. In response to such notice for the impugned assessment year assessee filed the return of income declaring the same income as was shown in the original return of income. As regard the nature of addition in dispute qua the scope of section 153A, it is borne out from the impugned assessment order, the appellate order and the records produced before us, that an information was received in the form of a document collected by the Government of India as a part of tax information exchange treaty. As per the said information received in form of USB, certain persons in India held bank accounts with HSBC Pvt. Bank (SUISSE), SA, Switzerland. The said documents also contained information with regard to the assessee which was 11 pages document, the relevant portion of which have been incorporated by the Assessing Officer in the impugned assessment order. The learned Assessing Officer has very meticulously analyzed the documents and noted that the documents contained the name of the assessee through various entities wherein assessee was linked with these accounts in some manner or the other, like;
> Portland Holding Ltd., where in the account of the said entity, assessee was shown as one of the beneficial owner of the account;
> Shagun-21, wherein the assessee has been shown as person having right of inspection;
> Willaston Investments Ltd., wherein the assessee has been found to be related to this account being beneficial owner; and
> Chotuman-1, wherein again the assessee has been shown as account holder in the bank account relating to this entity.
The total amount which stood deposited in these bank accounts for the relevant financial year, aggregated to Rs. 27,91,72,017.47, the details of which are as under:-
