Manjulata Kurele, New Delhi V. ACIT, New Delhi

ITA 5728/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6758 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Document seized; Principle of natural justice; Documents seized; Reassessment proceedings
• Section: 143(3); 50C; 153A; 234B; 147; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 5728 /DEL /20 13 ASSESSMENT YEAR : 20 0 5 - 0 6 MANJULATA KURELA VS. THE A.C.I.T A - 20, NARAINA INDUSTRIAL AREA CENTRAL CIRCLE - 23 PHASE I, NARAINA N EW DELHI NEW D ELHI [APPELLANT] [RESPONDENT] DATE OF HEARING : 1 6 . 1 2 . 2015 DATE OF PRONOUNCEMENT : 26 . 0 2 .2016 ASSESSEE BY : SHRI SANJAY KUMAR, CA DEPARTM ENT BY : SHRI SU LEKHA VERMA, CIT - DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE CIT(A) - XX X I II , NEW DELHI, DATED 28 / 06 /20 13 FOR A.Y 200 5 - 06 PASSED IN FIRST APPEAL NO. 949/10 - 11/483 . 2 ITA NO. 5728/DEL/2013 2 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: (1.1) BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 4,03,000/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN BY INVOKING THE PROVISIONS OF SECTION 50C. (1.2) BECAUSE ON A DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT (I) PROPERTY WAS AGREED TO BE SOLD IN JUNE, 2003 FOR RS. 20 LAKHS AND AN ADVANCE OF RS. 5 LAKHS WAS RECEIVED BY CHEQUE ON 14.6.2003 HOWEVER TH SALE DEED WAS REGISTERED ON 11.5.2004; (II) IN SPITE OF SEARCH AND SEIZURE ACTION U/S 132 HAVING BEEN CARRIED OUT TWICE, NO INCRIMINATING MATERIAL REQUIRING ADVERSE INFERENCE WAS FOUND; AND (III) IN THE EARLIER ASSESSMENT MADE U/ S 153A VIDE ORDER DATED 26.12.2007, NO ADVERSE INFERENCE WAS DRAWN ON THE SAME SET OF FACTS AVAILABLE ON R ECORD. THE LD. CIT(A) SHOULD HAVE HELD THAT IN SPITE OF PROVISIONS OF SECTION 50C NO ADDITION DESERVES TO BE MADE IN THE PRESENT CASE. 3 ITA NO. 5728/DEL/2013 3 2. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN STATING THAT CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE WHEREAS UNDER THE CIRCUMSTANCES NO INTEREST U/S 234A IS CHARGEABLE AND CHARGING OF INTEREST U/S 234B IS EXCESSIVE. 3. BECAUSE THE ORDER APPEAL AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. BRIEFLY STATED, FACTS RELATING TO THIS CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL LADY, WHO CONTINUED TO BE ASSESSED TO TAX REGULARLY FOR MORE THAN 20 YEARS. DU E TO SEARCH AND SEIZURE ACTION U /S 132 OF THE INCOME TAX ACT, 1961 [FOR SHORT, 'THE ACT'] ON 1.9.2005 (1 ST IN SEQUENCE), ASSESSMENT FOR THE IMPUGNED YEAR WAS MADE U /S 153A/143(3) OF THE ACT VIDE ORDER DATED 26.12.2007 WHEREIN ASSESSMENT WAS FRAMED BY MAKING ADDITION OF RS. 57,99 4 / - ON ACCOUNT OF SET OFF OF BROUGHT FORWARD LOSSES FROM THE INCOME RETURNED AS LONG - TERM CAPITAL GAINS AND AS AGAINST THE RETURNED INCOME OF RS. 39,31,613 / - , INCOME WAS ASSESSED AT RS. 39,89,607 / - . AGAIN, DU E TO SEARCH AND SEIZURE ACTION U /S 132 OF THE A CT ON 19.1.2009 (2 ND IN SEQUENCE), NOTICES U /S 153A OF THE ACT FOR SIX PRECEDING ASSESSMENT YEARS (I.E. A.Y. 2003 - 04 TO 2008 - 09) WERE ISSUED. IN COMPLIANCE, RETURNS FOR THE SAID S IX ASSESSMENT YEARS WERE FILED U /S 153A ON 1.2.2010 UNDER PROTEST AS NO INCRI MINATING MATERIAL WAS FOUND DURING 4 ITA NO. 5728/DEL/2013 4 THE COURSE OF SEARCH. RETURN FO R THE YEAR OF SEARCH WAS FILED U /S 139 OF THE ACT , IN TIME. THUS, ONLY ADDITION MADE WAS OF RS. 4,03,000 / - ON ACCOUNT OF LONG - TERM CAPITAL GAIN BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C IN THE ASSESSMENT YEAR 2005 - 06 I.E. THE YEAR UNDER APPEAL. RELEVANT FINDING OF THE ASSESSING OFFICER APPEARS AT PAGE 2 OF THE ASSESSMENT ORDER. ON PERUSAL OF WHICH IT W ILL BE SEEN THAT EVEN THE SAID ADDITION IS NOT BASED UPON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THOUGH NO INCRIMINATING MATERIAL WAS FOUND, AN ADDITION OF RS. 4,03,000 / - WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT. RELEVANT FINDING OF THE ASSESSING OFFICER APPEARS AT PAGE 2 OF THE AS SESSMENT ORDER W HEREBY ASSESSING OFFICER COMPUTED THE LONG TERM CAPITAL GAIN AT RS. 10,38,160/ - AS AGAINST ASSESSED AND RETURNED LONG TERM CA PITAL ASSTT. YEARS PARTICULA RS OF RETURN FILED ADDITION MADE PARTICULARS OF DATE OF FILING INCOME RETURNED INCOME ASSESSED DATE OF ORDER 2003 - 04 01.02.10 94,17,484 NIL 94,17,484 10.12.10 2004 - 05 01.02.10 11,99,366 NIL 11,99,366 10.12.10 2005 - 06 01.02.10 39,89,607 *4,03,000 43,92,607 10.12.10 2006 - 07 01.02.10 7,56,372 NIL 7,56,372 10.12.10 2007 - 08 01.02.10 4,59,485 NIL 4,59,485 10.12.10 2008 - 09 01.02.10 60,389 NIL 60,389 10.12.10 2009 - 10 31.07.09 3,75,943 NIL 3,75,943 10.12.10 * U/S 50C 5 ITA NO. 5728/DEL/2013 5 GAIN OF RS. 6,35,160 / - . 4. BEFORE CIT(A), IT WAS CONTENDED THAT A S ASSESSMENT FOR THE A.Y. 2005 - 06, STOOD ALREADY COMPLETED MUCH PRIOR TO SEARCH VIDE ASSESSMENT ORDER DATED 26.12.2007, THEREFORE, ASSESSMENT FOR THE YEAR DOES NOT GETS ABATED UNDER SECTION 153A OF THE ACT . FURTHER, AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH RELATING TO ANY OF THE ASSESSMENT YEAR, THEREFORE, NO ADDITION CAN BE MADE IN THE PRESENT ASSESSMENT. SAID PROPERTY WAS AGREED TO BE SOLD IN JUNE 2003 FOR RS. 20 LAKH S AND ADVANCE OF RS. 5 LAKHS WAS RECEIVED BY CHEQUE ON 14.6.2003, THOUGH SALE DEED WAS REGISTERED ON 11.5.2004 (AFTER A GAP OF 11 MONTHS APPROX), COPY OF SALE DEED HAS BEEN PLACED AT PAGE 11 - 23 OF PB. ADDITION HAS BEEN MADE WITHOUT MAKING REFE RENCE TO THE DVO. THE LD. AR FURTHER SUBMITTED THAT IN SPITE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 HAVING BEEN CARRIED OUT TWICE, NO INCRIMINATING MATERIAL REQUIRING ADVERSE INFERENCE WAS FOUND. HAVING PERUSED THE VERY SAME SALE DEED, NO ADDITIO N WAS MADE UNDER SECTION 50C OF THE ACT IN THE ASSESSMENT COMPLETED UNDER SECTION 153A/143(3) OF THE ACT EARLIER VIDE ORDER DATED 26.12.2007, THOUGH INCOME DECLARED UNDER THE HEAD CAPITAL GAINS WAS TINKERED WITH. 6 ITA NO. 5728/DEL/2013 6 5. THE LD. AR HAS RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANIL BHATIA WHEREIN IT HAS BEEN HELD AS UNDER: IN VIEW OF THE ABOVE RULING, I HOLD THAT THE ASSESSING OFFICER CAN GO BEYOND THE SEIZED MATERIAL WHILE ASSESSING TOTAL INCOME OF THE ASSESSEE UNDER SEC TION 153A OF THE ACT. AS A RESULT, THIS GROUND OF APPEAL IS ALLOWED (SIC DISALLOWED ). 6. THE LD. CIT(A) HAS HELD AS UNDER: REGARDING THE SECOND CONTENTION THE LD. CIT(A) S FINDING IS GIVNE AT PARA 5.3 AS UNDER: I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN SUBMISSION AND ARGUMENT OF LD. AR DURING THE APPELLATE PROCEEDINGS. IT IS UNDISPUTED FACT THAT THE STAMP VALUATION IS HIGHER THAN THE SALE CONSIDERATION. LD. AR HAS ONLY ARGUED THAT THE PROPERTY WAS AGREED TO BE SOLD IN JUNE 2003 WHEREAS REGISTRATI ON WAS DONE ON 11.5.2004. THEREFORE, THE STAMP VALUATION IS OF 11.5.2004. THIS FACT DOES NOT AFFECT THE WORK ABILITY OF SECTION 50C. THE APPELLANT HERSELF HAS DECLARED THE LONG TERM CAPITAL GAIN FOR ASSESSMENT YEAR 2005 - 06 FOR THE TRANSFER OF ASSETS ON THE BASIS OF DATE OF REGISTRATION AND NOT ON THE BASIS OF PART PERFORMANCE UNDER SECTION 2(47) OF I.T. ACT. THEREFORE, THIS ARGUMENT OF LD. AR DOES NOT HELP THE APPELLANT. 7 ITA NO. 5728/DEL/2013 7 AS REGARDS THE 3 RD CONTENTION, IT IS HELD BY THE CIT(A) IN PARA 5.3 AT PAGE 11 OF THE ORDER AS UNDER: NEXT ARGUMENT OF LD. AR IS THAT THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER FOR VALUATION TO THE DISTRICT VALUATION OFFICER AS PER THE PROVISION OF SUB - SECTION (2) AND (3) OF THE SECTION 50C AS STAMP VALUATION WAS MORE THAN TH E MARKET VALUE. I DO NOT AGREE WITH THIS ARGUMENT OF LD. AR. SUB SECTION (2) OF SECTION 50C CANNOT BE INVOKED AUTOMATICALLY. FOR THE OPERATION OF SUB - SECTION (2); THE ASSESSEE HAS TO CLAIM THAT STAMP VALUATION IS MORE THAN MARKET RATE WITH PROPER EVIDENC ES. ON THE CLAIM OF ASSESSEE, THE ASSESSING OFFICER WILL APPLY HIS MIND AND MAY REFER THE ISSUE FOR VALUATION TO DISTRICT VALUATION OFFICER. OPERATION SECTION 50C (2) IS NOT AUTOMATIC AS ARGUED BY LD. AR. THE ASSESSEE HAS TO DEMONSTRATE PRIMA FACIE CASE THAT STAMP VALUATION IS MORE THAN MARKET VALUE FOR THE OPERATION OF SECTION 50C(2). THEREFORE, I DO NOT AGREE WITH THIS ARGUMENT OF LD. AR. AS REGARDS THE 4 TH CONTENTION, IT IS HELD BY THE CIT(A) IN PARA 5.3 AT PAGE 11 OF THE ORDER AS UNDER: NEXT ARGUMENT OF LD. AR IS THAT THE ADDITION WAS MADE WITHOUT SEIZED DOCUMENTS. THIS ISSUE HAS BEEN DEED 8 ITA NO. 5728/DEL/2013 8 (SIC - DEALT) IN DETAILS IN EARLIER GROUND. I HAVE D ECIDED THAT THE ASSESSING OFFICER U/S 153A HAS POWER TO ASSESS TOTAL INCOME INCLUDING UNDISCLOSED INCOME AS PER THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF ANIL BHATIA. AS A RESULT, THIS GROUND OF APPEAL IS DISMISSED. SO FAR AS THE 5 TH CONT ENTION OF THE APPELLANT IS CONCERNED, IT APPEARS IN VIEW OF THE FACT THAT CIT(A) IS OF THE OPINION THAT ADDITION CAN BE MADE EVEN IN THE ABSENCE OF ANY SEIZED MATERIAL, HE HAS NOT GIVEN ANY SPECIFIC FINDING ON THIS SCORE. ALL THE AFORESAID ISSUE, HAS BEEN RAISED BY THE ASSESSEE BY WAY OF GROUNDS OF APPEAL NO. 1.1 & 1.2 BEFORE THE HON BLE ITAT. IN SUPPORT OF GROUNDS TAKEN, IT IS SUBMITTED AS UNDER: SO FAR AS THE ISSUE WHETHER ANY INCRIMINATING MATERIAL IS A MUST SO AS TO MA KE ADDITION IN THE ASSESSMENT FRAMED U/S 153A FOR THE YEARS WHICH DO NOT GETS ABATED AND FOR WHICH THERE IS NO INCRIMINATING MATERIAL, RELIANCE IS PLACED ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE RECENT DECISION DATED 28..8.2015 IN THE CASE OF CIT VS. KABUL CHAWLA [ITA 707, 709 AND 713 OF 2014] SINCE REPORTED IN [2015] 234 TAXMAN 300 (DEL), WHEREIN AFTER ANALYZING THE CASES OF - ( I ) CIT V. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DEL) (PARA 15 - 21); ( II ) CIT V. CHETAN DAS LACHMAN DAS [2012] 211 TAXMAN 61 (DEL) 9 ITA NO. 5728/DEL/2013 9 (PARA 22 - 23); ( III ) MADUGULA VENU V. D/T [2013] 215 TAXMAN 298 (DELHI) (PARA 24); ( IV ) CANARA HOUSING DEVELOPMENT CO. V. DCIT DT. 25.7.2014 OF KARNATAKA HIGH COURT (PARA 25 - 27); ( V ) FILATEX INDIA LTD. V. CIT [2014] 49 TAXMANN.COM 465 (DELHI) (PARA 28 - 31) ( VI ) CIT V. KURELE PAPER MILLS P. LTD. [ITA NO. 369 OF 2015 DT. 6.7.2015] (PARA 32); ( VII ) JAI STEEL (INDIA) V. ACIT [2013] 36 TAXMANN. COM 523 (RAJ) (PARA 33 - 34); ( VIII ) CIT V. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. [2015] 374 ITR 645 (BOM) (PARA 35 - 36) IT HAS BEEN REITERATED THAT SETTLED LEGAL PROPOSITION IS IF NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITION COULD BE MADE TO THE INCOME ALREADY ASSESSED AND THE RELATED LEGAL PROPOSITION HAS BEEN SUMMARIZED IN PARA 37 OF THE SAID ORDER. 1 . FURTHER, IT IS SUBMITTED THAT UNDER THE CIRCUMSTANCES AS THE SAID SALE DEED WAS AVAILABLE AT THE STAGE OF ORIGINAL ASSESSMENT ITSELF, AND ALL THE FACTS STOOD ALREADY DISCLOSED AND PROVISIONS OF SECTION 50C WERE NOT INVOKED, THEREFORE, IN THE PRESENT ASSESSMENT NO ADDITION CAN BE MADE BY INVOKING THE DEEMING PROVISIONS OF SECTION 50C. RELIANCE IS PLACED ON THE DECISION OF HON BLE AGRA BENCH OF ITAT IN THE CASE OF ITO V. HARESH CHAND AGARWAL, HUF [ITA NO. 282/AGRA/2013] DATED 20.12.2013, WHE RIN UNDER SIMILAR CIRCUMSTANCES, REASSESSMENT MADE U/S 147 10 ITA NO. 5728/DEL/2013 10 WAS QUASHED, KIND ATTENTION IS INVITED TO PARA 5 OF THE SAID ORDER. 2 . FURTHER ON MERITS, APART FROM THE SUBMISSION MADE BEFORE THE CIT(A) IT IS SUBMITTED THAT ON PERUSAL OF SALE DEED IT WILL BE SEEN THAT VALUATION MADE BY THE STAMP VALUATION AUTHORITIES IS MADE UP AS UNDER: COST OF LAND 20,05,380 ADD: 5% DUE TO PARK FACING 1,00,269 COST OF 34 YEARS OLD CONSTRUCTION 2,97,136 TOTAL ------------------------- 24,02,785 SAY 24,03,000 3 . ACCORDINGLY, ON A DUE CONSIDERATION OF FACT THAT CONSTRUCTION IS 34 YEARS OLD WHICH DOES NOT HAVE ANY VALUE AS SUCH RATHER, DEMOLITION OF THE SAID CONSTRUCTION WILL BE EXTRA TO THE BUYER, THEREFORE, THERE IS NO MAJOR DIFFERENCE AND IN ANY CASE DIFFERENCE IS BELOW 10%, NO ADDITION DUE TO VAL UATION DIFFERENCE IS CALLED FOR. 5. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE ACTION OF THE AUTHORITIES BELOW AND CONTENDED THAT THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA [SUPRA] DOES NOT APPLY TO THE FAC TS AND CIRCUMSTANCES OF THE PRESENT CASE. 11 ITA NO. 5728/DEL/2013 11 6. PLACING REJOINDER TO THE ABOVE SUBMISSIONS OF THE LD. DR, THE LD. AR HAS DRAWN OUR ATTENTION TOWARDS PARA 37 OF THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA [SUPRA] AND VEHEM ENTLY CONTENDED THAT THE HON'BLE HIGH COURT HAS SUMMARIZED THE LEGAL POSITION AND THE PROPOSITION IN THIS REGARD AND IN LEGAL POSITION NO. IV, IT IS AMPLY CLEAR THAT THE ASSESSMENT U/S 153A OF THE ACT HAS TO BE MADE ONLY O N THE BASIS OF SEIZED MATERIAL. 7. ON CAREFUL CONSIDERATION OF SUBMISSION OF BOTH THE RIVAL REPRESENTATIVES, AT THE VERY OUTSET, UNDISPUTEDLY AND ADMITTEDLY, THE EARLIER ASSESSMENT FOR A.Y 2005 - 06 WAS COMPLETED U/S 153A R.W.S 143(3) OF THE ACT ON 26.12.2007 AND COPY OF THIS ORDER HAS BEE N PLACED BY THE ASSESSEE AT PAGES 1 AND 2 OF HER PAPER BOOK WHEREIN NO DISALLOWANCE U/S 50C OF THE ACT WAS ALSO BEFORE THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS WHICH WAS COMPLETED ON 27.12.2007 AND NO ADDITION WAS MADE IN THIS REGARD. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FURTHER OBSERVE THAT FROM THE ASSESSMENT ORDER AND IMPUGNED ORDER IN THIS APPEAL, IT IS REVEALED THAT THE AO MADE ADDITION OF RS. 4,03,000/ - FOR A.Y 2005 - 06 BY INVOKING DEEMING PROVISIONS OF SECTION 50C OF THE ACT WHI CH IS THE YEAR UNDER APPEAL. ON 12 ITA NO. 5728/DEL/2013 12 CAREFUL PERUSAL OF THE OPERATING PARAS AT PAGE 2 OF THE ASSESSMENT ORDER, IT IS AMPLY CLE A R THA T THE SAID ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. AT THIS JUNCTURE, WHEN WE CON SIDER THE DICTA LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA, WE NOTE THAT THEIR LORDSHIPS , AFTER REFERRING TO ALL THE RELEVANT EARLIER JUDGMENT OF HON'BLE SUPREME COURT AND VARIOUS HON'BLE HIGH COURTS SUMMARIZED A LEGAL P OSITION IN PARA 37 OF THE ORDER WHEREIN IT WAS EXPLICITLY HELD THAT AN ASSESSMENT U/S 153A OF THE ACT HAS TO BE MADE ONLY ON THE BASIS OF SEIZED MATERIAL. FOR THE SAKE OF COMPLETENESS OF OUR CONCLUSION, WE RESPECTFULLY REPRODUCE PARA 37 OF THIS ORDER AS U NDER: PARA 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(L) 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 T HE SEARCH TAKES PLACE. 13 ITA NO. 5728/DEL/2013 13 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 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERI AL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V . IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 14 ITA NO. 5728/DEL/2013 14 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDING S. 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 A NY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. [EMPHASIS RESPECTFULLY SUPPLIED BY US BY UND ERLYING] 8. IN THE LIGHT OF DICTA LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA [SUPRA] WHEN WE ANALYSE THE ACTION OF THE AO IN THE PRESENT CASE, THEN WE OBSERVE THAT THE AO HAS MADE ADDITION BY INVOKING DEEMING PROVISION OF SECTION 50C OF THE ACT AND 15 ITA NO. 5728/DEL/2013 15 ADDITION FOR A.Y 2005 - 06 HAS BEEN MADE ON THE BASIS OF FACTS AND EVIDENCE WHICH WAS ALREADY AVAILABLE WITH THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS SUBSEQUENT ASSESSMENT PROCEEDINGS WHICH WERE COMPLETED ON 26.12.2007 U/S 143(3) R.W.S. 153A OF THE ACT. IT IS PERTINENT TO NOTE THAT THE AO HAS NOT MADE ANY ADDITION IN THE OTHER A.YS WHICH FALL WITHIN THE BLOCK OF A.YS AS WELL AS IN THE A.Y WHEREIN SEARCH AND SEIZURE OPERATION WAS CONDUCTED. IN THIS SITUATION, WHEN THERE WAS NO INCRIMINATING MATERIAL WITH THE AO, FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT ON 19.1.2009 WHICH W A S SECOND SEARCH OPERATION IN SEQUENCE, THEN NO ADDITION CAN BE HELD AS SUSTAINABLE DE HORS INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE INCLINED TO HELD THAT THE ADDITION MADE FOR THE YEAR UNDER CONSIDERATION , WHICH IS NOT BASE D ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARC H IS NOT SUSTAINABLE AND RESPECTFULLY FOLLOWING THE PRECEDENT LAID DOWN BY THE HON'BLE HIGH COURT, IN THE CASE OF KABUL CHAWLA [SUPRA] ADDITION MADE BY THE AO AND UPHELD BY THE LD. CIT(A) IS DEMOLISHED. WE ORDER ACCORDINGLY. 16 ITA NO. 5728/DEL/2013 16 9. SINCE BY THE EARLIER PART OF THIS ORDER WE HAVE QUASHED REASSESSMENT PROCEEDINGS, THE OTHER GROUNDS OF THE ASSESSEE ON MERITS BECOME ACADEMIC AND INFRUCTUOUS AND WE DISMISS THE SAME AS HAVING BECOME INFRUCTUOUS WITHOUT ANY ADJUDICATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL GROUND IN THE MANNER AS INDICATED ABOVE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 6 . 0 2 .201 6 . S D / - S D / - ( N.K. SAINI ) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 6 T H FEBRUARY, 2016 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI