Whether assessments which have attained finality u/s 153A can be disturbed or varied if no incriminating material is found qua the addition made?

IN THE INCOME TAX APPELLATE TRIBUNAL,

MUMBAI BENCH “I”, MUMBAI

BEFORE SHRI N. K. BILLAIYA ACCOUNTANT MEMBER AND

SHRI AMIT SHUKLA, JUDICIAL MEMBER

ITA No. 1553 & 3173/Mum/2010

Assessment Year: 2002-03 & 2004-05

Jignesh P. Shah

10th Floor, Hiralay Building,

Ashok Nagar CHS JVPD

Scheme, Vile Parle (W),

Mumbai 400 049

PAN:-AELPS9392A

(Appellant)

Versus.

DCIT

Cen Cir-46,Mumbai

(Respondent)

Assessee by: ShriChetanKaria

Revenue by: ShriKishanVyas

Date of hearing: 03.02.2015

Date of Order: 13.02.2015

O R D E R

PER AMIT SHUKLA, JM:

The aforesaid appeals have been filed by the Assessee, against order dated 02.02.2010 & 08.02.2010 for the A.Ys. 2002-03 and 2004-05 respectively, passed by Ld. CIT(A)-38, Mumbai for the quantum of assessment passed u/s 153 A r.w.s. 143(3) of the Income-tax Act. Since the facts and issues involved in both the appeals are common therefore, same are being disposed off by way of this consolidated order.

2. In various grounds of the appeal, assessee has mainly challenged the addition on account of deemed dividend u/s 2(22)(e) ofRs.1,69,68,750/- in the A.Y. 2002-03 and sum of Rs.4,62,91,123/-in the A.Y. 2004-05. Besides this, the assessee has also filed petition for admission of following as additional ground, which is common in both the years except for variation in the figures of deemed dividend.

“1. The learned Commissioner of Income Tax (Appeals) erred in confirming and the learned Assessing Officer erred in passing the assessment order u/s 153A and the same is without jurisdiction and ban in law.

2. The learned Commissioner of Income Tax (Appeals) erred in confirming and the learned Assessing Officer erred in making addition of Rs.1,69,68,750/- u/s 2(22)(e) in assessment order u/s143(3) r.w.s. 153A and the same is without jurisdiction and bad in law.

3. The learned Commissioner of Income Tax (Appeals) and Assessing Officer erred in determining amount of deemed dividend at Rs.1,69,68,750/-

4. The appellant prays that:

i) assessment order u/s 143(3) r.w.s. 153A may be cancelled as without jurisdiction and bad in law,

ii) addition of s.1,69,68,750/- u/s 2(22)(e) may be deleted as being without jurisdiction and bad in law,

iii) any other relief your honours may deem fit.”

3. Since the aforesaid additional grounds raised by the assessee are purely legal grounds arising out of facts and material on record and does not require any investigation or verification of facts therefore, in view of the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT reported in (1998) 229 ITR 383,we are admitting the additional grounds.

4. The brief facts qua the issue raised in the additional ground are that, assessee is an individual having salary income and income from other sources. Return of income for the A.Y. 2002-03 was filed on31.03.2003 u/s 139 at an income of Rs.14,69,770/- and for the A.Y.2004-05, return was filed on 31.03.2005 u/s 139 at an income ofRs.9,82,210/-. After the filing of the return of income, no notice u/s143(2) was issued within the time limit prescribed under the statute, which was 31.03.2004 for the A.Y. 2002-03 and 31.03.2006 for the A.Y.2004-05. Thus, the return of income stood assessed and had attained finality. Thereafter search and seizure action u/s 132(1) was carried out by the Investigation Wing Mumbai in the case of Commodities Exchange Group on 19.06.2007. The assessee being the member of Financial Technologies India Ltd., was also covered under the same search and seizure action. In pursuance of search action u/s 132(1), notices u/s153A was issued to the assessee on 25.10.2007 for the six assessment years immediately preceding the assessment year of the year of the search, which included the aforesaid assessment years. In response to the said notices the assessee filed his return of income on 26.11.2007on the same income which was declared in the original return of income filed u/s 139. In the assessment order passed u/s 153A, read with section 143(3), the addition on account of deemed dividend ofRs.1,69,68,750/- for the A.Y. 2002-03 and Rs.4,65,76,000/- for the A.Y.2004-05 was made, vide separate order dated 31.03.2009.

5. Before us, learned counsel submitted that during the course of search and seizure action, no incriminating document, material or unaccounted assets were found from the assessee. Even for the year of search i.e. A.Y. 2008-09, no addition has been made. The assessing officer without there being any incriminating material found in the course of search relating to the deemed dividend has made the addition on the basis of information already available in the return of income. This is also evident from the copy of panchnama and statement on oath of the assessee recorded at the time of search, the copy of which have been placed in the paper book form pages 135 to 139. Even in the assessment order there is no whisper about any material or document found at the time of search relating to the transaction of deemed dividend. The Ld. AO he has noted the facts about receiving of the payments by the assessee from M/s. Lotus investment, which was a division of M/s. La-fin Financial Services Pvt. Ltd. in which the assesse held 50% of share, from the balance sheets and records already filed along with the return of income. Since the assessment for the A.Ys.

2002-03 & 2004-05 had attained finality before the date of search and does not get abated in view of second proviso to section 153A,therefore, without there being any incriminating material found at thetime of search, no addition over and above the income which already stood assessed can be made. This proposition he said, is squarely covered by the decision of All Cargo Global Logistics Ltd. Vs. DCIT reported in (2012) 137 ITD 287 (SB) (Mum). Even the Hon’ble jurisdictional (Bombay) High Court in the case of CIT Vs. M/s. Murli Agro Products Ltd. ITA No. 36 of 2009 order dated 29.10.2010, has clearly held that, once the assessment has attained finality before the date of search and no material is found in the course of proceedings u/s 132(1),then no addition can be made in the proceedings u/s 153A. This proposition has been reiterated by Hon’ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT reported in (2013) 259 CTR (Raj) 281.Thus, the addition of deemed dividend made by the assessing officer is beyond the scope of assessment u/s 153A for the impugned assessment years.

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