Dinesh Salecha Vs DCIT (ITAT Mumbai)
It was expounded that in case of assessments which have attained finality no addition under section 153A can be done without seized incrementing material. We are aware that in these cases earlier assessments were not done u/s 143(3). In our considered opinion, the Hon’ble Jurisdictional High Court has never mentioned that it is only assessment which has been completed under section 143(3) that addition under section 153A cannot be done without reference to incriminating seized material. Hon’ble Jurisdictional High Court has clearly mentioned that it is those assessments which are unabated, that is not pending, to which the above said ratio will apply. Assessments which are not pending are not only those which have been completed under section 143(3) but also those for which the time for issuing notice under section 143(2) have already elapsed.
In other words the reference is to those assessments in whose case assessment under section 143(3) cannot now be done. It is not at all the case of the revenue that in the appeals which have been claimed as unabated here there was time for assessment under section 143(3). In this view of the matter, in our considered opinion, the submission of the learned counsel of the assessee succeeds that addition in the case of unabated assessment without reference to incriminating seized material for assessment u/s.153A is not sustainable on the touchstone of above said Hon’ble Jurisdictional High Court decision.
It may not be out of place here to mention that it is specifically provided in section 153A “that assessment or reassessment if any relating to any relevant assessment year or years referred to in this subsection pending on the date of initiation of search under section 132 or making of requisition under section 132 a as the case may be shall abate”. This makes it further abundantly clear that only those assessments which are pending abate. Hence sanguine provisions of the act read with Hon’ble Jurisdictional High Court decision as above make it abundantly clear that the assessments which do not abate and assessment and addition under section 153A without reference to incriminating seized material is not sustainable.
The jurisprudence regarding jurisdictional defect in assessment under section 153A /153C without reference to incriminating seized material has also been expounded by Hon’ble Supreme Court in the case of CIT v/s Singhad technical education Society in Civil Appeal No.11080 of 2017 and others. In this regard the Hon’ble Supreme Court in paragraph 18 of the said order observed that:-
“In this behalf it was noted by the ITAT that as per provisions of section 153C of the act,, incriminating material which was seized had to pertains to assessment years in question and it is an undisputed fact that the documents which were seized did not establish any correlation, document –wise, with these for assessment years since this requirement under section 153C of the act is essential for assessment under the provision it becomes a jurisdictional defect. We find this reasoning to be logical and valid having regard to the provisions of section 153C of the Act.”
In the background of aforesaid discussion and precedents, the addition made in these assessment orders passed by the assessing officer under section 153A without reference to any incriminating material found search is not sustainable. Hence we set aside the orders of authorities below and direct that the additions made are not sustainable due to the jurisdictional defect.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These are appeals by the assessee, against the common order dated 31st July 2018, passed by the learned CIT(A) for the concerned assessment years as above.
2. The grounds of appeal are common except for the amounts. For the sake of reference we are referring to grounds of appeal for assessment year 2008–09 which reads as under:–
“1. The learned Assessing officer and CIT (A) 50 erred in making addition under section 68 of Rs 25,00,000/- being loan from Simran Gems without appreciating the fact that the said loan was shown in the balance sheet of the assessee and that there was no incriminating material found in the course of search and therefore as per the principal laid down by Honourable Bombay High court in the case of Continental Warehousing Corporation (Nahava Seva)LTD. And All Cargo Global Logestic LTD. (2015) 374 ITR 645 and reaffirmed in the recent judgment CIT-20 vs Deepak Kumar Agarwal ITA NO, 1709 of 2014 dated 11th September 2017 no addition could be made for items for which there is not incriminating material.
2. The learned Assessing officer and the CIT(A)-50 erred in not providing the statement of Gyanchand B. Jain Proprietor of Simran Gems under section 132(4) though the same was sort both at the assessment and appeal stage in violation of grounds of natural justice.
3. The learned Assessing officer and CIT(A)-50 erred in not providing the assessee an opportunity to cross examine the party who had given evidence against the assessee in violation of grounds of natural Justice
4. On the facts and circumstances of the Appellant’s case and in law the learned assessing officer and CIT(A) -50 erred in making addition u/s 68 of the Income Tax Act 1961 amounting to Rs 25,00,000/- on account of alleged unexplained cash credit on the basis of surmises and conjectures.
5. On the facts and circumstances of the appellant’s case and in law the learned assessing officer and CIT(A) erred in making addition u/s 68 of the Income Tax Act 1961 amounting to Rs 60,000/- on account of Commission paid for arrangement of above mentioned cash credit without any evidence based on surmises and conjectures.
6. The learned Assessing Officer and CIT(A) erred in levying interest under section 234B of Rs. 959757 without considering the fact that the said interest was not leviable as per the judgment of Datamatics Ltd v/s Assistant Commissioner of Income 2008 110 ITD 24 Mum, 2008 299 ITR 286 Mum, [2007] 111 TTJ Mum. 55.”
3. Brief facts of the case are, the assessee is an individual and filed her return of income for the assessment year 2008–09 on 31st July 2008, declaring total income of Rs. 3,90,830. There was a search and seizure action carried out against the RSBL group under section 132 of the Act on 11th June 2013, and the assessee was also covered. The notice under section 153A of the Act was issued. The assessment under section 143(3) r/w section 154A of the Act was completed in the case of all the years on 28th March 2016, on an income of Rs. 29,50,830 (A.Y. 2008–09), Rs. 45,76,360 (A.Y. 2009–10) and Rs. 30,16,628 (A.Y. 2011–12). In the assessment, addition was made under section 68 for loans taken from the following parties:–
