| The Tax Publishers2022 TaxPub(DT) 1380 (Mum-Trib) INCOME TAX ACT, 1961
Section 153A
In respect of unabated assessment on date of search, the AO in search assessment proceedings cannot disturb the originally concluded assessment unless there is incriminating material found during the course of search relatable to such assessment year. In instant case, since on date of search action, the assessment for relevant assessment year was concluded/unabated and there was absolutely no reference to any seized material made by the AO for making additions in the hands of the assessee towards unexplained investment and unexplained expenditure under sections 69 and 69C respectively; the CIT(A) was justified in deleting such additions made under sections 69 and 69C.
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Search and seizure - Assessment under section 153A - Assessment being abated/concluded - No incriminating material found in search
Assessee filed her return of income, which was duly processed under section 143(1). Subsequently, a search and seizure action was carried out in case of an entity 'I' and other group concerns. Consequent to the search, the case of the assessee was also centralized and accordingly, a notice under section 153A was issued to the assessee. During course of search assessment proceedings, AO observed that assessee sold shares of an entity 'G'. AO categorized the scrip of 'G' as a penny stock involved in artificial price rigging thereon and thus, treated sale proceeds as a mere accommodation entry and added the same as unexplained investment under section 69. AO also added corresponding commission expenditure under section 69C as an expenditure incurred for taking accommodation entry. On appeal, CIT (A) deleted such additions on the ground that there was absolutely no incriminating material found during the course of search for making the said additions. Aggrieved, Revenue was in appeal.Held: Admittedly, as on date of search action, assessment for relevant assessment year was concluded/unabated as time limit for issuance of notice under section 143(2) on original return filed got expired. There was absolutely no reference to any seized material made by AO for making additions in the hands of assessee towards unexplained investment and unexplained expenditure under sections 69 and 69C respectively. The law is very well settled that in respect of unabated assessment on date of search, the AO in search assessment proceedings cannot disturb the originally concluded assessment unless there is incriminating material found during the course of search relatable to such assessment year. Further, Revenue argued that issue of absence of incriminating material was raised by the assessee for the first time only before CIT(A) and that the CIT(A) ought not to have entertained the said ground and granted relief to the assessee. It is settled position of law that CIT(A) is having co-terminus powers with that of AO and also has power to enhancement, which is statutorily provided to him. Further, in any case, if issue raised by the assessee for the first time before the CIT(A) is purely a legal issue, it can be raised at any time during the pendency of proceedings, as it goes to the root of the matter. Therefore, there was no merit in the said argument of the revenue. Hence, the CIT(A) was justified in deleting the additions made under sections 69 and 69C.
Distinguished:Dy. CIT v. Anr. v. Zuari Estate Development & Investment Company Ltd. (2015) 63 Taxmann.com 177 (SC) : 2015 TaxPub(DT) 2254 (SC) and Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Limited (2015) 63 Taxmann.com 177 (SC) : 2015 TaxPub(DT) 2254 (SC). Relied:CIT (Central)-III v. Kabul Chawla (2015) 380 ITR 573 (Del-HC) : 2015 TaxPub(DT) 3486 (Del-HC) and CIT-II, Thane v. Continental Warehousing Corporation (Nhava Sheva) Ltd., All Cargo Global Logistics Ltd. (2015) 374 ITR 645 (Bom-HC) : 2015 TaxPub(DT) 2182 (Bom-HC).
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