Income Tax Appellate Tribunal - Delhi
Kusum Gupta, New Delhi vs Assessee on 1 January, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'D': NEW DELHI)
BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER
And
SHRI J. S. REDDY, ACCOUNTANT MEMBER
ITA Nos.4873/Del/2009,(2005-06) 2510(A.Y 2003-04),
3312(A.Y 2004-05) 2833/Del/2011(A.Y 2006-07)
Kusum Gupta VS DCIT
21/40, Shakti Nagar Central Circle-15
New Delhi S R C Aviation Pvt. Ltd.
PAN: AEDPG4771M New Delhi
(APPELLANT) (RESPONDENT)
ITA NO- 3647/2\Del/2013 (A.Y 2002-03)
ITA NO- 510/Del/2010 (A.Y 2005-06)
ITA NO- 3343/Del/2011 AA.Y.2006-07)
DCIT Vs. Kusum Gupta
Central Circle-15 21/40, Shakti Nagar,
SRC Aviation Pvt. Ltd. New Delhi
New Delhi PAN: AEDPG4771M
ASSESSEE BY : Shri Salil Agrawal, Adv, Shailesh Gupta,
CA, M. M. Gupta, C.A
REVENUE BY : Shri D. K. Mishra, D.R
ORDER
PER I. C. SUDHIR, JUDICIAL MEMBER:
At the out set of hearing the parties pointed out that in the appeal for the assessment year 2002-03 preferred by the department the common issue 2 ITA NOS.4873, 2510,3647,3312,510,3343,2833 on the validity of addition made u/s 153A in absence of material found during the course of search, has been dealt with in detail, hence the same can be treated as the base year. Parties preferred to argue this appeal first.
ITA NO- 3647/DEL/2010 The revenue has questioned first appellate order on the following grounds:-
1. " On the facts and under the circumstances of the case, the Ld. CIT(A) has erred in holding that where an order section 143(3) has been passed and no material is found suggesting escapement of income in this assessment, then no addition can be made in 153A proceedings.
2(a). The order of the Ld.CIT(A) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal."
GROUND NO-1
1. The relevant facts are that a search operation u/s 132 of the Act was carried out at the premises of assessee on 7/2/2007 and after affording opportunity to the assessee, the assessment has been framed u/s 153A read with Section 143(3) of the Act for the six preceding years as provided u/s 3 ITA NOS.4873, 2510,3647,3312,510,3343,2833 153 A, starting from assessment year 2001-02 to 2006-07. During the assessment year2002-03 under consideration in response to the notice issued u/s 153 A of the Act, the assessee filed return of income declaring the total income of Rs.4,59,750/- i.e. income which was assessed u/s 143 (3) of the Act. During the assessment proceedings the AO noted that in the year a credit of Rs.20,00,000/- in the name of Shri Aman Gupta minor son of the assessee was there. Since the minor son was not having any source of income, the amount was stated to be advanced to the assessee after receipt of Rs.20,00,000/- from Shri Satya Narayan, resident of B E-97, Shalimar Bagh (West), Delhi. The assessee filed copies of memorandum of gift, affidavit, PAN, return of income of donor as proprietor of M/s Delta International. It was stated before the AO that the donor has made the gift out of natural love and affection. Since the donor was having withdrawal of Rs.3,85,000/- only, the AO doubted his creditworthiness. He also noted that the donor is not directly related to the assessee and gift has not been made on any special occasion.
The AO accordingly made addition of Rs.20,0000/- u/s 68 of the Act treating the claimed gift as non-genuine.
2. Before the first appellate authority while questioning the addition on its merits, the assessee also raised an additional ground to be allowed for the 4 ITA NOS.4873, 2510,3647,3312,510,3343,2833 adjudication involving the issue as to whether u/s 153 A proceedings addition can be made without reference to any incriminating material found during the course of search or not. The reasons shown for raising this additional ground for the first time before the Ld. CIT(A) was that subsequently the Delhi Bench of the Tribunal vide its order dated 1/1/2010 reported in 1 ITR (TRIB) 484 (Delhi) in the case of Shri Anil Kumar Bhatia vs. ACIT and Shri Sanjay Bhatia Vs. ACIT has decided the issue in favour of the assessee that without reference to any material found during the course of search, addition cannot be made in Section 153 A assessment. Discussing the circumstances under which the additional ground involving the legal issue was raised, the Ld. CIT(A) following the decisions of Hon'ble Supreme Court in the cases of Jute Corporation of India Ltd. Vs. CIT, 187 ITR 688 (SC) and NTPC Vs. CIT, 229 ITR 383 (SC). The Ld. CIT(A) admitted the additional ground for his adjudication. On this issue raised in the additional ground, the Ld. CIT(A) following its earlier order dated 17/5/2010 in this regard in the case of assessee itself for the assessment year 2004-05 has decided the issue in favour of the assessee. He has held that in absence of incriminating material found during the course of search or no statement etc. recorded during the course of search showing the non-genuineness of the gift, the addition on account of unexplained 5 ITA NOS.4873, 2510,3647,3312,510,3343,2833 credit/non-genuine gift which was not made in the original assessment cannot be made in an order passed u/s 153 A read with Section 153 (3) of the Act. In view of this finding he did not find it relevant to comment on the finding of the on merits AO as to whether the gift under consideration was genuine or not. He has accordingly deleted the addition made by the AO at Rs.20,00,00/- u/s 68 of the Act in the assessment framed u/s 153 A read with Section 143(3) of the Act. Against this action of the Ld. CIT(A) the revenue is in the appeal.
3. In support of the ground, the Ld. DR placed reliance on the assessment order with this contention that the special Provisions u/s 158 B B and in the provisions laid down u/s 153 A of the Act, there is no requirement of finding of incriminating document during the course of search for framing assessment under this provision as was there u/s 158 B B of the Act. He submitted that in the case CIT Vs. Anil Kumar Bhatia , (2012)211 Taxman 453 (Delhi), the Hon'ble Delhi High Court has not interpreted the Provisions of Section 153 A of the Act. Thus, this decision is not applicable on the issue raised in the present case on the validity of addition made in Section 153 A proceedings in absence of any material recovered or statement/recorded during the course of search. He submitted that provisions laid down u/s 153 A falls in the special category still it is a general 6 ITA NOS.4873, 2510,3647,3312,510,3343,2833 provision. The Ld. DR pointed out that in the case of Anil Bhatia (Supra), the issue has been kept open. He submitted that there is distinction between seized material and incriminating material and for invocation of the Provisions u/S 153 A, the only requirement is conducting of search u/S 132 of the Act. He submitted that statements recorded during the course of search can also be treated as evidence to make addition in Section 153 A proceedings. In the present case the Ld. D.R placed reliance on the following decisions:-
(i) Keshavji Ravji & Co. Vs. CIT 183 ITR 1 (S.C). (ii) Bharat Hari Singhania Vs. CIT 207 ITR 1 (S.C). (iii) Commissioner of Wealth Tax Vs. Sanghi Bros. India ) Ltd.301 ITR 129 (P&H) (iv) Maharaj Kumar Kamal Singh ,35 ITR 1 (S.C).
4. The Ld. A.R tried to justify the first appellate order on the issue. He submitted that the issue raised before the Ld. CIT(A) in the additional ground on the validity of addition made in Section 153 A proceedings in absence of any material found or statements recorded during the course of search has been decided by the Hon'ble Delhi High Court in the case of Anil Bhatia (Supra) which squarely covers the issue raised in the present case. He pointed out further that the revenue has not questioned the allowability 7 ITA NOS.4873, 2510,3647,3312,510,3343,2833 of adjudication of additional ground sought by the assessee before the Ld. CIT(A). There is no dispute in the present case that no incriminating material pertaining six preceding years was found during the course of search proceedings in the present case and on the date of search the regular assessment u/s 143 (3) for these assessments years was already framed by the A.O. He placed reliance on the following decisions:-
(i) CIT VS . Anil Kumar Bhatia 2011 Taxman 453 (Delhi) (ii) All Cargo Global Logistics Ltd. Vs CIT 137 ITD 287 (Mum) (S.B) (iii) Gurinder Singh Bawa Vs. CIT (iii) Dhakeshwari Cotton Mills Ltd. Vs. CIT 26 ITR 775 (S.C). (iv) Omar Saley Sait Vs. CIT 371 ITR 151 (S.C).
5. The Ld. D.R rejoined with this submission that the decisions relied upon by the Ld. A.R having distinguishable facts are not helpful to the revenue. He pointed out further that except in the assessment year 2004-05 in all the remaining A. Ys. assessment u/s 143(3) of the Act was framed before the date of search and in A. Y. 2004-05return filed earlier was processed u/s 143 (1) (a) of the Act.
6. Having gone through the orders of the authorities below we find that the Ld. CIT(A) has decided the issue raised in the ground in favour of the 8 ITA NOS.4873, 2510,3647,3312,510,3343,2833 assessee following his earlier order on identical issue in the case of assessee for assessment year 2004-05. In that year also the only issue raised was as to whether while making addition in the assessment framed u/s 153 A, the AO has to restrict himself only to materials found during the course of search. It was held that where order has already been passed u/s 143(3) and if no material is found suggesting escapement of income during search then no addition can be made in Section 153 A assessment. In other words in such cases addition can only be made with reference to material found during the course of search. The Ld. CIT(A) has placed reliance on the decision of the Tribunal in the case of Shri Anil Kumar Bhatia Vs. ACIT and ors, 1 ITR (Trib) 484(Delhi) holding that the power to frame assessment u/s 153 A of the Act shall be to the extent of income escaping assessment came to the knowledge of the Assessing Officer during the course of search. It was held that the assessment u/s 153 A of the Act shall be with reference to book of accounts, article or thing found or documents seized during the search which are not disclosed in the original assessment. It is pertinent to mention over here that in the case of Shri Anil Kumar Bhatia and Ors, (supra) the revenue had preferred appeal before the Hon'ble High Court against the order of the Tribunal and the issue raised before the Hon'ble High Court was as to whether even if assessment order had already been 9 ITA NOS.4873, 2510,3647,3312,510,3343,2833 passed in respect of any of those six assessment years, either u/s 143(1) (a) or Section 143 (3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings u/s 153 A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. It was answered by the Hon'ble High Court in affirmative and in favour of the revenue. In that case, the Hon'ble High Court has been pleased to hold that the Assessing Officer has the power u/s 153A to make assessment for all the prescribed six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee had filed return before the date of search which stood processed u/s 143(1) (a) of the Act. The Tribunal had held that since the returns of income by the assessee for all the six years under consideration before the search took place were processed u/s 143 (1) (a) of the Act, the provisions of Section 153 A cannot be invoked. The Hon'ble High Court did not agree with this, nor it agreed with the finding of the Tribunal that no material was found during the search. The Hon'ble High Court observed in that case, that in the entire case and arguments before the departmental authorities as well as the Tribunal it was contended by the assessee that no document embodying the transaction with Mohni Sharma was recovered from the assessee and the Tribunal had proceeded on that 10 ITA NOS.4873, 2510,3647,3312,510,3343,2833 basis but the same is not correct the reason being that in the order of the Tribunal itself it was mentioned that no document much less incriminating material was found during the search of the assessee's premises, except unsigned undertaking for loan. The Hon'ble High Court taking note of this material fact held that if it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered . Once the Section is triggered, it is mandatory for the Assessing Officer to issue notices u/s 153A calling upon the assessee to file returns for the prescribed six assessment years preceding the year in which the search took place. The contention of the Ld. A.R remained that under this premises that some document was found in the course of the search of the assessee's premises, the Hon'ble High Court was pleased to justify the assessment made u/s 153 A of the Act. In other words, in absence of finding of any material during the course of search where assessment has already been framed u/s 143 (3) of the Act or return filed u/s 139 has already been processed u/s 143 (1) (a), addition can not be made in the assessment framed u/s 153 A of the Act, remained the contention of the Ld. A.R. Further contention of Ld. A.R remained that in the assessment year 2001-02 no material was seized from the premises of assessee during the course of search and assessment was already framed u/s 143 (3) of the Act before the 11 ITA NOS.4873, 2510,3647,3312,510,3343,2833 search, in that assessment u/s 143(3) the AO had made addition of Rs. 60,00,000/- u/s 68 of the Act due to non-genuineness of the gifts. The Ld. CIT(A) upheld the same. The Tribunal had deleted the same. The revenue had preferred appeal against the said order of the Tribunal vide ITA No. 831/2010 and the Hon'ble High Court vide its judgment dated 16/7/2010 has approved the order of the Tribunal. The Hon'ble High Court noted that the gifts were made by way of registered gift deeds as well as payments were made by way of account payee cheques and both the donors are income tax assesses, it cannot be said that the gifts are not genuine. Consequently after search in the assessment framed u/s 153A, the AO made addition at Rs. 6503130/- including Rs. 60,00,000/- made u/s 68 on account of bogus gifts which was made in the original assessment framed u/s 143(3) of the Act. Besides the above addition an addition of Rs. 22.80 lakhs was also made on account of unexplained credit entry appearing in the books of the proprietory concern of the assessee. The Ld. CIT(A) deleted these additions, which has been approved by the Tribunal. The Tribunal in absence of any material found during the course of search or statement pertaining to the undisclosed income has deleted the addition made on account of non-genuineness of the gift as undisclosed income. Against this order of the Tribunal the revenue did not prefer appeal before the Hon'ble High Court. We thus find that in the case of Anil Bhatia (Supra) decided by the Hon'ble High Court no any clear ratio has 12 ITA NOS.4873, 2510,3647,3312,510,3343,2833 been laid down by the Hon'ble High Court in absence of any material found during the course of search, no addition can be made u/s 153 A of the Act where assessment has already been framed u/s 143 (3) or returned filed u/s 139 of the Act has been processed u/s 143(1) (a) of the Act. The decision of the Hon'ble High Court in the case of assessee for asstt. year 2001-02 is against the assessment framed u/s 143(3) before the search, hence not helpful to the assessee. Having gone through the other decisions relied upon by the Ld. A.R. we find that in the case of Anil Kumar Bhatia & ors (Supra), the Tribunal held that in respect of an assessment u/s 153A, where processing of returns u/s 143(1)
(a) stood completed in respect of returns filed in due course before search and no material is found in search thereafter, no addition can be made. In appeal preferred by Revenue against this order of the Tribunal, the Hon'ble Delhi High Court was pleased to hold that where assessment order had already been passed in respect of all or any of those six assessment years, either u/s 143 (1) (a) or Section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings u/s 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. The appeal was however, allowed in favour of the Revenue because the Hon'ble High Court did not concur with the finding of the Tribunal on fact 13 ITA NOS.4873, 2510,3647,3312,510,3343,2833 that no material was found during the search, whereas the document embodying the transaction with 'M' was recovered from the assessee in search but the same was ignored by the Tribunal on the plea that the document was not signed by 'M'. the Hon'ble High Court was pleased to hold that mere fact that the undertaking was not signed by 'M' did not absolve the assessee from the duty of satisfactorily explaining the possession of the documents. The amount was stated therein to have been advanced in cash. Thus an inference can be drawn from these decisions of the Tribunal and the Hon'ble High Court that there is no scope of debate on the ratio that taking note of undisclosed income, if any, unearthed during the search and even if assessment order had already been passed in respect of all on any of those six assessment years, either u/s 143(1) (a) or Section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings u/s 153 A without any fetters and reassess total income. The Ld. AR in the present case before us intends to take support of this ratio. Though we agree with the contention of Ld. DR that the Hon'ble High Court as it is evident from the contents of para no. 23 (P. 468, 211 Taxman 453) has not expressed its opinion on the issue as to whether Section 153 A can be invoked even where no incriminating material was found during the search conducted u/s 132 but at least we find that there is 14 ITA NOS.4873, 2510,3647,3312,510,3343,2833 no dispute that provisions u/s 153A can be invoked only taking note of undisclosed income, if any, unearthed during search. We find that the issue as to whether in a case where no incriminating material was found A.O had no jurisdiction to make addition in assessment or reassessment u/s 153A, has been dealt with and adjudicated upon by the Special Bench of the Tribunal in the case of Alcargo Global Logistics Ltd. Vs. Dy. CIT (2012) 137 ITO 287 (Mum) (SB), which has been followed by the Bombay Bench of the Tribunal in the case of Gurinder Singh Bawa Vs. CIT (Supra) relied upon by the Ld. AR. The issue was referred to the Special Bench on which it has reached to the conclusion that in case where assessment has abated A.O retains original as well as Section 153 A jurisdiction and when no assessment has been abated, assessment u/s 153 A can be made only on the basis of incriminating material recovered during search. The Special Bench held in that case that Provisions of Section 153 A come into operation if a search or requisition is initiated after 31/5/2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further held that in case assessment has abated, the AO retains the original jurisdiction as well as jurisdiction u/s 153A for which assessment shall be made for each assessment year 15 ITA NOS.4873, 2510,3647,3312,510,3343,2833 separately. Thus in case where assessment has been abated the AO can make additions in the assessment, even if no incriminating material, has been found. But in other cases the Special Bench held that the assessment u/s 153 A can be made on the basis of incriminating material which in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property is found during the course of search. The question raised before the Special Bench was as to whether, the scope of assessment u/s 153A encompasses additions, not based on any incriminating material found during the course of search? (question No. 1). Vide para No. 58, reproduced below, it has been answered as :
"58. Thus, question No. 1 before us is answered as under :-
(a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately :
(b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means- (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search."
In the present case, the assessment had been completed under summary scheme u/s 143(1) and time limit for issue of notice u/s 143(2) had expired 16 ITA NOS.4873, 2510,3647,3312,510,3343,2833 on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement of assessment. Therefore, addition in the assessment u/s 153A could be made only on the basis of incriminating material found during search.
7. Following the decision of Special Bench in the case of Alcargo Global Logistic Ltd. (Supra) and ors, the Bombay Bench of the Tribunal in the case of Gurinder Singh Bawa (Supra) held that in search assessment pertaining to six immediately preceding assessment years which abet due to pendency, Assessing Officer can make additions even if no incriminating materials is found during search, but when all assessments are complete and no assessment has abated, Assessing Officer can make addition only on the basis of either incriminating material found during search or undisclosed income/property disclosed during search. In that case the addition made in the assessment framed u/s 153A was deleted as being made without jurisdiction since the said assessment u/s 153A was made on the basis of material available in return of income and there was no reference to any incriminating material found during the search and since no assessment was abated.
8. The Bombay Bench of the Tribunal in the case of ACIT vs. Pratibha Industries Ltd. (supra) has held that proceedings u/s 153A are linked to the 17 ITA NOS.4873, 2510,3647,3312,510,3343,2833 search having been initiated on the person, not with the documents found and seized. The documents so found and seized, may become useful to the AO for making an assessment of total income u/s 153A read with section 143(3), held the Tribunal. In other words as per this decision where search has been conducted issuance of notice u/s 153A for filing return is valid action but in such assessment no fresh addition than those made in the assessment attains finality, can be made in absence of material found and seized in search. This decision is thus supports the case of the assessee
9. The assessment year 2001-02 was the starting year out of the prescribed six preceding years from the related previous year in which search was conducted. In the A.Y 2001-02 however the addition made u/s 68 of the Act on account of bogus gifts in the assessment framed u/s was deleted by the Ld. CIT(A) which was approved by the Tribunal. Before that same addition u/s 68 of the Act due to same non-genuine gift was also made in the original assessment framed u/s 143(3) which was deleted by the Tribunal and the order of the Tribunal was approved by the Hon'ble High Court of Delhi. Thus the said decision of the Hon'ble High Court for this Asst. year is not helpful to the assessee on the issue.
10. On perusal of the assessment order for the year under consideration and others in question in the appeals before us, we find substance in the 18 ITA NOS.4873, 2510,3647,3312,510,3343,2833 contention of Ld. AR that no incriminating material found or statement recorded during the course of search was there to suggest even prima facie that some undisclosed income was there to attract the invocation of the provisions laid down u/s 153A of the Act for the addition as per the decision of Special Bench of the Tribunal on the issue in the case of Alcargo Global Logistics Ltd Vs DCIT (Supra). As discussed above the ratio laid down is that when no assessment has been abated , addition in the assessment u/s 153A can be made only on the basis of incriminating material recovered during search. Respectfully following this decision of the Special Bench of the Tribunal we hold that in the A.Y involved in the appeal since no assessment has been abated, addition made in the assessment u/s 153A, in absence of incriminating material recovered or statement recorded during the search, showing non-genuineness of gifts was beyond jurisdiction, hence addition so made at Rs. 20,00,000/- on account of non-genuineness of the gift which was not made in the original assessment u/s 143(3) of the Act, was rightly deleted by the Ld. CIT(A) without commenting on merits of it. The same is upheld. The ground is accordingly rejected.
11. In result appeal is dismissed.
ITA NOS. 4873/deL/2009, 2510, 3312, 510/Del/2010, 3343 & 2833/Del/2011. 19 ITA NOS.4873, 2510,3647,3312,510,3343,2833
12. Identical issue has been raised under all most similar set of facts in the A.Ys. 2004-05 and 2006-07 in the appeals of the assessee. In the appeals for the A.Ys. 2003-04, 2005-06 preferred by the assessee, the assessee/appellant has sought permission of the Bench to allow the issue questioning the validity of addition in the assessment framed u/s 153A in absence of incriminating material found or statement recorded during the search, raised by way of additional ground. In support of the application reliance has been placed don the decision of the Hon'ble Supreme Court in the case of N.T.P.C Ltd. Vs. CIT, 229 ITR 383 (SC). It was submitted by the Ld AR that the issue involved is legal in nature and adjudication of which does not require consideration of fresh material outside the record. He submitted further that the issues raised goes to the root of the matter questioning jurisdiction of the A.O. The Ld. DR opposed the same. We however, found substance in the submission of the Ld. AR that the issue involved in the additional ground is legal in nature, it goes to the root of the matter and adjudication of the same does not need consideration of fresh material outside the record, we accordingly allowed the same for our adjudication. The additional ground raised is as under:-
" That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in overlooking the basic fact that no document much less incriminating material was found during the course of search and the assessment as contemplated u/s 153A is not a de novo assessment 20 ITA NOS.4873, 2510,3647,3312,510,3343,2833 and as such the additions so made by Assessing Officer which are beyond seized materials are liable to be deleted in totality."
13. In the appeals for the A.Ys 2003-04, 2004-05, 2005-06 and 2006-07 preferred by the assessee, the additions made in these A. Ys in the assessment framed u/s 153 A have also been questioned on their merits. In the A.Y 2003-04 addition has been made u/s on account of non-genuineness of gift received at Rs.5,00,000/- each from Mr. Rahul Jain and Smt. Babita Jain by the minor son of the assessee. In A. Y 2004-05 addition 68 has again been made on account of non-genuineness of the gifts received of Rs.69,00,000/- from Shri Goverdhan Dass and addition at Rs. 7,00,000/- has been made on account of ad-hoc disallowance of expenses. In A. Y 2005-06 addition has been made at Rs. 17,64,000/- on account of education expenses of assessee's son. In A.Y 2006-07 in the appeal preferred by the revenue the action of Ld. CIT (A) has been questioned in directing the A.O. to treat the income of sale of shares as one from long term capital gain; to treat the chargeability of income of Rs.29,09,500/- at lower tax rate and in deleting the addition Rs. 3.39 crores made on account of unaccounted investment in the property. In the appeal preferred by the assessee for this year the action of the Ld. CIT(A) has been questioned whereby the Ld. CIT(A) has made disallowance of Rs. 1,00,000/- u/s 14A of the Act and has sustained addition of Rs. 17,64,000/- made on account of estimate basis for education expenses 21 ITA NOS.4873, 2510,3647,3312,510,3343,2833 of assessee's son. The revenue is also in appeal for the A.Y 2005-06 wherein they have questioned the action of Ld. CIT(A) whereby he has allowed exemption u/s10(38) amounting to Rs. 2,92,22,804/-. We however, find that fate of these appeals on the additions on its merits depends upon the outcome of the adjudication of the legal issue raised questioning the validity of addition/disallowance made by the A.O. in the assessment framed u/s 153A of the Act in absence of any incriminating material recovered or statement recorded during the course of search, where original assessments were not abated.
14. Similar argument as made in A.Y 2002-03 has been advanced by the parties on the validity of addition made in the assessment u/s 153A in these years. The Ld. AR asserted that in these years also there was no incriminating material recovered or statements recorded during the search suggesting the non-genuineness of the gifts or expenses claimed which was not remained the subject matter of the addition made in the original assessment which were not abated. He pointed out that except A.Y 2004-05 in all the A.Ys original assessment was framed u/s 143(3) of the Act, whereas in the A.Y 2004-05 return filed was processed u/s 143(1) and no notice u/s 143(2) was issued within the prescribed time limit hence it reached finality.
22 ITA NOS.4873, 2510,3647,3312,510,3343,2833
15. Since there is no change on this material fact that during all these assessment years no incriminating material was recovered or statement was recorded during the course of search suggesting non-genuineness of the claimed gifts or expenses etc. and no such addition/disallowance was made in the original assessment which remained unabated, we following the decision on the issue hereinabove in the appeal preferred by the revenue for A. A 2002-03, hold that such addition/disallowance cannot be made in the assessment framed u/s 153A of the Act in these A. Ys. in appeals. In result the issue is decided in favour of the assessee and against the revenue. In view of this finding the remaining grounds questioning the merits of additions/disallowances do not need adjudication as they have become infructuous and academic only . Consequently appeals preferred by the assessee for the A.Ys. 2003-04, 2004-05, 2005-06 and 2006-07 are allowed and appeals preferred by the revenue in the A.ys. 2002-03, 2005-06, 2006-07 are dismissed.
Order pronounced in open court on 28 /03/ 2013.
Sd/- sd/-
(J. S. REDDY) (I. C. SUDHIR)
Accountant Member Judicial Member
Dated the 28th day of March, 2013
*R. Naheed
Copy forwarded to
23 ITA NOS.4873, 2510,3647,3312,510,3343,2833
1. APPELLANT
2. RESPONDENT
3. CIT
4. CIT (A)
5. CIT(ITAT), New Delhi.
AR,ITAT
NEW DELHI.