IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : SMC-II : NEW DELHI
BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
ITA No.2514/Del/2015
Assessment Year : 2008-09
RG Consultants Pvt. Ltd., Vs. DCIT,
109, MCD Market, Circle-15(1),
Saraswati Marg, Karol Bagh, New Delhi.
Delhi.
PAN: AAACR3394M
(Appellant) (Respondent)
Assessee By : Shri Ved Jain, Advocate
Department By : Shri M.K. Jain, Sr. DR
Date of Hearing : 23.10.2015
Date of Pronouncement : 17 .11.2015
ORDER
This appeal filed by the assessee is directed against the order of the
CIT(A)-7, Delhi, dated 03.02.2015 for assessment year 2008-09.
2. After hearing the rival contentions and perusing the material on
record, I hold as follows. This is an order passed u/s 143(3) read with
section 153A of the Act in view of the requirements u/s 132A of the IT
ITA No.2514/Del/2015
Act, 1961. From para 5 of the assessment order, it is clear that the
additions in this case are not based on any material found or seized during
the course of search. The additions were made based on the perusal of the
financial statements. It is not the case of the Revenue that the
assessments in this case have abated. Under these circumstances, we,
apply the propositions laid down by the jurisdictional High Court in the
case of CIT, Central-III vs. Kabul Chawla in ITA No.707/2014 vide
judgment dated 20th April, 2015, wherein at paras 37 and 38 it has been
held as follows:-
"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 153 A (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 will exercise normal assessment powers in respect of the
six years previous to the relevant AY in which the search takes place.
The AO 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
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respect of each of the six AYs "in which both the disclosed and the
undisclosed income would be brought to tax".
iv. Although Section 153 A 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
AO 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 seized material."
v. In 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 153 A is relatable to abated
proceedings (i.e. those pending on the date of search) and the word
'reassess' to completed assessment proceedings.
vi. Insofar as pending assessments are concerned, the jurisdiction to
make the original assessment and the assessment under Section
153A merges into one. Only one assessment shall be made separately
for each AY on the basis of the findings of the search and any other
material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while
making the assessment under Section 153 A 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.
Conclusion
38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-
07.On the date of the search the said assessments already stood
completed. Since no incriminating material was unearthed during the
search, no additions could have been made to the income already
assessed."
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3. Respectfully following the judgement of the Hon'ble jurisdictional
High Court in the case of Kabul Chawla (supra), we uphold the decision
of the ld.CIT(A) and delete the additions.
4. In the result, the appeal of the assessee is allowed.
The order pronounced in the open court on 17.11.2015.
Sd/-
[J.SUDHAKAR REDDY]
ACCOUNTANT MEMBER
Dated, 17th November, 2015.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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