Notice u/s 153A (of Income Tax Act, 1961) held to be bad where no incriminating document found in search

1. The assessee is engaged in the business of trading and manufacturing of jewellery. There was a search and seizure operation carried by the department U/s 132 (of Income Tax Act, 1961) and survey U/s 133A (of Income Tax Act, 1961) on the Members of KGK Group on 06/5/2010 of which the assessee is one of the Members.

2. The Assessing Officer issued notice U/s 153A (of Income Tax Act, 1961) on 16/09/2011 and the assessee was asked to file a true and correct return of income as prescribed under Rule 12 (of Income Tax Rules, 1962) (in short the Rules) within 30 days from the service of said notice. The assessee in response to said notice filed return declaring a loss of Rs. 8,07,200/- with unabsorbed depreciation of Rs. 2,64,348/- and carry forward business loss and unabsorbed deprecation of previous years at Rs. 2,79,178/- was filed by the assessee on 31/3/2012 as declared in the original return filed by the assessee. The AO made an addition to the assessee’s income.

3. CIT(A), who had confirmed the addition by considering the assessee's submission and held that the Assessing Officer specifically asked the assessee to produce these share holders instead of which the assessee merely filed copy of their bank statements, balance sheets, P&L accounts etc.

4. On appeal the ITAT held as under:

5. In this case the return U/s 139(1) (of Income Tax Act, 1961) was filed on 30/09/2008 as per law for the year under consideration. The Assessing Officer could issue notice by 30/09/2009 U/s 143(2) (of Income Tax Act, 1961). In this case, search was conducted on 06/5/2010. Thereafter the Assessing Officer issued notice on 16/09/2011 U/s 153A (of Income Tax Act, 1961) read with Section 143(2) (of Income Tax Act, 1961). During the course of search, no incriminating documents were found. Therefore, no notice can be issued U/s 153A (of Income Tax Act, 1961) read with Section 143(3) (of Income Tax Act, 1961) because no proceeding was pending before the Assessing Officer, which has abated for issue of notice on the date of initiation of search. Various case laws referred by the assessee including Hon'ble Jurisdictional High Court decision in the case of Jai Steel (India) Vs. ACIT (supra) are squarely applicable on the case of the assessee. Thus, on technical ground, the assessee's appeal succeeds and order passed U/s 153A (of Income Tax Act, 1961) read with Section 143(3) (of Income Tax Act, 1961) is held void ab initio. 6.1 On facts also, the assessee has produced before the Assessing Officer copy of share application, confirmation of the cash creditors, copy of PAN, copy of Board resolution, copy of Director's report, auditor's report, copy of balance sheet, copy of P&L account, copy of bank account in all the cases to prove the identity, genuineness and creditworthiness of the cash creditors. The ld Assessing Officer made addition on the basis of investigation conducted by the ITO, Investigation Wing, Kolkata but the ld Assessing Officer of the assessee has not clarified what inquiry had been conducted and what evidences collected which goes against the assessee. The notice U/s 131 (of Income Tax Act, 1961) issued by the ITO, Investigation Wing, Kolkata were served in case of Vidya Agencies Pvt. Ltd. and Shivarpan Mercantiles Pvt. Ltd., but compliance could not be made on the given date because concerned officer was on leave. In case of Middleton Goods Pvt. Ltd. and Lactrodryer Marketing Pvt. Ltd., notices were served on the assessee and in compliance to the notice, the party submitted all the documents in the IT office. The case law referred by the ld CIT(A) i.e. decision of Hon'ble Delhi High Court in the case of Nipun Builders and Developers Pvt. Ltd. Vs. CIT and Vijay Power Generator Ltd. Vs CIT (supra) are not squarely applicable on the facts of the case as there was short time available with the Assessing Officer as well as Investigation Wing of Kolkata. The copy of inquiry has not been provided by the Assessing Officer to the assessee. As per findings of the Hon'ble Delhi High Court in the case Nipun Builders and Developers Pvt. Ltd. Vs. CIT (supra), the Investigation Officer at Kolkata had not deputed Inspector to enquire the whereabouts of the company. The case laws referred by the assessee are squarely applicable on the facts and circumstances of the appellant's case, therefore, we reverse the order of the ld CIT(A) on technical ground as well as on merit also.. In the result, the assessee's appeal is allowed.

Case Reference-BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM M/s Jadau Jewellers & Vs. Assistant Commissioner of Income Tax,

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR