Kamal Deo Sharma and Ors Vs DCIT Central Circle1 aAN20190212191651055COM475988

MANU/AN/0029/2019
IN THE ITAT, RANCHI BENCH, RANCHI

IT(SS)A Nos. 34 to 40, 27 to 33, 62 and 63/RAN/2019
Assessment Year: 2009-2010;2010-2011;2011-2012;2012-2013;2013-2014;2014-
2015;2015-2016
Decided On: 18.11.2019
Appellants: Kamal Deo Sharma and Ors.
Vs.
Respondent: DCIT, Central Circle-1 and Ors.
Hon'ble Judges/Coram:
C.M. Garg, Member (J) and L.P. Sahu, Member (A)
Counsels:
For Appellant/Petitioner/Plaintiff: Devesh Poddar, Advocate
For Respondents/Defendant: Inderjeet Singh, CIT(DR)
ORDER
1. These are the appeals filed by two different assessees namely, Shri Kamal Deo
Sharma (husband) and Smt. Tripta Sharma(wife), as well as revenue against the
order of Commissioner of Income Tax (Appeals), Patna, all dated 26.12.2018 for the
assessment years 2009-2010 to 2015-2016.
2. Since the issue involved in all these appeals in the case of both the assessees are
identical in nature, therefore, all the appeals were heard together and disposed off by
this consolidated order.
IT(SS)A Nos. 34 to 40/Ran/2019 (AY: 2009-2010 to 2015-2016)(Assessee-Shri
Kamal Deo Sharma)
3 . First we shall take up appeals of the assessee (for the assessment years 2009-
2010 to 2012-2013 i.e. IT(SS)A Nos. 34 to 37/Ran/2019. For the sake of brevity and
convenience, we shall take into consideration the facts and grounds mentioned in
IT(SS)A No. 34/Ran/2019 (AY: 2009-2010) for deciding the above appeals and
decision of which will apply mutatis mutandis to the other appeals also. Grounds of
appeal raised by the assessee (Shri Kamal Deo Sharma) for A.Y. 2009-2010 in
IT(SS)A No. 34/Ran/2019:-
1 . For that search operation was only carried out at Transit Office of the
appellant in Orissa whereas the appellant resides in Una, Himachal Pradesh
since last 15 years. No document or paper relating to appellant was found, as
such, no search took place. Initiation of proceedings u/s. 153A, therefore, is
ab-initio void and illegal.
2. For that no notice u/s. 143(2) was received by the appellant at his place
of residence or registered office or at the place of search. As such, the order
of assessment passed is ab-initio void and illegal since no notice u/s. 143(2)
was served.
3 . For that the appellant has been regularly assessed to tax u/s. 143(1) or
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143(3). During the course of search no document whatsoever was found
relating to the appellant, as such, Ld. A.O. had no authority to disturb the
income originally assessed. The addition made by Ld. A.O. making an
assessment u/s. 153A is ab-initio void and illegal. Additions were made of
the various amounts mentioned in the audited Profit and Loss A/c and
Balance Sheet which stands accepted in the regular assessment, as such, in
light of the various decisions and judicious pronouncements additions made
is fit to be deleted.
4. For that Ld. CIT(A) was not justified in confirming the addition made u/s.
68 of Rs. 59,25,209/- being the alleged sundry creditors. The amount of
sundry creditors include opening balance, expenses payable or transaction in
regular course of business. Complete detail of the same was filed before the
lower authorities. There is no basis to observe sundry creditors as cash credit
for addition to be made u/s. 68. No such additions have been made in the
subsequent years. Moreover there was no incriminating material seized to
suggest for the said addition. As such, the addition made is fit to be deleted.
5 . For that Ld. CIT(A) was not justified in confirming the addition of Rs.
7,61,05,543/- made u/s. 2(22)(e) against the credit balance of M/s. Rajat
Minerals and M/s. KDS Contractors Pvt. Ltd. The said amount includes
opening balance, salary, TDS and transaction in regular course of business,
as such, no addition is called for u/s. 2(22)(e). The amount stands disclosed
in books of account which were accepted in regular course of assessment, as
such, the addition made in course of assessment u/s. 153A is illegal and fit
to be deleted.
6 . For that Ld. CIT(A) was not justified in sustaining the addition of Rs.
27,85,952/- being the alleged difference in turnover as per 26AS and audited
accounts. Complete reconciliation for the same was furnished before lower
authorities. It was mentioned that the amount in 26AS includes interest
received, and other payments includes customs and other statutory duties
which have been separately accounted for in our books. As such, there is
absolutely no difference in the turnover figure. Moreover there was no
incriminating material found or seized during search to suggest for any such
addition. As such, the addition made is fit to be deleted.
52,000/- being made as deemed rental income. There was no vacant
residential property for which deemed income from rent can be estimated.
Complete detail of the properties held by the appellant was furnished before
the lower authorities. As such, the addition made in absence of any
incriminating material is fit to be deleted.
8 . For that ld. CIT(A) was not justified in confirming the addition of Rs.
98,88,221/- made by Ld. AO by disallowing expenses. 50% of the expenses
claimed under breaking, sizing, picking, shorting & stacking expenses were
disallowed on the ground that bills and vouchers were not produced. Further
general expenses and salary to staff claimed in full was disallowed being said
as bogus. Disallowance of expenses is arbitrary, illegal and uncalled for.
Appellant had disclosed reasonable profit. As such, no disallowance of
expenses is called for. There was no incriminating material found during the
course of search operation to suggest the same. As such, the ad-hoc
disallowance made by Ld. AO and confirmed by Ld. CIT(A) is fit to be
deleted.

9 . For that following the decision of Hon'ble Jharkhand High Court the
interest u/s. 234A and 234B should only be charged on the returned income
and not on the assessed income.
1 0 . For that any other grounds in detail shall be argued at the time of
hearing.
4. Brief facts of the case are that a search and seizure operation u/s. 132(1) of the
Act was conducted on 03.07.2014 at the residential and business premises of Padam
Kumar Jain and Core Mineral group of cases at Ranchi, Chaibasa, Barbil, Chennai,
etc. Padam Kumar Jain Group is mainly controlled and managed by Sri Padam Kumar
Jain and his two son's viz. Sri Anand Jain and Sri Rohit Jain. The Group is engaged in
the business of Iron Ore Mining at Barbil, Orissa. Simultaneously, search was also
conducted on the assessee Shri Kamal Deo Sharma, who is engaged in the business
of raising and Transport contractor operating from Barbil, Orissa and having business
transactions with Shri Padam Kumar Jain and Core Minerals Group and Smt. Tripta
sharma was also covered under the search. During the course of search various
documents were found and seized as per panchanama drawn by the search team,
which is placed on record. After centralization of the group cases, the AO issued
notice(s) u/s. 153A of the Act for A.Y. 2009-10 to 2014-15 and notice u/s. 142(1) for
A.Y. 2015-16 requiring the assessee to file the return. The assessee complied with
the above notices by filing the return of income. During the course of assessment
proceeding, the AO was in receipt of assessee specific Tax Evasion Petition (TEP) on
dated 21.11.2016 detailing complete modus operandi of tax evasion, details of
suppression of income and inflation of expenses including the violations of specific
provisions like Sec. 2(22)(e) of the Act etc. alongwith financial statements.
Accordingly, the AO after confronting the assessee with the contents on TEP, passed
order(s) u/s. 153A of the Act for the respective assessment years under consideration
making additions as under.
5 . Aggrieved from the assessment order, the assessee appealed before the CIT(A),
however, the CIT(A) after considering the findings of AO and submissions of the
assessee, dismissed the appeals of the assessee for the respective years under
consideration.
6. Aggrieved from the order of CIT(A), the assessee is in further appeals before the
Income Tax Appellate Tribunal.
7 . Ld. AR before us submitted that during the search proceeding a panchnama was
drawn, copy of which is annexed in paper book-1 at Page No. 108 to 113. It is seen
vide the said panchnama that at page 112 certain inventories/bank account details of
the assessee and his group was recorded and in page 113 certain documents/books
of account such as purchase bills, sales bills, and raising bills of this group was
seized. Vide the said panchnama in page 110 of the paper book-1 it is said during the
course of search, statement of Sri Sanjay Pati was recorded who looks after the entire
work of the assessee and his group. Ld. AR further as a matter of fact, contended that

during the course of assessment proceedings or remand proceeding or in the order of
CIT(A) there is no whisper of the statement recorded of the said accountant or the
seized documents as mentioned in page 113 of the paper book 1. Further, ld. AR
submitted that the assessee stated before the AO that assessment for A.Y. 2009-10,
2010-11, 2011-12 and 2012-13 are completed/unabated assessment and the same
should not have disturbed in absence of any incriminating material found or seized
during the course of search. In this regard, ld. AR placed reliance on the decision of
Hon'ble Delhi High Court in case of Kabul Chawla and also decision of Hon'ble Apex
Court in case of CIT Vs. Meeta Gutgutia wherein the SLP of the revenue stands
dismissed on same footings and submitted that the AO has not consider the above
judicial precedence and made the assessment. With respect to other years under
consideration, ld. AR submitted that a detailed questionnaire was issued to the
assessee on 21/11/2016 which was based upon a TEP dated the same day i.e.
21/11/2016 asking us to make compliance on 28/11/2016. When the assessee made
compliance on 29/11/2016, it was informed that the AO has already passed the
assessment order on 28/11/2016 itself. Ld. AR further submitted that on one hand,
the AO is fixing the date compliance on 28/11/2016 and on the other hand, the order
has already been passed on the said date. Apart from this, ld. AR of the assessee has
filed written submissions as under:-
While framing the assessment for the year under consideration Ld. AO made
the following addition which is disputed:
1. Sundry Creditors Rs. 59,25,209/-: This amount of sundry creditor
was taken from our balance sheet as on 31/03/2009. It was
contended before Ld. CIT(A) that on this amount of sundry creditors,
there is only a fresh sundry creditor of Rs. 1 lakh for the relevant
year and the balance Rs. 58.25 lakh is the opening balance which
has been carried forward from the previous year, as such, no
addition shall be made. The submissions of the assessee was noted
by Ld. CIT(A) in Page No. 56 of his order. However, Ld. CIT(A) failed
to appreciate the same and give any relief. In any view of the case, it
was also contended before the lower authorities that there is
absolutely nothing found or seized during the course of search
against the assessee which would suggest the said addition. During
the course of assessment there is absolutely no reference to any
seized document which would suggest the same. However, in the
course of remand proceeding, Ld. AO has made a reference to some
seized document from third person which is marked as CMB-24 and
CMB-1 wherein it is stated that the assessee had some transactions
with Core Minerals. Even in the course of remand proceeding Ld. AO
has failed to correlate a single entry from the seized document which
could suggest the addition made in the hands of the sundry
creditors. It would be pertinent to mention that no opportunity was
allowed to the assessee during the course of remand proceedings,
rather remand report was prepared at the back of the assessee. It
was only when Ld. CIT(A) forwarded the copy of the assessee for
counter comments that we made our submissions. We would like to
mention that the said seized documents has only been referred for a
simple reason that the name of the assessee appeared on the same.
As mentioned above there was absolutely no reference to any seized
document during the course of assessment and even in the course of
remand proceeding Ld. AO in particular has failed to correlate the
seized document with the addition made. As such, we would like to
submit that the addition made is fit to be deleted.

2 . Addition u/s. 2(22)(e): Ld. AO while completing the assessment
made addition of Rs. 7,61,05,543/- being deemed dividend for the
credit amount appearing in name of the assessee in two companies
namely M/s. Raj at Minerals Pvt. Ltd. Rs. 2,78,00,000/- and M/s.
KDS Contractors Rs. 6,78,57,240/-. This figure was taken completely
from the audited books as stated by ld. AO in the questionnaire
issued on 21/11/2016 copy of which is annexed in Paper Book 2
year wise. There was absolutely no seized material found during the
course of search or there is no reference to any seized material
found in the course of remand proceeding which could suggest that
said addition. As such, relying upon the various judicial
pronouncements we beg to submit that the addition made is
unjustified, illegal and fit to be deleted. In any view of the case, we
would like to mention that the credit amount includes transactions
such as, salary, rent, TDS on Sale and certain genuine business
loans which in no view can be considered for making addition u/s.
2(22)(e) which was not looked into by the Ld. AO judiciously.
Further Ld. AO fail to correlate the additions being made with the
reserves and surplus of the companies, details of which is annexed
herewith in page 43 of paper book-2 as such, the addition being
made is in heist and fit to be deleted.
3 . Mismatch in turnover Rs. 61.40.077/- Ld. AO while making the
assessment made addition of Rs. 61,40,077/- stating the same to be
mismatch in turnover as per the total receipts in form 26 AS and as
disclosed by the assessee in his profit and loss account. In appeal
Ld. CIT(A) considering the remand report filed by the Ld. AO
sustained the addition of Rs. 27,85,952/- and deleted the balance
amount as mentioned in page 118 of the appellant order. With
respect to the amount confirmed of Rs. 21,85,952/- we firstly, beg
to submit that the addition is not being made on basis of any seized
documents found in course of search or any reference being made
thereby in the course of remand proceeding. Further, there is actual
no difference in the books of the assessee. The difference if any
between form 26AS and the profit and loss account is because in
form 26AS a consolidated amount is taken which included salary,
interest income, contract income wherein excise duty, customs etc is
also include, whereas in the profit and loss account, all these heads
are booked separately and the turnover amount only includes the net
turnover. As such, the difference if any should have been reconciled.
In any view of the case as stated above, the addition being made is
completely unjustified, illegal and fit to be deleted, since, not being
made on basis of any seized material.
4 . Rental income Rs. 52,500/-: Ld. AO made addition of Rs.
52,500/- being deemed rental income. During the course of
assessment proceeding Ld. AO failed to even specifically mention for
which property said addition has been made. However, in the course
of remand proceeding Ld. AO states that the addition is being made
for the house property in Joda, Orissa stating that the assessee failed
to establish that the said property was used as transit office. We
would like to mention that the search upon the assessee was only
conducted on the said premises which can be clearly seen from the
copy of panchnama which is annexed in paper book No. 1 at page
No. 108 onwards. This itself is sufficient to show an establishment

that the said property was used as transit office by the assessee and
his group for controlling the business. In any view of the case the
addition made by Ld. AO is not based upon any seized material
found during the course of search proceeding.
5 . Disallowance of expenses: Rs. 98,88,221/-: :Ld. AO while
completing the assessment made addition of Rs. 98,88,221/- by
making a disallowance of 100 % of the expenses claimed under the
head of salary and general expenses and 50% of the expenses
claimed under the head of picking expenses, breaking and sizing
expenses and shorting and staking expenses. In the order of
assessment Ld. AO while making the addition has only refer to the
alleged tax evasion petition TEP. Further, in course of remand
proceeding Ld. AO has referred to some seized document marked as
UKD-1. We fail to understand the basis of this seized document and
its reference with the assessee. As a matter of fact, we would like to
mention that the word TEP or the alleged seized documents marked
UKD-1 (not being seized from the possession of assessee) has been
used vaguely by the authorities below for a simple reason that the
name of the assessee might have appeared and to correlate the same
for the addition. However, as a matter of fact, no nexus could have
been framed and drawn by the authorities below which can suggest
the said addition on basis of those document. There is absolutely
nothing brought on record by the authorities below which clearly
states that the salary expenses or general expenses claimed by
assessee was 100 % bogus or that the expenses claimed under the
head as stated above are bogus to the extent of 50 %. Moreover Ld.
AO did not give us any opportunity during the course of remand
proceedings to counter his queries and submissions made thereby.
As such, the addition being made by Ld. AO is unjustified, illegal and
fit to be deleted. In any view of the case, we would like to mention
that there is absolutely no incriminating material on record which
would specifically lead to the said addition. As such, the addition
made by the Ld. AO is fit to be deleted.
8 . In addition to this, ld. AR submitted that the addition made by the AO are not
sustainable both on facts and on law as no incriminating material were found during
the course of search and the AO has made addition only on the basis of tax evasion
petition filed by somebody else which does not relate to any incriminating material.
He aso invited our attention the tax evasion petition and which has been referred by
the AO. He also submitted that the remand report was called from the AO and the AO
has referred some documents which has been mentioned in the remand report. The
CIT(A) has also not enhanced the income of the assessee considering any
incriminating material found and referred by the AO in the assessment order. Ld. AR
also submitted that these all exercise must be done by the AO while framing the
assessment order. Accordingly, Ld. AR of the assessee submitted that the additions
made by the AO on various heads and confirmed by the CIT(A) may kindly be deleted
and appeals of the assessee may kindly be allowed.
9. On the other hand, ld. DR relied on the orders of authorities below and submitted
that with regard to ground No. 1 this forum has no right to hear the case. In respect
of ground No. 2, ld. DR submitted that the ld. CIT(A) has rightly discussed this issue
and the order of CIT(A) should not be disturbed as this issue has not been objected
by the assessee before the Assessing Officer. With regard to ground No. 3, ld. DR
submitted that the proceedings u/s. 132 is sufficient for reopening for the last six

years of the case. In the Tax Evasion Petition there was sufficient information that the
assessee is not disclosing his true income. During the statement recorded the
accountant has accepted that the assessee is not disclosing his true income. Ld.
CIT(A) has sought remand report from the AO wherein the AO has referred to the
incriminating material and considering the same and relying on various case laws,
has rightly dismissed the appeal of the assessee. He further submitted that the
Assessing Officer had issued notices to the assessee. in spite of he did not appear
before the AO. The panchnama has been drawn by the search team in which the
incriminating documents have been mentioned and which have been incorporated in
the remand report sought by the CIT(A).
10. We have heard the rival submissions of both the parties and perused the material
available on record along with the orders of authorities below. In ground No. 1, the
assessee has challenged the validity of search. The CIT(A) while dealing with the
issue has observed as under:-
4.1 Appellate finding and decision:
At the outset the appellant has not raised this issue before the AO so as to
enable the AO to bring on record all necessary facts. Therefore the
contention of the appellant is not acceptable at the appellate stage. However,
a remand report u/s. 250(4) of the Act was called from the AO, and the AO
vide his letter in F. No. ACIT/CC-1/RR/250(4)/233 dated 19.07.2018 has
confirmed that in pursuance of Warrant of Authorisation issued by DIT (Inv.),
Patna and Addl. DIT (Inv.), Ranchi a search and seizure operation u/s.
132(1) of the Act was conducted on 03.07.2014 at the business premises of
the appellant assessee situated at Joda, Banaikela, Barbil, Orissa. Hence the
contention of the appellant that no search took place is hereby rejected.
From the above observations of the CIT(A), we find that in pursuance of warrant of
authorization issued by DIT(Inv.), Patna and Addl. DIT(Inv.), Ranchi, a search and
seizure operation was carried out on 03.07.2014 at the business premises of the
appellant-assessee situated at Joda, Banaikela, Barbil, Orissa. Accordingly, the
CIT(A) rejected the plea of the assessee that no search was carried out in the case of
the assessee. In our opinion, this issue must have been raised by the assessee before
the constitutional bench. In the present case, we also noted that this issue has not
been raised before the AO. However, when raised before the CIT(A), the CIT(A) on
receiving remand report from the AO confirmed that the search was duly conducted in
the premises of the assessee. So far as our considered opinion, the Tribunal has no
power to hear the validity of search. In the totality of facts and circumstances of the
case, we decline to accept the ground No. 1 taken by the assessee regarding validity
of search proceedings. Therefore, this ground of appeal is dismissed.
11. With regard to ground No. 2, the assessee has contested that the assessee has
not received notice u/s. 143(2) of the Act at his registered office or place of search.
The CIT(A) while dealing with the issue has dismissed the ground of assessee after
observing as under:-
5.1 Appellate finding and decision:
The appellant through the above ground contended that he has not received
Statutory notice u/s. 143(2) either at his registered office or place of search
and therefore the AO has no jurisdiction to pass order u/s. 153A/143(3) of
the Act. However, it is evident from assessment order vide para 4, the AO
categorically stated that a "Statutory notice u/s. 143(2) of the Act was issued
on 02/11/2016 fixing the date of compliance on 11/11/2016". Further, in

response to the said notice of hearing Shri Deepak Banga, CA and AR of the
appellant attended before the AO. Therefore the contention of the appellant
that no proper notice u/s. 143(2) was issued and served on the appellant is
totally misplaced. In this context reliance is placed on the latest decision of
Hon'ble Supreme Court in the case of ITO, Etawah Vs. Dharam Narain
reported in MANU/SC/0301/2018 : [2018] 90 taxmann.com 325 (SC). In the
decision the Hon'ble Apex Court held that "Due to non-availability of
assessee to receive scrutiny notice sent by registered post as many as on two
occasions and service of notice on authorized representative of assessee
whom assessee now disown, is sufficient to draw an inference of deemed
service of notice on assessee and sufficient compliance of requirement of
section 143(2)".
5.2 Further, Hon'ble Delhi High Court in the case of Ashok Chaddha Vs. ITO
reported in MANU/DE/2814/2011 : [2012] 337 ITR 399 has gone to the
extent of saying that no notice u/s. 143(2) is required in the case of
assessments made u/s. 153A of the Act. The relevant portion of the decision
is stated hereunder:
There is no specific provision in the Act requiring the assessment made
under section 153A to be after issue of notice under section 143(2). The
words "so far as may be" in clause {a) of sub-section (1) of section 153A
cannot be interpreted that the issue of notice under section 143(2) is
mandatory in case of assessment under section 153A. The use of the words
'so far as may be' cannot be stretched to the extent of mandatory issue of
notice under section 143(2). A specific notice is required to be issued under
clause (a) of sub-section (1) of section 153A calling upon the persons
searched or requisitioned to file return. That being so, no further notice
under section 143(2) can be contemplated for assessment under section
153A.
5.3 Further the contention of the appellant with regard to non service of
notice u/s. 143(2) is also not tenable in view of Section 292BB of the Act
which reads as under:--
"292BB. Notice deemed to be valid in, certain circumstances.--
Where an assessee has appeared in any proceeding or cooperated in
any inquiry relating to an assessment or reassessment, it shall be
deemed that any notice under any provision of this Act, which is
required to be served upon him, has been duly served upon him in
time in accordance with the provisions of this Act and such assessee
shall be precluded from taking any objection in any proceeding or
inquiry under this Act that the notice was-
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply
where the assessee has raised such objection before the
completion of su assessment or reassessment."
5.4 In the instant case of the appellant, the AR of the appellant Sri Deepak
CA appeared from time to time and cooperated in the assessment

proceedings. No objection as to issue and service of notice u/s. 143(2) was
ted(sic) before the AO till the completion of assessment. Therefore the
appellant can't raise the validity of issue of notice u/s. 143(2) during
appellate proceeding. Hence the contention of the appellant is rejected even
on this count also. In this regard reliance is placed on the decision of the
Hon'ble Punjab & Haryana High Court in the case of Josh Builders &
Developers (P.) Ltd. Vs. PCIT-1, Chandigarh reported in
MANU/PH/1785/2016 : [2017] 79 taxmann.com 435 wherein it was held that
the Assessee, having not raised any objection with regard to issuance and
service of a valid notice during assessment proceedings and rather, without
any objection, having voluntarily taken part in such proceedings, could not
seek annulment of assessment proceedings on ground of non-service of
notice. The brief facts of the case and the decision of the Hon'ble High Court
are submitted as under:
FACTS
The assessee challenged the assessment before the Commissioner
(Appeals) on ground that no valid notice under section 143(2) was
issued and served on the assessee preceding such assessment. The
Commissioner (Appeals) allowed the assessee's appeal and ordered
the annulment of the assessment. The Tribunal relying upon section
292BB reversed order of the Commissioner (Appeals) holding the
notice issued under section 143(2) to be valid.
HELD
that the notice was declared by the Tribunal to be a valid notice by
recording findings essentially based on facts produced before it,
which included speed post entries, copies of the dispatch register of
the department and the actual notice issued under section 143(2).
The assessee, having not raised any objection with regard to
issuance and service of a valid notice during the assessment
proceedings and rather, without any objection, having voluntarily
taken part in such proceedings were facts, which were also
considered and held against the assessee. The conclusion arrived at
by the Tribunal being a possible view could not be termed as
perverse and could not be interfered with.
5.5 Further reliance is placed on the decision of the Hon'ble Madras High
Court in the case of Sumitra Menon Vs. ACIT reported in
MANU/TN/1345/2009 : [2009] 315 ITR 111 (Madras) wherein it was held
that though assessee alleged that there was no proper service of notice,
assessee was represented by an auditor who filed return, as alleged
irregularity was practically waived by assessee she could not make any
grievance of it. The brief facts of the case and the decision of the Hon'ble
High Court are submitted as under:
FACTS
According to the assessee, without serving a proper notice on the
assessee and above all by effecting service on a total stranger, the
Assessing Officer had passed the impugned order of assessment and
that the said order was set aside by the Commissioner (Appeals) for
the said irregularity in the service of notice to the assessee and the
Tribunal ought not to have interfered with the order of the

Commissioner (Appeals).
HELD
that the alleged irregularity in the service of notice as pointed out by
the assessee virtually faded into insignificance inasmuch as the
assessee was represented by her own auditor, who filed the return
on behalf of the assessee.
That apart, neither in the course of the hearing before the Assessing
Officer or before the Commissioner (Appeals), the assessee raised
any grievance as regards the appearance made by the auditor on her
behalf, on the footing that there was no proper service of notice in
relation to the assessment proceedings initiated originally by the
assessing authority, viz., the Joint Commissioner. Thus, it was
rightly held by the Tribunal, that the alleged irregularity was
practically waived by the assessee which could not be found fault
with inasmuch as, at no point of time till the final order was passed
by the Commissioner (Appeals), the assessee made any grievance as
regards the representation and appearance made by one S in his
capacity as auditor, who admittedly filed the returns. Therefore, the
ultimate relief granted by the Tribunal in directing the Commissioner
(Appeals) to decide the appeal de novo in accordance with law after
providing adequate opportunity to the assessee, was perfectly in
order.
5.6 Further, the Hon'ble Delhi High Court in the case of CIT Vs. Vision Inc.
reported in MANU/DE/2195/2012 : [2012] 21 taxmann.com 515 (Delhi) held
that, where in absence of partners of assessee-firm, notice under section
143(2) was served on employee of firm at official address and, pursuant to
said notice, assessee also participated in assessment proceedings, it
amounted to valid service of notice. The brief facts of the case and the
decision of the Hon'ble High Court are submitted as under:
FACTS
For the relevant assessment year, assessee-firm filed its return
declaring certain income. The assessment was completed under
section 143(3), read with section 144 making certain additions. On
appeal, the assessee raised an objection that in the absence of
proper service of notice under section 143(2), the assessment order
deserved to be set aside. The revenue's explanation in this regard
was that a notice was sent to assessee's address on 30-12-2004. It
was further stated that since both the partners of assessee-firm had
gone out of station, the notice under section 143(2) was served
upon person present at the address on 31-12-2004. The
Commissioner (Appeals) having accepted revenue's explanation,
upheld the validity of the assessment order. On further appeal, the
assessee contended that even if it was assumed that an employee of
the firm had received the notice, that could not amount to proper
service since no employee had been authorized to receive the notice
and factually also, no notice had been handed over by any employee
to any of the partners of the assessee-firm. It was thus contended
that in the absence of a valid service of notice under section 143(2)
on the assessee, the assessment order was invalid, null and void.

The Tribunal accepted the assessee's contention taking a view that
service of notice on the employee of the assessee did not amount to
valid service. The Tribunal also referred to the provisions of section
292BB and held that those provisions were not applicable to the
assessment year 2003-04 since they were inserted with effect from
1-4-2008 and were accordingly applicable only from the assessment
year 2008-09. In this view of section 292BB, the Tribunal held that
despite the fact that the assessee participated in the assessment
proceedings, it could still object to the validity of the assessment
order. Accordingly, the Tribunal set aside the impugned assessment
order.
On revenue's appeal
HELD
The only question that arises for consideration is whether the notice
issued on 30-12-2004 under section 143(2) was validly served upon
the assessee-firm on 31-12-2004 as claimed by the Assessing
Officer. One proceeds on the assumption that the notice was not
served on either of the two partners of the assessee-firm and that it
was served on some person who was not specifically authorized to
receive notice. Even so, one is not persuaded to hold that there was
no valid service of the notice upon the assessee-firm. It should be
remembered that the basic purpose of issuing a notice under section
143(2) is to give an opportunity to the assessee, who has submitted
his return, to support the same by adducing the necessary evidence,
documents, etc. Clause (ii) of section 143(2) in terms says that if the
Assessing Officer considers it necessary or expedient to ensure that
the assessee has not understated the income or has not computed
excessive loss or has not underpaid the tax in any manner, he may
serve on the assessee a notice requiring him, on a date to be
specified therein, either to attend his office or to produce, or cause
to be produced, any evidence on which the assessee may rely in
support of the return. The proviso as it existed at the relevant time
says that no notice shall be served on the assessee after the expiry
of 12 months from the end of the month in which the return was
submitted. There is in the present case undoubtedly no direct
evidence of the service of the notice upon any of the partners.
However, there can be no dispute and in fact it was not disputed by
the assessee, that the notice had been served on a person who was
not authorized to receive the same on behalf of the assessee-firm. In
the remand report dated 11-1-2007, the Assessing Officer has stated
that the notice issued on 30-12-2004 had fixed the hearing of the
case on 5-1-2005. This fact has been noticed by the Commissioner
(Appeals) in his order. One would be closing one's eyes to the
realities if one holds that the participation of the assessee in the
proceedings fixed on 5-1-2005 cannot be attributed to the service of
the notice on 31-12-2004, albeit upon a person who is not
authorized to receive the same. The assessee protested that the
participation or attendance in the proceedings before the Assessing
Officer on 5-1-2005 was not pursuant to the notice issued on 30-12-
2004. That is an argument that is far-fetched to merit acceptance. It
cannot be sheer coincidence that the notice is served on 31-12-2004
upon some person available at the proper address and the person for

whom the notice is meant participates in the proceedings on 5-1-
2005 which is the date fixed by the said notice. It is difficult to
visualize how else could the assessee have come to know that his
case is posted before the Assessing Officer on 5-1-2005, except from
the notice. [Para 11].
Several contentions were raised on behalf of the assessee. It was
argued, almost as an afterthought, that there is no evidence to show
that the case was fixed for hearing on 5-1-2005 or that any one
appeared on that date before the Assessing Officer on behalf of the
assessee. This argument is an afterthought because the initial
argument was that the appearance made on behalf of the assessee
on 5-1-2005 was not pursuant to the notice issued on 30-12-2004.
Perhaps realizing the difficulty that this argument is likely to cause to
the assessee, the argument was modified later to the effect that
there was no evidence to show that the case was fixed for hearing on
5-1-2005 or that any one appeared before the Assessing Officer on
that date on behalf of assessee. The Commissioner (Appeals) has
noted in his order that in the remand report the Assessing Officer
has stated that in the notice dated 30-12-2004, the case was fixed
for hearing on 5-1-2005. This statement constitutes sufficient
evidence to refute the contention advanced on behalf of the
assessee. As regards the other part of the contention that there was
no evidence of any one appearing before the Assessing Officer on
behalf of the assessee on 5-1-2005, one may refer to the grounds
taken by the revenue in the appeal.
In one ground it has been asserted that pursuant to the notice issued
on 30-12-2004 the counsel for the assessee appeared before the
Assessing Officer on 5-1-2005 and filed his power of attorney. A true
copy of the power of attorney has been filed along with the grounds
of appeal. The grounds of appeal have been served upon the
assessee and there was sufficient time for the assessee to have
inspected the assessment record in case it wanted to dispute the
assertion made in the ground of appeal. This was not done and
therefore the assertion made in the ground of appeal remains
uncontroverted. It follows that it will be fair and reasonable to infer
that the appearance of the assessee's representative before the
Assessing Officer on 5-1-2005 was only in pursuance of the notice
issued on 30-12-2004 under section 143(2). [Para 12]
The other argument advanced on behalf of the assessee was that
since the partners of the assessee-firm were out of town on 31-12-
2004, it was incumbent upon the Assessing Officer to serve the
notice by affixture instead of serving the same on the person
available at the address. It is well settled that service by affixture
can only be resorted to when the person sought to be served cannot
be found with due and reasonable diligence. But when it was known
to the Assessing Officer that the partners were out of town it cannot
be said that they could not be found by the exercise of due diligence.
The only option then available to the Assessing Officer was to hand
over the notice to the person available at the address. All this, even
if it was irregular, pales into insignificance once it is found that the
notice intimated the date of hearing as 5-1-2005 and on that date
the representative of the assessee appeared before the Assessing

Officer and filed his power of attorney. This conduct clearly shows
that the assessee was aware of the receipt of the notice and the
posting of his case for hearing on 5-1-2005. As already pointed out,
the issue of a notice under section 143(2) is to enable the assessee
to adduce evidence in support of the return submitted by him. The
provision is essentially conceived in the interests of the assessee and
once he comes to know of the opportunity that has been accorded to
him and also takes a step towards availing of the same, it does not
lie in his mouth to turn round and contend that there was no valid
service of the notice upon him. [Para 13]
Several authorities were cited on behalf of the assessee, including
those of this Court to the effect that if there is no valid service of the
notice under section 143(2) of the Act, the assessment order is null
and void. The question is whether there was a valid service of the
notice upon the assessee. Considering the facts of the case and the
conduct of the assessee, it is opined that there has been a valid
service of the notice upon the assessee. He has also participated in
the proceedings. In the decided cases to which attention was drawn,
the discussion has proceeded on the basis that there was no service
of the notice upon the assessee and therefore the assessment order
was null and void. Where the facts show that there has been
effective service of the notice upon the assessee pursuant to which
he has also participated in the proceedings for assessment of his
income, there is nothing in law to compel the Court to hold that
despite notice that his case is posted for hearing before the
Assessing Officer, the assessment order passed after giving him full
opportunity of being heard would still be invalid. That will be a
travesty of justice. [Para 14]
In the instant case, authorized representative appeared before the
Assessing Officer on 5-1-2005, which was the date specified in the
notice dated 30-12-2004 as the date of hearing and filed his power
of attorney. There is no case set up by the assessee that such
appearance by its authorized representative was either under protest
and without prejudice or that the authorized representative or the
assessee at any point of time during the assessment proceedings had
raised the plea that no notice under section 143(2) had been served
upon the assessee. In fact, the objection that there was no valid
service of the notice under section 143(2) was raised for the first
time before the Commissioner (Appeals). It was not raised before
the Assessing Officer at all. [Para 16]
The Tribunal fell into an error in accepting the contention of the
assessee without examining the crucial and relevant fact such as the
appearance of the assessee's authorized representative before the
Assessing Officer on 5-1-2005 which is the date fixed for hearing in
the notice issued on 30-12-2004. The Tribunal further erred in
holding that the participation of the assessee in the assessment
proceedings is of no consequence because the provisions of section
292BB came into force only from 1-4-2008. The participation of the
assessee in the proceedings for the assessment in the present case is
an important fact to be taken note of, not because of section 292BB
but in the light of the fact that the notice dated 30-12-2004
mentioned 5-1-2005 as the date of hearing, on which date the

authorized representative had appeared and filed his power of
attorney before the Assessing Officer. A little probing was enough to
show that the apparent was not the real. It would be against the
spirit of law relating to income-tax assessments if one were to too
readily be willing to hold that there was non-service or invalid
service of the notice under section 143(2) of the Act, merely on
peripheral allegations or facts and not looking at the substance i.e.,
whether the notice in fact was served and even acted upon by way of
appearance entered before the Assessing Officer. This has made the
impugned order erroneous and perverse as relevant and material
aspects have been ignored and not given credence. A provision
intended for the benefit of the assessee and conceived in accordance
with the rules of natural justice should not be permitted to be
abused by the very person for whose benefit it is intended and
should not be permitted to become a tool to ward off the liability to
pay the tax. [Para 17]
In view of the foregoing discussion, it is held that the Tribunal was
not right in quashing the assessment proceedings. The assessee was
properly served with the notice under section 143(2) and within the
statutory period prescribed by the proviso to the said sub-section.
Since, the Tribunal has not examined the order of the Commissioner
(Appeals) giving relief to the assessee in respect of various additions
made in the assessment because of the view it took on the question
of validity of the assessment, the issue was to be remitted to the
Tribunal for a fresh disposal. [Para 20]
5.7 Reliance is also placed on the decision of Hon'ble Delhi High Court in the
case of CIT-II, New Delhi Vs. Madhsy Films Pvt. Ltd. reported in
MANU/DE/0460/2008 : 301 ITR 69 wherein the Hon'ble court held that,
where notice issued to assessee under section 143(2) had been dispatched
by speed post at its address as per its return and same had not been received
back, it could be presumed that it had reached assessee, particularly when
no affidavit had been filed by assessee to effect that notice was not received
by it.
5.8 In view of the facts of the appellant's case and relying on the decisions
cited above, the contention of the appellant that no proper notice u/s. 143(2)
was issued and served is liable to be rejected. Accordingly, ground No. 2 is
dismissed."
1 2 . It is clear from the above observations of the CIT(A) that there was no
mandatory to issue notice u/s. 143(2) of the Act and served to the assessee for
completion of assessment u/s. 153A of the Act. The provisions of Section 153A of the
Act is a special provision to unearth the escaped income by the assessee. Ld. CIT(A)
has decided this issue after relying on the various judgments as quoted by him,
which are applicable in the present case also. The Ld. AR was also unable to
controvert the findings recorded by the CIT(A) in this regard. He just submitted that
issuance of notice u/s. 143(2) of the Act is mandatory for assuming jurisdiction for
completion of assessment. It is also settled position of law that there is no
mandatory requirement of issuance of notice under section 143(2) of the Act in
respect of assessment proceedings u/s. 153A of the Act as decided by the Hon'ble
Punjab & Haryana High Court reported in [2017] 81 taxmann.com 347, wherein the
Hon'ble High Court has held as under:-

8. The question that arises for consideration in this appeal relates to whether
there is any mandatory requirement of issuance of notice under Section
143(2) of the Act in respect of assessment proceedings under Section 153A
of the Act or not. The question is no longer res integra as Delhi High Court in
Ashok Chaddha's case (supra) delving into identical matter had opined in the
negative holding that there was no specific provision in the Act requiring the
assessment made under section 153A of the Act to be after issue of notice
under section 143(2) of the Act. After considering the matter in detail, it was
recorded as under:-
'9. There is no specific provision in the Act requiring the assessment
made under section 153A to be after issue of notice under section
143(2) of the Act. Learned counsel for the assessee places heavy
reliance on the judgment of the Hon'ble Supreme Court in Hotel Blue
Moon v. DCIT, (supra) wherein it was held that the where an
assessment has to be completed under section 143(3) read with
section 158BC, notice under section 143 (2) must be issued and
omission to do so cannot be a procedural irregularity and the same
is not curable. It is to be noted that the above said judgment was in
the context of Section 158BC. Clause (b) of Section 158BC expressly
provides that "the AO shall proceed to determine the undisclosed
income of the block period in the manner laid down in section 158BB
and the provisions of Section 142, sub-sections (2) and (3) of
Section 143, Section 144 and Section 145 shall, so far as may be,
apply. This is not the position under section 153A. The law laid
down in Hotel Blue Moon, is thus not applicable to the facts of the
present case.
10. The decision of Lunar Diamond Ltd. (supra), Vardhman Estates
(supra) and Bhan Testiles (supra) relied upon by learned counsel for
the assessee related to the requirement of service of notice upon the
assessee within a prescribed time and thus not applicable to the
present case. The case of Pawan Gupta (supra) related to mandatory
issue of notice under Section 143(2) of the Act in the case of regular
assessment as also on block assessment. This being not a case of
assessment based on search under Section 153A, the same is not
applicable to the present case. In the case of Raj Kumar Chawla
(supra) relied upon by learned counsel for the assessee was that of
the Tribunal, wherein, a view was taken that if a return filed under
Section 148 of the Act is sought to be scrutinized, the compliance of
provision contained in proviso under Section 143 (2) of the Act is
mandatory. The issue of requirement of notice under section 143(2)
for an assessment under section 147 came up for consideration
before this court recently in CIT v. Madhya Bharat Energy Corpn. ITA
No. 950/08 decided on 11-07-2011. In that case also, this court has
held that in the absence of any specific provision under Section 147
of the Act, the issuance of notice under Section 143 (2) cannot be
held to be a mandatory requirement.
1 1 . It is also to be noted that Section 153A provides for the
procedure for assessment in case of search or requisition. Sub-
section (1) starts with non-obstante clause stating that it was
Notwithstanding "anything contained in sections 147, 148 and 149,
etc. Clause (a) thereof provides for issuance of notice to the person
searched under Section 132 or where documents etc. are

requisitioned under Section 132(A), to furnish a return of income.
This clause nowhere prescribes for issuance of notice under Section
143(2). Learned counsel for the assessee/appellant sought to
contend that the words, "so far as may be applicable" made it
mandatory for issuance of notice under Section 143(2) since the
return filed in response to notice under Section 153A was to be
treated as one under Section 139. Learned counsel relies upon R.
Dalmia v. CIT(supra) wherein the question of issue of notice under
Section 143(2) was examined with reference to Section 148 by the
Supreme Court in the context of Section 147. The Apex Court held as
under:
"As to the argument based upon Sections 144-A, 246 and
263, we do not doubt that assessments under Section 143
and assessments and reassessments under Section 147 are
different, but in making assessment and re-assessments
under Section 147 the procedure laid down in Sections
subsequent to Section 139, including that laid down by
Section 144B, has to be followed."
12. The case of R. Dalmia v. CIT (supra) primarily was with regard
to applicability of section 144B and Section 153 (since omitted with
effect from 01.04.1989) to the assessment made under section 147
and 148 and thus cannot be said to be the decision laying down the
law regarding mandatory issue of notice under Section 143(2).
13. The words "so far as may be" in clause (a) of sub-section (1) of
Section 153A could not be interpreted that the issue of notice under
Section 143(2) was mandatory in case of assessment under Section
153A. The use of the words, "so far as may be" cannot be stretched
to the extent of mandatory issue of notice under Section 143(2). As
is noted, a specific notice was required to be issued under Clause (a)
of sub-section (1) of Section 153A calling upon the persons searched
or requisitioned to file return. That being so, no further notice under
Section 143(2) could be contemplated for assessment under Section
153A.
14. No specific notice was required under section 143(2) of the Act
when the notice in the present case as required under Section
153A(1)(a) of the Act was already given. In addition, the two
questionnaires issued to the assessee were sufficient so as to give
notice to the assessee, asking him to attend the office of the AO in
person or through a representative duly authorized in writing or
produce or cause to be produced at the given time any documents,
accounts, and any other evidence on which he may rely in support of
the return filed by him.'
In view of the aforesaid pronouncement, we do not find any error or
perversity in the approach of the Tribunal warranting interference by this
Court.
9 . With regard to the judgments relied upon by the learned counsel for the
assessee, suffice it to notice that none of them was relating to applicability of
requirement of issuance of notice under Section 143(2) of the Act within the
prescribed period thereunder relating to framing of assessment under Section

153A of the Act. Thus, the assessee cannot derive any advantage from the
said pronouncements.
Respectfully following the above observations of the Hon'ble Punjab & Haryana High
Court, cited supra and after considering the facts and circumstances of the case, in
our opinion, the CIT(A) has rightly dismissed the ground raised by the assessee to
which our interference is not called for. Accordingly, ground No. 2 is dismissed.
13. With regard to ground No. 3, the assessee has contested that during the course
of search no any incriminating material/document whatsoever was found relating to
the assessee. On perusal of the assessment order we find that in the assessment
order while making addition the AO has not referred to any loose sheets or any
specific incriminating documents found during the course of search as per annexures
prepared by the search team for enabling him to make such addition. Section 153A of
the Act provides that assessment can be made in case of search or requisition u/s.
132 or u/s. 132A of the Act and the AO shall assess or reassess the total income of
six assessment years immediately preceding the assessment year relevant to the
previous year in which such search is conducted or requisition is made. Further the
second provision of Section 153A(1) of the Act prescribes that assessment or
reassessment, if any, relating to any assessment year falling within the period of six
assessment years and for the relevant assessment year or years referred to in sub-
section (1) of the Section 153A of the Act, which is pending on the date of initiation
of the search under section 132 or making of requisition under section 132A, as the
case may be, shall abate. In the present case in hand, the ld. DR was also unable to
produce any cogent evidence for the assessment years under consideration i.e. AYs.
2009-2010 to 2012-2013, that assessment for these years are pending before the AO.
On further perusal of assessment order at page No. 3 we noticed that the
submissions of the assessee has been incorporated in which it has been stated that
the assessment has been completed u/s. 143(3) of the Act, which has not been
controverted by the revenue authorities. Therefore, these assessment years (AYs.
2009-2010 to 2012-2013) shall be unabated. In case of unabated assessment for the
last four years, addition could be made only on the basis of any incriminating
material found during the search. It is the case of the assessee that
additions/disallowances could not be made in the assessment framed u/s. 153A of
the Act de horse reference to any incriminating material found in the course of search
in this regard. The return of income was filed by the assessee u/s. 139 of the Act,
which was processed u/s. 143(1)(a) of the Act. Even in page 4 of the assessment
order in second para, the AO has observed as under:-
"Further, this is to state that finding of incriminating document is not a
necessity to complete assessment u/s. 153A under the I.T. Act. Issue of
warrant of search and a conduct of search is sufficient for proceedings u/s.
153A. Further, when no incriminating document is found, the assessment is
to be completed as a normal assessment. The same procedure is followed in
this case."
1 4 . On perusal of the above observations of the AO, we find total absence of
reference to any incriminating material which may have any bearing to impugned
additions/disallowances. As a corollary, it is manifest that additions/disallowances
have been made without reference to any specific incriminating material/document
found as a result of search and seizure action under s. 132 of the Act and is based on
re-appreciation of facts unconnected to search. Accordingly, we are of the view that
various additions/disallowances made by the AO on the basis of TEP or financial
statements are clearly beyond the scope of authority vested under s. 153A of the Act
owing to absence of any incriminating material or evidence deduced as a result of

search. No reference of such incriminating material, if any, is found in any of the
assessment orders for the purposes of making various additions/disallowances. In
this regard, We would like to placed reliance on the decision of ITAT Delhi Bench of
the Tribunal in the case of M/s. Aerens Buildwell Ltd. Vs. ACIT, ITA No.
5073/Del/2016, order dated 21.12.2018, wherein the Tribunal after relying on the
decision of Hon'ble Delhi High Court in the case of Kabul Chawla
MANU/DE/2482/2015 : (2016) 380 ITR 573 (Del), has observed as under:-
5 . We have heard both the parties and perused the records, especially the
assessment as well as impugned order and the submissions and case laws
filed by both the parties. We find that the case laws relied upon by the Ld.
DR are on the merits of the case, however, the ground argued before the
Tribunal by the Ld. Counsel for the assessee is relating to absence of
incriminating material having been found during the course of search,
addition could not have been made by the AO, hence, the case laws relied
upon by the Ld. CIT(DR) are on distinguished facts and does not help the
Revenue. Though the Ld. counsel for the assessee has argued the case on
legal ground as well as on merits of the case, but we are only dealing with
legal issue i.e. absence of incriminating material during the search. We have
also gone through the Paper Book containing pages 1 to 335, as discussed
above. We find that the additions made by the AO are beyond the scope of
section 153A of the Income Tax Act, 1961, because no incriminating material
or evidence had been found during the course of search so as to doubt the
transactions. It was noticed that as on the date of search i.e. 17.8.2011, no
assessment proceedings were pending for the year under consideration and
the AO was not justified in disturbing the concluded assessment without
there being any incriminating material being found in search. In fact, in the
entire assessment order, the AO has not referred to any seized material or
other material for the year under consideration having being found during
the course of search in the case of assessee, leave alone the question of any
incriminating material for the year under appeal. Perusal of the assessment
orders framed u/s. 153A r.w.s. 143(3) dated 30.3.2014 would reveal that the
addition made in respect of share capital and premium does not pertain to
any incriminating material found during the course of search. It is only for
the reason of making enquiries after the conduct of search and during the
course of assessment proceedings carried out in pursuance to section 153A,
the AO formed an opinion expressing his doubt regarding genuineness of
share capital and creditworthiness of entities which have invested share
capital with the assessee, therefore, the same has been added to the income
of the assessee. Therefore, in our considered opinion, the action of the AO is
based upon conjectures and surmises and hence, the additions made is not
sustainable in the eyes of law, because this issue in dispute is now no more
res-integra, in view of the decision dated 28.8.2015 of the Hon'ble Delhi
High Court in the case of Commissioner of Income Tax vs. Kabul Chawla
MANU/DE/2482/2015 : (2016) 380 ITR 573(Del.) and appeal filed before the
Hon'ble Supreme Court Of India by the Department in the case of CIT vs.
Kabul Chawla has been dismissed in Civil Appeal No. 6415 of 2016 vide
order dated 17.9.2018. The relevant finding of the Hon'ble Delhi High Court
in the case of CIT vs. Kabul Chawla are reproduced 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 ITA Nos. 707, 709 and 713 of 2014 of 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
respect of each of the six AYs "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 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 ITA Nos. 707, 709 and 713 of
2014 of 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
153A 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 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.
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."

6 . Respectfully following the precedent of the Hon'ble Jurisdictional High
Court in the case of CIT vs. Kabul Chawla, as aforesaid, we allow the appeal
of the Assessee, because AO has completed the assessment and made the
addition in dispute without any incriminating material found during the
search and seizure operation and the addition in this case was purely based
on the material already available on record. Hence, the addition in the case is
deleted and the grounds raised by the assessee in the appeal are allowed.
15. The coordinate bench of the Tribunal in the case of Dr. Sukanta Chandra Mallick,
in IT(SS)A Nos. 86-91/CTK/2018, order dated 08.07.21019, wherein the Tribunal has
observed as under:-
12. In the present case, we find that there is nothing on record to suggest
that any material was found in the course of search which would show any
connection on addition made by AO with the seized material which is the
subject matter of dispute in assessment order. Nothing is found contrary to
the stated position of the assessee. We also find that there is no material
referred to by the AO to say that any incriminating material was unearthed
during the search. Therefore, in the factual background, we do not find any
justification for the AO to make the impugned additions/disallowance in an
assessment finalized u/s. 153A of the Act in the absence of any incriminating
material having been found during the course of search, qua the impugned
additions made in assessment order. Respectfully, following the ratio of
decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra),
wherein, the Hon'ble High Court after detail analysis concluded that, where
there is no incriminating material qua each of the assessment year roped in
under section 153A of the Act, then, no addition can be made while framing
the assessment under section 153A of the Act. The aforesaid principle and
ratio are clearly applicable on the facts of the present case also, as
admittedly no incriminating material relating to these assessment years or as
a matter of fact for any of the assessment years were found during the
course of search and accordingly, we set aside the orders of both the
authorities below and held that when no incriminating material has been
found during the course of search then, no addition can be made while
framing the assessment under section 153A of the Act. Thus, the grounds
raised by the assessee for the assessment year 2010-2011 are allowed.
16. In the instant case, on perusal of the assessment order, it was noticed that the
AO has not disallowed any specific amount of expenses on account of any
incriminating materials found at the time of search. It is pertinent to note that the
assessee had filed the return of income on the basis of audited trading profit and loss
account and balance sheet. The AO has made addition only on the basis of tax
evasion petition filed by somebody else. Copy of the tax evasion petition is placed on
record at page Nos. 102 to 107.
17. It is pertinent to mention here that completed assessments can be interfered with
by the Assessing Officer while making the assessment under section 153A of the Act
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. However, in the case in hand, the AO
has not referred to any incriminating material found during the course of search while
framing the assessment. Section 153A of the Act, 1961 provides for the scheme of
assessment of income in case of a searched person. For the sake of completeness of
our order, we would like to reproduce the provisions of Section 153A of the Act,

which read as under:-
[Assessment in case of search or requisition
A. [(1)] Notwithstanding anything contained in section 139, section 147,
section 148, section 149, section 151 and section 153, in the case of a
person where a search is initiated under section 132 or books of account,
other documents or any assets are requisitioned under section 132A after the
31st day of May, 2003, the Assessing Officer shall--
(a) issue notice to such person requiring him to furnish within such
period, as may be specified in the notice, the return of income in
respect of each assessment year falling within six assessment years
[and for the relevant assessment year or years] referred to in clause
(b), in the prescribed form and verified in the prescribed manner and
setting forth such other particulars as may be prescribed and the
provisions of this Act shall, so far as may be, apply accordingly as if
such return were a return required to be furnished under section
139;
(b) assess or reassess the total income of six assessment years
immediately preceding the assessment year relevant to the previous
year in which such search is conducted or requisition is made [and
for the relevant assessment year or years]:
Provided that the Assessing Officer shall assess or reassess
the total income in respect of each assessment year falling
within such six assessment years [and for the relevant
assessment year or years]:
Provided further that assessment or reassessment, if any,
relating to any assessment year falling within the period of
six assessment years [and for the relevant assessment year
or years] referred to in this [sub-section] pending on the
date of initiation of the search under section 132 or making
of requisition under section 132A, as the case may be, shall
abate:
[Provided also that the Central Government may by rules
made by it and published in the Official Gazette (except in
cases where any assessment or reassessment has abated
under the second proviso), specify the class or classes of
cases in which the Assessing Officer shall not be required to
issue notice for assessing or reassessing the total income for
six assessment years immediately preceding the assessment
year relevant to the previous year in which search is
conducted or requisition is made [and for the relevant
assessment year or years]:]
[Provided also that no notice for assessment or
reassessment shall be issued by the Assessing Officer for the
relevant assessment year or years unless--
(a) the Assessing Officer has in his possession books of
account or other documents or evidence which reveal that
the income, represented in the form of asset, which has

escaped assessment amounts to or is likely to amount to
fifty lakh rupees or more in the relevant assessment year or
in aggregate in the relevant assessment years;
(b) the income referred to in clause (a) or part thereof has
escaped assessment for such year or years; and
(c) the search under section 132 is initiated or requisition
under section 132A is made on or after the 1st day of April,
2017.
Explanation 1.--For the purposes of this sub-section, the expression
"relevant assessment year" shall mean an assessment year preceding the
assessment year relevant to the previous year in which search is conducted
or requisition is made which falls beyond six assessment years but not later
than ten assessment years from the end of the assessment year relevant to
the previous year in which search is conducted or requisition is made.
Explanation 2.--For the purposes of the fourth proviso, "asset" shall include
immovable property being land or building or both, shares and securities,
loans and advances, deposits in bank account.]
[(2) If any proceeding initiated or any order of assessment or reassessment
made under sub-section (1) has been annulled in appeal or any other legal
proceeding, then, notwithstanding anything contained in sub-section (1) or
section 153, the assessment or reassessment relating to any assessment year
which has abated under the second proviso to sub-section (1), shall stand
revived with effect from the date of receipt of the order of such annulment by
the [Principal Commissioner or] Commissioner:
Provided that such revival shall cease to have effect, if such order of
annulment is set aside.]
Explanation.--For the removal of doubts, it is hereby declared that,--
(i) save as otherwise provided in this section, section 153B and
section 153C, all other provisions of this Act shall apply to the
assessment made under this section;
(ii) in an assessment or reassessment made in respect of an
assessment year under this section, the tax shall be chargeable at
the rate or rates as applicable to such assessment year.
From the above provisions of Section 153A of the Act, it is clear that the Assessing
Officer, while framing assessment under section 153A of the Act cannot make the
addition/disallowance dehors any 'incriminating' material. In this regard, reliance can
also be placed on the decision of Mumbai Bench of the Tribunal in the case of K. Sera
Sera Productions Ltd. Vs. DCIT, [2017] 87 taxmann.com 249 (Mumbai-Trib); wherein
the Tribunal has held as under:-
"8. We have carefully considered the rival submissions. In order to
appreciate the controversy, it is pertinent to observe that Section 153A of the
Act postulates an assessment in case of search or requisition under section
132 or under section 132A of the Act respectively. The said section envisages
that the Assessing Officer shall assess or reassess the total income for six
assessment years immediately preceding the assessment year relevant to the

previous year in which search was conducted. The second proviso to section
153A(1) of the Act also prescribes that assessment or re-assessment, if any,
relating to any assessment year falling within the period of six years referred
to in sub-section(1) of section 153A of the Act, which is pending on the date
of initiation of search or making of requisition, as the case may be, shall
abate. Thus, in so far as the pending assessments are concerned, the
competence of the Assessing Officer to make the original assessment
converges with the assessment to be made under section 153A of the Act,
i.e. only one assessment shall be made for such assessment years, based on
the findings of the search as well as any other material existing or brought
on record by the Assessing Officer. Notably, there would be assessments in
the period of the six assessment years identified in section 153A(1) of the
Act, which would have become final (i.e. which are not pending on the date
of search); such assessments do not abate in terms of the second proviso to
section 153A(1) of the Act. The scope and ambit of the assessment where the
original assessment has not abated is the controversy before us. In this
context, it would be pertinent to refer to the judgment of the Hon'ble Bombay
High Court in the case of All Cargo Global Logistics Ltd. (supra), wherein the
scope of assessment under section 153A of the Act has been considered. One
of the points addressed by the Hon'ble High Court was whether the scope of
assessment under section 153A of the Act envisages additions, which are
otherwise not based on any incriminating material found during the course of
the search in the case of the original assessment not abating. As per Hon'ble
High Court, no addition could be made in respect of the assessment that had
become final, in the event where no incriminating material is found during
the course of search. The Hon'ble High Court also noticed its earlier
judgment in the case of CIT v. Murali Agro Products Ltd. [IT Appeal No. 36 of
2009, dated 29-10-2010] and elaborately culled out the scope and ambit of
the assessment and reassessment of total income under section 153A(1) of
the Act read with the proviso thereof. The Hon'ble Bombay High Court has
ruled out that an assessment under section 153A(1) in an unabated year
would not encompass any addition for which no incriminating material is
found during the course of search, because in such a case, the original
assessment had become final.
8.1 The aforesaid proposition is also supported by judgment of Hon'ble Delhi
High Court in the case of CIT v. Kabul Chawla MANU/DE/2482/2015 : [2015]
61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573, wherein the
legal proposition has been summarized in the following words:--
"Summary of the legal position
37. On a conspectus of Section 153A(1) of the Act, read with the
proviso 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
for six AYs immediately preceding the previous year relevant
to the AY in which the search takes places.

have to be computed by the AOs as afresh exercise.
the search take place. The AO has the power to assess and
iv. Although Section 153A does not say that additions should
seized material. Obviously an assessment has to be made
under this Section only on the basis of seized material."
reassessment can be made. The word 'assess' in Section
assessment under Section 153A merges into one. Only one
existing or brought on the record of the Assessing Officer.
vii. Completed assessments can be interfered with by the AO
while making the assessment under Section 153A only on
made known in the course of original assessment."
8.2 In this legal background, we may now turn to the addition made by the
Assessing Officer in the impugned assessment and the manner in which such
additions have been made. The first addition is out of claim of preliminary
expenses under section 35D of the Act of Rs. 10,12,826/-, and the relevant
discussion in this regard is contained in para 5 of the assessment order
which shows that it is based on the disallowance made in the assessment
originally finalized under section 143(3) of the Act dated 22/11/2006. The
second addition is the disallowance of Stock Exchange listing fee of Rs.
2,00,000/- and the relevant discussion is contained in para-6 of the
assessment order. The addition has been made primarily in the absence of
evidence to substantiate the expenditure. Thirdly, depreciation on furniture
and fixtures of Rs. 5,94,013/- has been denied in terms of the discussion in
para-7 of the assessment order. The relevant discussion shows that in case

of some of the invoices of the cost of furniture and fixtures, the assessee
could not substantiate the values and thus, depreciation was denied on such
value of the assets. Fourthly, the addition of Rs. 28,00,000/- out of
expenditure on gifts has been made and the relevant discussion is contained
in para-9 of the assessment order. The discussion shows that the Assessing
Officer was not satisfied with the justification for incurrence of expenditure
and out of the total expenditure of Rs. 30,00,000/- on gifts made, he
disallowed an amount of Rs. 28,00,000/-. Lastly, the Assessing Officer
disallowed the interest expenditure of Rs. 10,79,724/- as per the discussion
contained in para-8 of the assessment order. The only reason advanced is
the failure of the assessee is to prove that the corresponding borrowings
were made for the purposes of business. The respective discussion made by
the Assessing Officer with respect to each of the additions does not reflect
reference to any incriminating material or any other information, which was
unearthed in the course of search, so as to justify the additions. Even at the
time of hearing before us, there is no reference to any incriminating material,
much less any material found during the course of search in order to justify
the additions made in the impugned assessment. Thus, on facts, it has to be
concluded that the additions made to the returned income by the Assessing
Officer in the impugned assessment is not with reference to any incriminating
material found in the course of search. Thus, following the parity of
reasoning laid down by Hon'ble Bombay High Court in the case of All Cargo
Global Logistics Ltd. (supra), the impugned additions could not have been
made in the impugned assessment since the original assessment made under
section 143(3) of the Act had become final and did not abate. Thus, in the
absence of any incriminating material, the Assessing Officer is not
empowered to make the impugned additions in an assessment finalized
under section 143(3) r.w.s. 153A of the Act. Accordingly, assessee succeeds
on its Additional Ground of appeal No. 5(b), as above.
8.3 As a consequence of above, all the additions made to the returned
income are deleted. Thus, all the other issues raised by the assessee in its
appeal become infructuous and are not being adjudicated.
18. Further in the case of Priya Holding (P.) Ltd. Vs. ACIT, [2018] 90 taxmann.com
408, the Ahmedabad Bench of the Tribunal has observed as under:-
6 . We have carefully perused the orders of the authorities below and
examined the merits of legal contentions raised on behalf of the assessee. It
is the case of the assessee that additions/disallowances could not be made in
the assessment framed under s. 153A of the Act de horse reference to any
incriminating material found in the course of search in this regard. It is
further case of the assessee that the additions/disallowances made have no
nexus whatsoever with any material of incriminating nature found in the
course of search which is genesis of proceedings under s. 153A of the Act in
the instant case. The appeal of the assessee thus hinges around one
pertaining legal point as to whether, while making assessment under s.
153A, the Revenue is entitled to interfere with the assessment concluded
either under s. 143(1) or under s. 143(3) and not pending at the time of
search in the absence of any incriminating material unearthed as a result of
search.
6.1. On a bare perusal of assessment years in appeals and the composite
order of the CIT(A) discussing issues connected with various
additions/disallowances, we find total absence of reference to any

incriminating material which may have any bearing to impugned
additions/disallowances. As a corollary, it is manifest that
additions/disallowances have been made without reference to any specific
incriminating material/document found as a result of search and seizure
action under s. 132 of the Act and is based on re-appreciation of facts
unconnected to search.
6.2. We also note that the income-tax return for the relevant assessment
years were filed prior to the search in the normal course suo motu
incorporating the items of income/expenditure which are subject matter of
considerations in the assessment framed under s. 153A of the Act. The
returns for various assessment orders in question so filed in ordinary course
were accepted under s. 143(1) of the Act and/or assessed under s. 143(3) of
the Act and as such no assessment was eventually pending on the date of
initiation of search which may get abated in consequence of search.
Accordingly, we are of the view that various additions/disallowances made
by the AO are clearly beyond the scope of authority vested under s. 153A of
the Act owing to absence of any incriminating material or evidence deducted
as a result of search. No reference of such incriminating material, if any, is
found in any of the assessment orders for the purposes of making various
additions/disallowances.
6.3. The legal issue emanating on such facts that in the absence of any
incriminating material/evidence, no addition can be sustained under s. 153A
is no longer res integra in view of the decision of the Hon'ble Jurisdictional
High Court in the case of Saumya Construction (P.) Ltd. (supra) and Devangi
alias Roopa in Tax Appeal No. 54 of 2017 order dated 02/02/2017. Similar
view was earlier taken by the Hon'ble Delhi High Court in the case of Kabul
Chawla (supra).
6.4. In view of long line of judicial precedents governing the field, we hold
that additions/disallowances made without any nexus to incriminating
material found, if any, as a result of search operations are not sustainable in
the eyes of law in section 153A of the proceedings. Hence, the
additions/disallowances made by the AO in all the captioned appeals require
to be quashed. Thus, we find merit in the legal ground raised by the
assessee. In this view of the matter, we do not intend to adjudicate various
additions/disallowances on merits.
1 9 . The Delhi Bench of the Tribunal in the case of DCIT Vs. Rajiv Kumar
MANU/ID/0267/2017 : [2018] 99 taxmann.com 371, has held as under:-
10. We have heard the rival submissions and carefully perused the relevant
material placed on record. It is undisputed that the transfer of shares was
done in pursuance of a restructuring of the family business and scheme of
restructuring was duly approved by the hon'ble Delhi High Court. The order
under section 394 of the Companies Act, 1956 was passed by the hon'ble
Delhi High Court on August 7, 2003. It is also undisputed that the shares
transferred were amongst the family members of the family held companies
and no shares were sold to the outsiders. It is also undisputed that the
buyers/assessees are not at liberty to transfer the shares so acquired to third
parties outside the family concern and in case these shares are required to be
transferred, the sellers would have a pre-emptive right to buy back the said
shares. It is also undisputed that the memorandum of understanding as well
as the sanction of scheme of merger relates back to the financial year 2003-

04.
10.1 Further, a perusal of the assessment orders reveal that while making
the impugned additions, the Assessing Officer has only mentioned the date of
search but has not referred to any incriminating material found during the
course of search which could be the foundation of these additions. There is
not even a whisper of any incriminating material having been found and
relied upon by the Department relating to these additions on account of
perceived benefits under section 2(24)(iv) of the Act. There are a plethora of
decisions in which the hon'ble High Courts have held that there can be no
valid assessment under section 153A/153C of the Act in the absence of any
incriminating material. We find that the reliance of the learned authorised
representative on the judgment of the hon'ble Delhi High Court in the case of
Mahesh Kumar Gupta (supra) is well placed and squarely covers on the
issue. In this case, the Income-tax Appellate Tribunal had concluded, based
upon the material available, that the search and seizure operations had not
yielded any fresh material warranting addition under section 153A of the Act
and, therefore, could not clothe the Commissioner of Income-tax (Appeals)
with the authority to add the amount on the basis of a fresh appraisal of the
existing material that formed part of the original assessment. The hon'ble
Delhi High Court adjudicated the issue in paragraphs 4 and 5 of the said
judgment which is being reproduced for a ready reference:
"4. There is no dispute that the search and seizure proceedings in
this case did not result in anything, therefore, material either in the
form of books of account or other documents related to the issue of
deemed dividend under section 2(22) of the Act. The amounts paid
were in fact originally declared in the assessment returns of the
assessee. The Commissioner of Income-tax, therefore, had
opportunity to exercise his powers as it were on the basis of returns
as filed originally and validly under section 263 of the Act.
5 . In the circumstances in the absence of any material disclosing
that the issue of deemed dividend had been willfully derived or had
been deemed or otherwise withheld from the assessment an addition
under section 153A was warranted-based on the proposition taught
by this court in judgment dated August 28, 2015 in I.T.A. No. 707 of
2014 titled CIT v. Kabul Chawla MANU/DE/2482/2015 : [2016] 380
ITR 573 (Delhi). Therefore, we concur with the Income-tax Appellate
Tribunal's opinion in this regard. The search and seizure proceedings
in such cases are undoubtedly meant to bring to tax amount that are
to be determined on the basis of materials seized in the course of
such searches; permitting anything over and above that would
virtually amount to letting the Revenue have a third or fourth opinion
as it were. Searches-to quote the view of Attorney-General (NSW) v.
Quin MANU/AUSH/0014/1990 : [1990] HCA 21 in another context
are 'not the key which unlocks the treasury' of the Revenue's
jurisdiction in regard to matters that had attracted attention in the
regular course of assessment."
10.2 In the appeals before us, it is not the case of the Department that any
material disclosing the issue of transfer of shares was withheld from the
assessment and was found and seized during the course of search. It is also
not the case of the Department that any other incriminating material which
could point out to such transfer of shares was unearthed during the course of

search and was subsequently relied upon by completing the assessment
under section 153A. In such a circumstance, respectfully applying the ratio of
the judgment in the case of Mahesh Kumar Gupta (supra) as well as of CIT v.
Kabul Chawla MANU/DE/2482/2015 : [2015] 61 taxmann.com 412/234
Taxman 300/[2016] 380 ITR 573 of the hon'ble Delhi High Court, we hold
that proceedings under section 153A were against the scheme of the Act in
case of all the assessees. We also hold that the learned Commissioner of
Income-tax (Appeals) was not justified in upholding the validity of the
proceedings under section 153A. We are of the considered opinion that it
was not open for the Assessing Officer to assume jurisdiction under section
153A de hors any incriminating material. Accordingly, we quash the
proceedings under section 153A in case of all the five assessees and
accordingly allow the cross-objections of all the five assessees.
2 0 . Hon'ble Bombay High Court in the case of Pr. CIT Vs. Jignesh P. Shah
MANU/MH/3531/2018 : [2018] 99 taxmann.com 111 has held as under:-
6 . The aggrieved assessee approached the Tribunal. After considering the
rival submissions, the Tribunal answered the legal issue in favour of the
assessee. While answering it, in para 8, the scheme of the law was
discussed. Then, the principle which was enunciated by the judgment of this
Court rendered in the case of CIT v. Murli Agro Products Ltd.
MANU/MH/2342/2010 : [2014] 49 taxmann.com 172 was applied. That
judgment held that, once the assessment has attained finality before the date
of search and no material is found in the course of proceedings under
Section 132(1), then, no addition can be made in the proceedings under
Section 153A.
7 . After setting out this principle in great details, the Members of the
Tribunal rendered their opinion that factually there was no incriminating
material found during the course of search relating to the addition made on
account of deemed dividend. The very fact that Section 132 was resorted
requiring the Assessing Officer to record the necessary satisfaction, was
lacking in this case. The assessment, which had gained finality, in the
absence of any material termed as incriminating having thus been subjected
to assessment/re-assessment, the Tribunal held in favour of the assessee.
We do not think that the Tribunal's understanding of the legal provisions in
the backdrop of these peculiar facts suffers from such legal infirmity or
perversity necessitating our interference in further Appellate jurisdiction.
8 . We are of the firm opinion that the present Appeals do not raise any
substantial questions of law. They are accordingly dismissed, but without any
order as to costs.
21. The Chandigarh Bench of the Tribunal in the case of Mala Builders (P.) Ltd. Vs.
ACIT MANU/IG/0229/2016 : [2017] 88 taxmann.com 801, has observed as under:-
1 3 . We have heard the contentions of both the parties, perused the
documents placed before us as also the orders of the authorities below.
14. The undisputed facts in the present case are that on the date of search
conducted on the assessee u/s. 132 of the Act, i.e. 17-3-2010, no
assessment proceedings relating to the impugned year were pending. In fact
the assessee had filed return filed u/s. 139(1) of the Act on 29-6-2004, no
notice u/s. 143(2) had been issued to the issue and on the date of initiation
of search i.e. 17-3-2010 the time limit for issuing notice u/s. 143(2) had

expired. Thus, on the date of search no assessment proceedings were
pending. Further in the assessment made u/s. 153A of the Act, the only
addition made pertained to disallowance of interest u/s. 24(b) of the Act in
the absence of any documentary proof for claiming the same by the
assessee. No incriminating material, found during the course of search,
pertaining to the addition/disallowance made was referred to while making
the disallowance.
15. The issue before us is, whether in case of assessments framed under
section 153A of the Act, addition could be made in the absence of any
incriminating material in those years where no assessment proceedings were
pending and assessment had been made u/s. 143(1)/143(3) of the Act.
16. We are in complete agreement with the contention of the Ld. AR that the
issue is no longer res integra in view of various decisions of the High Courts
holding that 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.
17. We find, that the issue first came up for consideration before the High
Court of Bombay in the case of Murli Agro Products Ltd. (supra), wherein on
the issue of exercise of revisionary powers by the Commissioner of Income
Tax u/s. 263 of the Act, on the order passed by the Assessing Officer under
section 153A, it was contended by the Revenue that the impugned order was
erroneous and prejudicial to the interest of the Revenue since the Assessing
Officer had only determined the undisclosed income and not the total income
which is the mandate of section 153A. The Hon'ble High Court, while
adjudicating the issue, dealt at length with the purpose of introduction of the
new search assessment procedures, as against the earlier block assessment
procedures and then went on to interpret the proviso to section 153A(1), and
held that it is only pending proceedings which are abated on initiation of
proceedings under section 153A of the Act, while the assessments which
have attained finality cannot be disturbed unless materials gathered in the
course of proceedings under section 153A of the Act established otherwise.
1 8 . Thereafter, the Delhi High Court in the case of Anil Kumar Bhatia,
(supra) interpreted the provisions of section 153A of the Act at length, and
held that as against the earlier block assessment procedure which roped in
only the undisclosed income and the regular assessment proceedings were
preserved, resulting in multiple assessments, under the present assessment
procedures prescribed under section 153A/B/C of the Act, only one
assessment order in respect of each of the six assessment years had to be
passed. The Hon'ble High Court held that this was sought to be achieved in
case of those assessment years where assessment proceedings were pending
on the date of search by abating them and framing fresh assessment
including incomes relating to incriminating material found during search. In
case of those assessment years where an assessment order had already been
passed under section 143(1)(a) or 143(3), those assessments could be
reopened and the total income reassessed taking note of the undisclosed
income if any unearthed during search, the fetters to reopening, being
removed by insertion of the non-obstante clause to section 153A. The entire
thrust of the judgment rested on the interpretation that there cannot be

multiple assessment orders in case of search assessments under section
153A/B/C of the Act and, therefore, where assessments were pending they
would abate to enable the Assessing officer to assess the total income
including undisclosed income, and where assessments or reassessments had
been completed, they would not abate and the Assessing Officer would only
reopen the completed assessments and include therein undisclosed income.
The High Court went on to hold that such determination would be similar to
orders passed in any reassessment where the total income determined in the
original assessment order and income that escaped assessment are clubbed
together and assessed as total income.
19. The Bombay High Court in the case of Continental Warehousing (supra)
upheld the interpretation of the section by the Division Bench of the same
Court in the case of Murli Agro (supra) and held that finalized assessments
cannot be touched by resorting to the provision of section 153A and addition
was to be made only on the basis of material unearthed during search, since
'search' and 'requisition' are the crucial words appearing in the substantive
provision and proviso and they would throw light on the issue of applicability
of the provision. The Court upheld the understanding of the legal provision
of section 153A by the Special Bench in the I.T.A.T. in this case and further
held that the Delhi High Court had in the case of Anil Kumar Bhatia also
reached to the same conclusion. It also referred to the judgment of the
Karnataka High Court in the case of Canara Housing Development Co. (supra)
and stated that even as per that judgment, the scope of enquiry in search
carried under section 153A had to essentially revolve around search or
requisition under section 132A of the Act.
2 0 . In the case of Kabul Chawla (supra), the Delhi High Court after
considering various decisions of High Courts, summarized the legal position
in paragraph 37, which is reproduced below:
"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
for six AYs immediately preceding the previous year relevant
to the AY in which the search takes place.
have to be computed by the AOs as a fresh exercise.
the search takes place. The AO has the power to assess and
iv. Although section 153A does not say that additions should

seized material. Obviously an assessment has to be made
under this section only on the basis of seized material."
reassessment can be made. The word 'assess' in section
assessment under section 153A merges into one. Only one
existing or brought on the record of the AO.
viii. Completed assessments can be interfered with by the
AO while making the assessment under section 153A only on
made known in the course of original assessment."
2 1 . The Delhi High Court further reiterated the proposition laid down in
Kabul Chawla (supra) in the case of CIT v. RRJ Securities,
MANU/DE/3306/2015 : [2015] 62 taxmann.com 391/[2016] 380 ITR 612
(Delhi) and Pr. CIT v. Lata Jain MANU/DE/1536/2016 : [2017] 81
taxmann.com 83/[2016] 384 ITR 543 (Delhi).
2 2 . On going through the above judgments, we find that the reason for
upholding the proposition that addition u/s. 153A, in case of earlier
completed assessments, can be made only on the basis of incriminating
material found during search or requisition is that:
1. Assessment u/s. 153A can be framed only in cases where a search
is initiated u/s. 132 or Books of Account, other documents or any
assets are requisitioned u/s. 132A of the Act. Moreover notices u/s.
153A(1)(a) can be issued and income assessed or reassessed of six
years preceding the assessment year relevant to the previous year in
which search is conducted or requisition is made. Thus the crucial
words "search" and "requisition" appear in the substantive provision
and the proviso, which throws light on the issue of applicability of
the provision. Such assessments have a vital link with the initiation
and conduct of search. Since search can be authorized only on the
fulfillment of conditions enumerated in section 132, those conditions
will have to be taken into account while interpreting section 153A
and the interpretation arrived at is that in respect of unabated
proceedings assessment has to be made on the basis of books of

account or other documents not produced in the course of original
assessment but found in the course of search and undisclosed
income/property discovered in the course of search. section 153A
being enacted to a search and requisition, its construction would
have to be made accordingly.
2. The second proviso to section 153A(1) states that on initiation of
proceedings u/s. 153A, the assessment/reassessment proceedings
pending on the date of conducting search or making requisition u/s.
132A of the Act, shall stand abated. The CBDT Circular No. 8 of 2003
: MANU/DTCR/0004/2003 dt. 18-09-03, clarifies that proceedings in
appeal, revision or rectification against finalized
assessments/reassessments shall not abate. Reading the two
together, the Courts have stated that as per section 153A,
Assessments/reassessments already finalized do not abate, meaning
thereby that they attain finality, which cannot be disturbed unless
some incriminating materials are gathered during the course of
search.
3. That the words "assess" or "reassess" has been used at more than
one place in the section and a harmonious construction of the entire
provision would lead to the conclusion that the word "assess" has
been used in the context of abated proceedings and "reassess" has
been used for completed proceedings which would not abate as they
are not pending on the date of initiation of search or making of
requisition.
2 3 . We may add that that the requirement of the section is limited to
opening or reopening of the cases for the purpose of making assessment or
reassessment of the total income of preceding six assessment years prior to
the year of search. It does not contain any provision regarding the concept of
making assessment of undisclosed income as was there in the earlier Block
assessment regime under chapter XIVB. It does not specifically contain any
provision regarding the nature of addition which can be made under this
section. The section has provided, for the removal of doubts, by way of
insertion of Explanation at the end of the section that save as otherwise
provided in this section, section 153B and section 153C, all other provisions
of this Act shall apply to assessment made under this section. This implies
that nature of assessment or reassessment made under this section shall be
governed by the normal provisions of the Act. In case it is an assessment
made for the first time, all provisions of assessment which are applicable to
assessments made u/s. 143(3) shall apply and in case it is a reassessment
being made all principles of reassessment which are applicable in case of
proceedings u/s. 147/148 shall become applicable. Thus in cases where
assessments have already been made addition to be made in proceedings
u/s. 153A is to be restricted to incriminating material found if any.
2 4 . It is amply evident from the above that the issue is settled, with a
number of decisions of the High Courts holding that in the case of completed
assessments, no addition can be made in the absence of any incriminating
material. Though we do agree that there are decisions of High courts which
hold otherwise and state that u/s. 153A, addition in case of completed
assessments need not be restricted to incriminating material, but in view of
the Apex court decision in CIT v. Vegetable Products Ltd.
MANU/SC/0241/1973 : [1973] 88 ITR 192 which states that where there are

two reasonable constructions of a statute, the construction favouring the
assessee should be adopted, we hold that in case of completed assessments
under section 143(3)/143(1) of the Act, in the absence of any incriminating
material found during the course of search, the Assessing Officer has no
jurisdiction to make any addition under section 153A of the Act.
25. We may add that during the course of hearing before us, the learned DR,
Shri Manjit Singh, vehemently argued at length, raising several issues
against the proposition and though as observed above, the issue is no longer
res integra, we shall still deal with the arguments of the learned D.R.
26. The first argument of the learned D.R. that the issue had been decided
against the assessee by the Chandigarh Bench of the I.T.A.T. in the case of
Vipan Kumar Verma (supra), merits no consideration in view of the
numerous judgments of the higher authorities i.e. High Courts on this issue.
27. The argument of the learned D.R. that the Hon'ble Supreme Court has
granted SLP against the High Courts ruling in the case of Continental
Warehousing (supra) does not disturb the current status of the interpretation
of the proposition since the fact remains that as on date there are several
judgments of the High Courts upholding the proposition that no addition can
be made in the absence of incriminating material in the case of completed
assessments under section 153A of the Act.
28. The next argument of the learned D.R. was that if addition under section
153A of the Act is to be restricted to the extent of incriminating material
found/undisclosed income" (term used by the learned D.R.) there would be
no difference between the procedures prescribed under the Block assessment
regime prescribed in chapter XIV and the current search assessment
proceedings under section 153A and the very purpose of introducing the new
procedure to do away with controversies relating to undisclosed income,
would be defeated. We find no merit in this contention of the learned D.R.
also since, the restriction of addition under section 153A of the Act to the
extent of incriminating material found, is to be made only in the case of
completed assessments or reassessments, which do not abate under section
153A of the Act. There is therefore no similarity between the assessment
procedures prescribed under Block assessment regime and the current
procedures u/s. 153A/B/C/D of the Act. Moreover, by prescribing one
assessment for each of the six years, covered under search, the Legislature
has done away with the requirement of making assessment only of
undisclosed income prescribed in the earlier block assessment requirement,
and thus doing away with consequent litigation regarding the same.
2 9 . The learned D.R. further argued that even the Circular outlying the
objective behind bringing the present search assessment procedures stated
that the assessee shall assess/reassess "total" income for each of the six
years. The learned D.R. stated that the mandate of the current requirement
was to assess the "total" income, hence, it cannot be restricted to the extent
of incriminating material only.
30. We find that the meaning of the word "total" income in the context of
completed assessment was interpreted by the Delhi High Court in the case of
Anil Kumar Bhatia (supra), wherein in para 21, the Court held that in cases
where the assessment or reassessment proceedings have already been
completed and assessment orders have been passed determining the

assessee's total income and such orders are subsisting at the time when the
search or the requisition is made, there is no question of any abatement
since no proceedings are pending. In this latter situation, the Assessing
Officer will reopen the assessments or reassessments already made (without
having the need to follow the strict provisions or complying with the strict
conditions of sections 147, 148 and 151) and determine the total income of
the assessee. Such determination in the orders passed under section 153A
would be similar to the orders passed in any reassessment, where the total
income determined in the original assessment order and the income that
escaped assessment are clubbed together and assessed as the total income.
(emphasis supplied by us) In such a case, to reiterate, there is no question
of any abatement of the earlier proceedings for the simple reason that no
proceedings for assessment or reassessment were pending since they had
already culminated in assessment or reassessment orders when the search
was initiated or the requisition was made.
31. It is evident from the same that the understanding of the learned D.R.
that by including only undisclosed income discovered as a result of search, in
the assessment framed under section 153A in those cases where assessment
have been completed earlier under section 143(3)/143(1) of the Act, the
"total income", is not assessed is misplaced. What section 153A of the Act
prescribes is that where assessments are completed, they shall be reopened,
incomes relating to incriminating material found during the search
determined and added to the already assessed income and thus total income
computed. Thus, restricting the addition made to the extent of incriminating
material would not mean, that total income is not determined.
32. As for the reliance placed by the learned D.R. on the decisions against
the proposition, we agree that there are divergent views of the High Courts
on this issue, but as stated above we uphold the view favouring the assessee
in view of the apex court decision in case of Vegetable Products Ltd. (supra).
Further we may add that the Hon'ble Delhi High Court in its decision
rendered in the case of Kabul Chawla (supra), has dealt and distinguished
most of these decisions primarily by finding that those decisions dealt with
the fact situation where material had been unearthed during search and
therefore could not apply in situations where no material was found during
search.
33. The Ld. DR further contented that the statement of Sh. Kishan Kumar
Goyal which was recorded during the course of search conducted on the
Modern Group, constituted incriminating material. As per the Ld. DR, in the
statement, Sh. Kishan Kumar Goyal admitted that incriminating documents
relating to various investment companies, excess cash and jewellery were
found. The assessee in consequence thereof had surrendered additional
income of Rs. 11 crores.
34. The statement referred to by the Ld. DR is reproduced as under:
"Q.3 Do you want to say anything else further?
Ans. During the course of search operation certain incriminating
documents relating to various investment companies, excess cash &
jewellery were found at my residence. In this connection I would like
to offer additional income to the tune of Rs. 11 crore (Rupees eleven
crore only) to avoid litigation with the departments, over and above

the income of my family and investment companies as stated above
subject to no penal action. The disclosure is made u/s. 132(4) of the
IT Act, 1961 voluntarily. The break-up of the same will be submitted
in the next two days. A separate letter to this effect is submitted
hereby."
From a reading of the above, it is event that Sh. Goyal admitted that certain
incriminating documents relating to various investment companies, excess
cash and jewellery was found at his residence. Admittedly there is no
reference in the statement to any document found, which revealed that the
assessee had wrongly claimed interest on loan taken for his house property,
which was the only disallowance made in the assessment order passed u/s.
153A for the impugned year. Moreover we find that the disallowance was
made for want of evidence and not on the basis of any incriminating material
found during search. Further we find that the statement is general with no
reference to any specific document or asset found during search and the
assessee has admittedly surrendered Rs. 11 crore on account of the same
and paid taxes thereon. The statement therefore cannot be stated to be
incriminating material for the purpose of disallowing interest on housing
loan.
35. Moreover the Delhi Bench of the ITAT in the case of Best Infrastructure
(India) (P.) Ltd. v. Asstt. CIT in ITA No. 1698 (delhi) of 2014 dt. 31-5-2016,
held that any statement recorded during search cannot on standalone basis
without reference to any other material discovered during search be treated
as "evidence found during search". The relevant findings of the coordinate
Bench at para 23(ii) is as follows:
"(ii) Any statement recorded during the course of search cannot on a
standalone basis without reference to any other material discovered
during search and seizure operation would empower the Assessing
Officer to make the addition. The words "evidence found as a result
of search" would not take within its sweep statement recorded
during search and seizure operations. Therefore, the Revenue's stand
that the addition u/s. 153A can be made in respect of share capital
on account of statement of Shri Tarun Goyal and Shri Anu Aggarwal
cannot be accepted."
36. In view of the above the stand of the Revenue that the statement of Sh.
Kishan Kumar Goyal constituted incriminating material for the purpose of
making disallowance of interest on housing loan u/s. 153A cannot be
accepted.
37. In view of the above we hold that in the absence of any incriminating
material found during the course of search and the assessment proceedings
having not abated at the time of search, the assessing officer has no
jurisdiction to make the addition u/s. 153A of the Act.
38. This ground of appeal of the assessee is therefore allowed. The additions
made in the order u/s. 153A/143(3) are accordingly deleted.
22. It is not the case of the Revenue that the assessment was pending on the date of
search. If there is no any assessment is pending before the AO, that assessment
order is unabated. In this case before us, the assessment is not pending before the
AO as submitted by the AR of the assessee which has not been controverted by the
Revenue. The AO has not referred any incriminating materials if any found during the

course of search while framing the assessment. It appears that there was no
incriminating material was found in the case of the assessee which can be used for
completing assessment. The assessee had filed return of income as per Section 139
of the Act, which was available before the AO. The AO has made addition only on the
basis of TEP (Tax Evasion Petition) filed by somebody else, financial statements and
return of income available before him. There is no any iota of sentence in the
assessment order that any annexures prepared by the search team in the Panchanama
has been referred in the assessment order. The Tax Evasion Petition has been filed on
21.11.2016 much after search took place, which is not covered under the search and,
therefore, it cannot be termed as incriminating materials found during the course of
search. We also referred to the Panchanama drawn by search team the statement of
Shri Sanjay Pati, Accountant has been recorded which has also not been utilized by
the AO while framing the assessment order. Therefore, it is clear that there is no
incriminating material was found during the course of search.
23. It is pertinent mention here that as per the provisions of Section 153A of the Act,
the Assessing Officer assesses or reassesses the assessment for immediately
preceding six assessment years from the date of search. In this case, the Assessing
Officer has completed the assessment u/s. 153A of the Act without referring any
document found during the course of search and the assessment has been completed
only on the basis of Tax Evasion Petition (TEP) filed by somebody else on
21.11.2016. In the impugned case, even after calling remand report by the CIT(A)
from the Assessing Officer, which is placed on paper book at pages No. 55 to 75, the
CIT(A) has just confirmed the order of Assessing Officer. However, we may point out
that in the remand report vide dated 25.07.2018. The AO had referred to TEP as
incriminating material but we are unable to see any observations of description
regarding the same in the said remand report, explaining or substantiating that the
so-called incriminating material was related or belonging to the assessee. From the
said remand report or orders of the authorities below, it is also not clear or
discernible that in which manner it can be tagged or levelled as incriminating
material belonged or related to the assessee. In the Income Tax Act, the "Assessing
Officer has been defined as per Section 2(7A) of the Act, which reads as under:-
[(7A) "Assessing Officer" means the Assistant Commissioner [or Deputy
Commissioner] [or Assistant Director] [or Deputy Director] or the Income-
tax Officer who is vested with the relevant jurisdiction by virtue of directions
or orders issued under sub-section (1) or sub-section (2) of section 120 or
any other provision of this Act, and the [Additional Commissioner or]
[Additional Director or] [Joint Commissioner or Joint Director] who is
directed under clause (b) of sub-section (4) of that section to exercise or
perform all or any of the powers and functions conferred on, or assigned to,
an Assessing Officer under this Act;]
On careful conjoining reading of provisions of Section 2(7A) of the Act and Section
153A of the Act, it is clear that the CIT(A) has been precluded. The AO must have
referred to the incriminating material while framing the assessment for unabated
assessment year in his order. Respectfully following the judicial pronouncements
cited above, we hold that additions/disallowances made without any nexus to
incriminating material found, if any, as a result of search operations, are not
sustainable in the eyes of law in section 153A of the proceedings. Hence, the
additions/disallowances made by the AO in all the captioned appeals require to be
quashed. Thus, we find merit in the legal ground raised by the assessee in ground
No. 3 and the same is allowed. In this view of the matter, we do not intend to
adjudicate various additions/disallowances on merits. Thus, appeal of the assessee in
IT(SS)A No. 34/Ran/2019 for A.Y. 2009-2010 is partly allowed.

24. Since, we have held that the assessment framed by the AO u/s. 153A of the Act
is not sustainable as the AO has not referred to any loose sheet or any specific
incriminating document found during the course of search enabling him to make such
addition, therefore, rest of the appeals i.e. IT(SS)A No. 35 to 37/Ran/2019 for the
assessment years 2010-2011 to 2012-2013 being similar in grounds raised in
assessment year 2009-2010, the addition made therein by the AO and confirmed by
the CIT(A) is not sustainable. Thus, appeals of the assessee for assessment years
2010-2011 to 2012-2013 are partly allowed.
25. Now, we shall take up the appeals of the assessee for assessment years 2013-
2014 to 2015-2016 in IT(SS)A Nos. 38 to 40/Ran/2019. For the sake of convenience,
we shall take up the facts and grounds mentioned in IT(SS)A No. 38/Ran/2019 for
deciding all the above appeals. The assessee has raised the following grounds for
A.Y. 2013-2014:-
1 . For that search operation was only carried out at Transit Office of the
appellant in Orissa whereas the appellant resides in Una, Himachal Pradesh
since last 15 years. No document or paper relating to appellant was found, as
such, no search took place. Initiation of proceedings u/s. 153A, therefore, is
ab-initio void and illegal.
2. For that no notice u/s. 143(2) was received by the appellant at his place
of residence or registered office or at the place of search. As such, the order
of assessment passed is ab-initio void and illegal since no notice u/s. 143(2)
was served.
3 . For that the appellant has been regularly assessed to tax u/s. 143(1) or
143(3). During the course of search no document whatsoever was found
relating to the appellant, as such, Ld. A.O. had no authority to disturb the
income originally assessed. The addition made by Ld. A.O. making an
assessment u/s. 153A is ab-initio void and illegal. Additions were made of
the various amounts mentioned in the audited Profit and Loss A/c and
Balance Sheet which stands accepted in the regular assessment, as such, in
light of the various decisions and judicious pronouncements additions made
is fit to be deleted.
20,58,79,432/- made u/s. 2(22)(e) against the credit balance of M/s. Rajat
Minerals and M/s. KDS Contractors Pvt. Ltd. The said amount includes
opening balance, salary, TDS and transaction in regular course of business,
as such, no addition is called for u/s. 2(22)(e). The amount stands disclosed
in books of account which were accepted in regular course of assessment, as
such, the addition made in course of assessment u/s. 153A is illegal and fit
to be deleted.
5 . For that Ld. CIT(A) was not justified in confirm the addition of Rs.
1,41,14,473/- made u/s. 69 for the alleged unexplained investment.
Complete detail regarding investment made in purchase of vehicle, stone
crusher and property stands explained as payment were made through
banking channel and are duly disclosed in the books of the assessee.
Moreover depreciation claimed against the same was also allowed. There was
no incriminating material found during search to suggest for any such
addition. As such, the addition being made is fit to be deleted.
6 . For that Ld. CIT(A) was not justified in sustaining the addition of Rs.

4,25,372/- being the alleged difference in turnover as per 26AS and audited
accounts. Complete reconciliation for the same was furnished before lower
authorities. It was mentioned that the amount in 26AS includes interest
received, and other payments includes customs and other statutory duties
which have been separately accounted for in our books. As such, there is
absolutely no difference in the turnover figure. Moreover there was no
incriminating material found or seized during search to suggest for any such
addition. As such, the addition made is fit to be deleted.
52,000/- being made as deemed rental income. There was no vacant
residential property for which deemed income from rent can be estimated.
Complete detail of the properties held by the appellant was furnished before
the lower authorities. As such, the addition made in absence of any
incriminating material is fit to be deleted.
8 . For that ld. CIT(A) was not justified in confirming the addition of Rs.
2,99,888/- made by Ld. AO by disallowing expenses. General expenses and
salary to staff claimed in full was disallowed being said as bogus.
Disallowance of expenses is arbitrary, illegal and uncalled for. Appellant had
disclosed reasonable profit. As such, no disallowance of expenses is called
for. There was no incriminating material found during the course of search
operation to suggest the same. The addition has purely been made on ad-hoc
basis relying upon some anonymous TEP filed in group cases. As such, the
ad-hoc disallowance made by Ld. AO and confirmed by Ld. CIT(A) is fit to be
deleted.
9 . For that following the decision of Hon'ble Jharkhand High Court the
interest u/s. 234A and 234B should only be charged on the returned income
and not on the assessed income.
1 0 . For that any other grounds in detail shall be argued at the time of
hearing.
26. In addition to the written submissions filed by the assessee, which is placed on
record and also incorporated by us somewhere in the foregoing paragraphs, ld. AR,
during the course of hearing before us, submitted that the assessment framed in the
present case is abated. The AO has issued show cause notice to the assessee on
21.11.2016. Thereafter the AO proceeded to frame assessment on 28.11.2016 only
on the basis of TEP filed by somebody else on 21.11.2016, without providing any
reasonable opportunity of being heard to the assessee. Ld. AR also submitted that it
is not just and fair case that once the date of hearing has been fixed on 28.11.2016
and on the same date the order has also been passed in all the group cases. Ld. AR
further submitted that when he reached office on 29.11.2016, he came to know that
the order was passed on 28.11.2016. Hence, the AO asked the assessee that there is
no room for incorporating the submissions filed by the assessee because the order
has already been passed on 28.11.2016. Ld. AR further submitted that the CIT(A) has
also not properly considered the submissions of the assessee. Therefore, the ld. AR
of the assessee requested that the matter may kindly be restored to the file of AO for
deciding afresh after providing sufficient opportunity of hearing to the assessee, so
as to substantiate the claim by the assessee with proper documentary evidence.
27. On the other hand, ld. DR in all fairness, submitted that keeping in view the
entire facts and circumstances, in which the assessment orders have been passed, if
it is found just, proper and necessary to restore the issue to the file of AO then the

department has no serious objection to that in the interest of justice.
28. After hearing the submission of both the parties and perusing the entire material
on record, we find that the AO has issued show cause notice on 21.11.2016 on the
basis of TEP filed on 21.11.2016 for fixing the case on 28.11.2016 on which date the
AO passed the assessment order u/s. 153A r.w.s. 143(3) of the Act. The search was
conducted on 3rd July, 2014 and for selection of scrutiny u/s. 143(2) of the Act was
not expired on the date of search, therefore, this year's assessment would be
completed as a regular assessment u/s. 143(3) of the Act. The ld. AR of the assessee
was also unable to controvert that on the date of search, the assessment for the
impugned year has been completed. Our this view is supported by plethora of judicial
decisions. Accordingly, on perusal of the assessment order and considering the
request of the ld. AR of the assessee, to which ld. DR has not objected, we are of the
considered opinion that the assessee in this case was deprived of reasonable
opportunity of hearing. Therefore, we remit the matter back to the file of AO for
making de novo assessment after depth examination as per provisions of Income Tax
Act, 1961 after providing reasonable opportunity of being heard to the assessee. The
assessee is also directed to cooperate with the department for early disposal of the
case and also directed to not to seek any adjournments because the assessee has
been given many opportunities of being heard by the AO during the original
assessment proceeding. Thus, the grounds of appeal of the assessee for A.Y. 2013-
2014 are allowed for statistical purposes.
29. Since, the issues involved in IT(SS)A Nos. 39 & 40/Ran/2019 for the assessment
years 2014-2015 & 2015-2016 are similar and identical to the grounds raised in
IT(SS)A No. 38/Ran/2019 for the assessment year 20013-2014, wherein we have
remitted the matter back to the file of AO for de novo assessment, therefore, our
observations made in the above appeal of the assessee for A.Y. 2013-2014 shall
apply mutatis mutandis to these appeals of the assessee for A.Y. 2014-2015 & 2015-
2016, respectively. Accordingly, IT(SS)A Nos. 39 & 40/Ran/2019 are allowed for
statistical purposes.
3 0 . Thus, appeals in case of Shri Kamal Deo Sharma in IT(SS)A Nos. 34 to
37/Ran/2019 are allowed partly and IT(SS)A Nos. 38 to 40/Ran/2019 are allowed for
IT(SS)A Nos. 27 to 33/Ran/2019 (AY: 2009-2010 to 2015-2016)(Assessee-Smt.
Tripta Sharma)
31. First we shall take up appeals of the assessee for the assessment years 2009-
2010 to 2012-2013 i.e. IT(SS)A Nos. 27 to 30/Ran/2019.
3 2 . Ground Nos. 1 & 2 raised in appeals for A.Y. 2009-2010 to 2012-2013 are
similar to the grounds No. 1 & 2 decided by us in the case of assessee-Shri Kamal
Deo Sharma in IT(SS)A No. 34/Ran/2019. Accordingly, following the reasoning given
by us in the above appeal, ground Nos. 1 & 2 raised in these appeals by Smt. Tripta
Sharma are dismissed.
33. In ground No. 3 raised in appeals for A.Y. 2009-2010 to 2012-2013 are similar
to the grounds No. 3 decided by us in the case of assessee-Shri Kamal Deo Sharma
in IT(SS)A No. 34/Ran/2019, wherein we have held that the assessment order passed
by the AO u/s. 153A of the Act is not sustainable as the AO while making assessment
has not referred to any document whatsoever found during the course of search.
Therefore, our observations made in the ground No. 3 in IT(SS)A No. 34/Ran/2019
shall also apply mutatis mutandis to these appeals of the assessee. Accordingly,
ground No. 3 is allowed.

34. Thus, appeals in IT(SS)A Nos. 27 to 30/Ran/2019 for A.Y. 2009-2010 to 2012-
2013 are partly allowed.
35. Now, we shall take up appeals for assessment years 2013-2014 to 2015-2016.
35.1. On perusal of the grounds of appeal raised in the above appeals, we found that
similar grounds have been decided by us while considering the appeals of assessee-
Shri Kamal Deo Sharma in IT(SS)A No. 38/Ran/2019, wherein we have remitted the
matter back to the file of AO for de novo assessment. Accordingly, the issues raised
in the present appeals being similar to the appeal decided by us in IT(SS)A No.
38/Ran/2019 for the assessment year 2013-2014, therefore, our observations made
in the above appeal shall also apply mutatis mutandis to these appeals of the
assessee.
35.2. Thus, appeals of the assessee for A.Y. 2013-2014 to 2015-2016 are allowed for
36. Now, we shall take appeals of the Revenue in IT(SS)A Nos. 62 & 63/Ran/2019
for the assessment years 2009-2010 & 2011-2012.
36.1. In both the appeals, the Revenue has raised similar ground with regard to
deleting the addition made on account of difference of figures as per 26AS and figure
disclosed by the assessee.
36.2. Since we have quashed the assessment order passed u/s. 153A of the Act by
the AO while deciding the appeals of both the assessee i.e. Shri Kamal Deo Sharma &
Smt. Tripta Sharma in the forgoing paragraphs holding therein that in absence of
referring to any incriminating document whatsoever found during the course of
search by the AO while making the assessment, therefore, both the appeals of the
Revenue have become infructuous and the same are dismissed accordingly.
36.3. Thus, appeals of Revenue in IT(SS)A Nos. 62 & 63/Ran/2019 are dismissed.
37. In the result, appeals of assessee-Shri Kamal Deo Sharma in IT(SS)A Nos. 34 to
37/Ran/2019 are partly allowed and IT(SS)A Nos. 38 to 40/Ran/2019 are allowed for
statistical purposes. And, appeals of assessee-Smt. Tripta Sharma in IT(SS)A Nos. 27
to 30/Ran/2019 are partly allowed and IT(SS)A Nos. 31 to 33/Ran/2019 are allowed
for statistical purposes, whereas appeals of Revenue in IT(SS)A Nos. 62 &
63/Ran/2019 are dismissed.
Order pronounced in pursuance with Rule 34/4 of ITAT Rules, 1963 by putting the
copy of the same on Notice Board on 18/11/2019 at Ranchi.
© Manupatra Information Solutions Pvt. Ltd.

Kamal Deo Sharma and Ors Vs DCIT Central Circle1 aAN20190212191651055COM475988

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Kamal Deo Sharma and Ors Vs DCIT Central Circle1 aAN20190212191651055COM475988

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MANU/AN/0029/2019

IN THE ITAT, RANCHI BENCH, RANCHI

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