Muzaffar Hussain, CIT (DR) for the Revenue. Sunil Jain for the Respondent.

Present appeals and cross appeals has been filed by assessee as well as revenue against order is dated 26/03/2016 and 26/04/2017 passed by Ld.CIT(A)-11, Bangalore under section 143 (3) read with section 144C and 153A of the Act, and 143(3) read with section 153A of the Act, for assessment years 2009-10 and 2008-9 respectively.

Brief facts of the case are as under:

2. Assessee is an infrastructure company engaged in the business of handling engineering procurement construction solutions in infrastructure sector, corporate support services to various infrastructure special purpose vehicles, infrastructure development, financing, investment with banks, investment in shares and securities in its subsidiaries whether incorporated in India or abroad, investment and mutual funds, rendering managerial services etc assessee was deriving its income by way of contract revenue, management service fees, interest, profit on disposal of shares and securities.

3. For years under consideration assessee filed its return of income on 30/09/2008 and 30/09/2009 respectively.

4. During the original assessment proceedings, Ld. AO made addition under section 14 A read with Rule 8 D for assessment years under consideration. Assessment was completed for years under consideration by Ld.AO under section 143 (3) on 23/12/2010 and 12/12/2011 for assessment years 2008-09 and 2009-10 respectively, by computing disallowance under section 14 A in both the years.

5. Subsequently search was undertaken on 11/10/2012 in the premises of assessee.

6. Ld.AR submitted that, primary question raised by assessee in present appeals for years under consideration are in respect of validity of assessment order passed by Ld.AO under section 153A of the Act, without there being any incriminating material/undisclosed income found during course of search, since original assessment was completed under section 143(3) of the Act, for years under consideration.

7. Ld.AR placed reliance on various decision including assessee’s own case passed by this Tribunal on identical issue in preceding assessment years:

• Decision of Hon’ble Bombay High Court in case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd reported in 374 ITR 645

• Special Bench of the Tribunal in case of Al Cargo Global Logestic Ltd vs DCIT reported in (2012) 18 ITR 106 (Trib.)

• Decision of Hon’ble Delhi Tribunal in case of DCIT vs Dharam pal Satya pal Ltd in ITA No. 3877- 3881/del/2016 and ITA No. 3310, 3717-3719, 3737/del/2016 for assessment year 2005-06 to 2009-10 vide order dated 17/05/2018Decision of Supreme Court dismissing SLP in the case of Kurele Paper Mills P Ltd

• PR.CIT VS Kurele Paper Mills (P) Ltd (81 taxmann.com 82) (Delhi High Court)

• ACIT vs Cornerstone Properties Pvt Ltd in ITA CO Nos. 1714 to 1717/Bang/2013 and Cornerstone Properties Pvt Ltd vs ACIT in C.O.Nos.62 to 65/Ban g12014 (in ITA Nos. 1714 to 1717/Bang/2013) dated September 8, 2017 (Bangalore Tribunal)

• The Rajasthan High Court in the case of Jai Steel (India' v. ACIT 1(259 CTR 281) (Rai.)]

• The Hon'ble High Court of Karnataka, in the case of Canara Housing Development Co. v. DCIT (49 Taxmann.com 98)

• Delhi High Court in the case of Kabul Chawla (61 Taxmann.com 412- Para 25 to 27)

• Delhi High Court in the case of Meeta Gutgutia (82 Taxmann.com 287).

• Hon’ble Supreme Court dismissed SLP filed by the Revenuer in Meeta Gutgutia case (96 Taxmannnn.com 468)

• Bangalore ITAT in case of GMR Kamalanga Energy Ltd vs DCIT in ITA No. 1235,1236, 1307 & 1308/ Bang/2017 dated April 5, 2019 for AY 2008-09 to AY 2011-12

8. It has thus been contended by assessee that no incriminating material is found in search in connection with any of the assessment years under consideration.

9. On the contrary Ld.CIT.DR submitted that for assessment year 2007-08, Hon’ble High Court remanded the issue to this Tribunal for fresh consideration in accordance with law. He submitted that even if there is no incriminating material that was seized leading to undisclosed income, proceedings under section 153A could be invoked on an issue that has been subject matter of consideration in original assessment proceedings. He placed reliance on decision of Hon’ble Karnataka High Court in case of Canara Housing Development company vs CIT reported in 62 taxmann.com 250.

10. We have perused submissions advanced by both sides in light of records placed before us.

11. At the outset a query was raised by the bench, as to whether, there is a finding of any authorities below on the factual aspects that any incriminating material for the assessment years under consideration was found during course of search or not and that the additions made are based on such incriminating materials that was unearthed during the course of search.

12. Both sides replied that Ld. CIT (A) has not given a finding on this aspect, though it was raised for the years under consideration in Ground No. 3 for assessment year 2009-10 and Ground No.I for assessment year 2008-09.

13. On perusal of the orders passed by authorities below, we note that they have proceeded on the footing that, undisclosed income or incriminating material is not a precondition for issue of notice under section 153A. Ld.CIT.DR as well as the authorities below have placed reliance on decision of Hon’ble Karnataka High Court in case of Canara Housing Development company vs CIT (supra).

14. We have considered the argument advanced by Ld.Sr.DR in light of decision of Hon’ble Karnataka High Court in case of Canara Housing Development company vs CIT (supra). We note that the view taken by Hon’ble court in this case is that having invoked the provisions of section 153A in proper manner, assessment is to be carried on based on income found in the search and/or declared by assessee during search and/or any other income that comes in light during assessment proceedings under section 153A. We note that Hon’ble Court had observed that, there was incriminating material unearthed during the course of search in that case. Hence in our considered opinion this judgment of Hon’ble Karnataka High Court is not relevant to decide the aspect as to whether section 153A can be invoked for the years, where there is no finding regarding incriminating material being found in search in an unabated assessment.

15. From the records placed before us for years under consideration, we note that the assessment orders, were passed under section 143(3) before the date of search. We refer to certain decisions relied by Ld.AR wherein plethora of decisions passed by Hon’ble Supreme Court and various Hon’ble High Courts have been considered on identical issue. On perusal of decision of Hon’ble Delhi Tribunal in case of CIT vs Dharampal Satyapal Ltd.(supra), we note that Hon’ble Supreme Court in case of CIT vs Sinhagd Technical Education Society reported in 397 ITR 344 held that, incriminating material had to pertain to assessment year for making addition in a concluded assessment.

16. Under such circumstances, without there being a clear finding in respect of their being incriminating material/unaccounted money unearthed during the course of search, validity of assessment order passed under section 153A cannot be ascertained. Hence we feel it proper to remand the issue back to Ld.CIT(A) for fresh consideration on this aspect about validity of invocation of section 153A in the light of decision of Hon’ble Supreme Court in case of CIT vs Sinhagd Technical Education Society (supra). In the event assessee succeeds on this aspect then nothing remains to be decided on merits. But if assessee fails on this aspect, then the issue on merits should be decided by Ld.CIT(A) afresh, in accordance with law.

17. We also note that Ld.CIT(A) remanded certain issues to Ld.AO to consider in accordance with law. In our opinion after the amendment to section 251, Ld.CIT(A) cannot remand any issue to Ld.AO and has to decide it himself. Hence we set aside the orders of Ld.CIT(A) in both the years under consideration and remand entire issues alleged by assessee, with a clear direction that, he should 1st decide the legal ground raised by assessee as indicated hereinabove and thereafter decide the issue on merits if assessee fails in the legal ground.

In the result appeal is filed by assessee as well as revenue stands allowed for statistical purposes and cross objection filed by assessee becomes infructuous.

Order pronounced in open court on 28th Oct, 2020

Sd/- Sd/-

(A.K GARODIA) (BEENA PILLAI)

Accountant Member Judicial Member

Bangalore,

Dated, the 28th Oct, 2020.