IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH `H, MUMBAI. Before Shri Shri J.

Sudhakar Reddy, Accountant Member and Smt. Asha Vijayraghavan, Judicial Member. S.No. I.T.A. No. Asstt. Year. 1. 2855/Mum/2008 1999-2000 2. 2856/Mum/2008 2000-01 3. 2857/Mum/2008 2001-02 4. 2858/Mum/2008 2002-03 5. 2859/Mum/2008 2003-04 6. 2860/Mum/2008 2004-05. Anil P. Khimani, Dy. Commissioner of Income-tax, 518, Kalbadevi Road, Vs. 14(2), Mumbai. Mumbai 400002. PAN AAKPK 4124D Appellant Respondent Appellant by : Shri S.M. Jain. Respondent by : Shri Abhijit Patankar. ORDER Per J. Sudhakar Reddy, A.M. All these appeals are filed by the assessee and are directed against the separate but identical orders of the CIT(Appeals)-XIV, Mumbai dated 19-11-2007. As the issues arising in all these appeals are common, for the sake of convenience, they have heard together and dispose of by way of this common order. 2. There is a delay of 91 days in filing of all these appeals. The assessee submitted a letter for condonation of delay and also filed an affidavit explaining the delay. It was explained that the assessee was 2 suffering from a neurological health problem and proof of the same by way of Doctors certificate has been furnished. On going through these papers and on hearing the learned DR, we are of the considered opinion that the assessee has been prevented by a reasonable cause in filing these appeals in time. Thus we condone the delay in filing all these appeals. 3. The assessee filed two additional grounds of appeal which read as follows : 1. On the facts and the circumstances of the case and in law, the learned CIT(A) has erred in rejecting the ground of appeal regarding assumption of jurisdiction by the AO to frame the Assessment Order. Reasons assigned by him for adjudicating the ground of appeal against the assessee are wrong and insufficient in as much as requirement of recording reasons for the transfer of case is a mandatory direction and non communication thereof to the assessee is not saved by showing that the reasons exist in the file although not communicated to the assessee. 2. On the facts and the circumstances of the case and in law since nothing incriminating was found in the course of the search relating to the Assessment Year in question and thereby disturb the

assessment cannot be warranted under the provisions contained in sec. 153 A. Provisions of the Act ought to have been properly construed and resort to sec. 153 A ought not to have been nmade. It was prayed that these being questions of law, which require no factual investigation, the same may be admitted. Reliance was placed on the decision in the case of Ahmedabad Electricity Co. Ltd. Vs. CIT 199 ITR 351 (Bom.) (FB). After hearing the rival contentions, we admit these grounds of appeal. 4. Facts in brief : The assessee is a proprietor of M/s Ronak Enterprises trading in oil and electrical contract works. Action u/s 132A was conducted by the DDIT (Inv.), Jabalpur and gold about 4 kgs. and cash 3 of Rs.79,000/-was seized from the assessee. Earlier the assessee had filed returns of income. The ITO, Ward 14(2)-2 had issued notice u/s 153A for all the assessment years. In response thereto the assessee filed fresh return of income declaring a similar amount as which was declared when he filed the original return of income. In other words, the assessee had in response to a notice issued u/s 153A filed the same return of income, as was originally filed. 5. For all the assessment years the AO completed the assessments u/s 143(3) read with section 153A. The only addition that has been made for each of the assessment years, is on account of low withdrawal and from opening balance in capital account. A perusal of all the assessment orders shows that none of the additions were based on any material found during the course of search. The AO on page 2 para 6 explained the basis of the addition as follows : The assessee was requested to explain the low withdrawals on the house hold expenditure. The house hold expenditure of Rs.17,000/-debited to Capital A/c appears to be very low. The assessees representative has stated that the assessee and his family are supported by his in-laws. However, the ARs submission are not acceptable, convincing and reliable. Because, assesees in-laws are residing at Andheri, whereas the assessee is residing at Dahisar. Therefore, considering the size of the assesees family i.e. assessee himself, his wife and two school going children, the yearly withdrawals for maintenance of family of four members, the household expenditure is estimated at Rs.1,20,000/-for the year. So, by reducing the withdrawals shown in the Capital A/c, the balance is added in the net taxable income. Thus, the same works out is Rs.1,03,000/-. 6. On appeal, the CIT(Appeals) deleted the addition made on account of opening capital account. On the issue of additions made on 4 account of low withdrawals, the first appellate authority confirmed the same. Aggrieved, the assessee is in appeal before us. 7. In addition to the additional grounds of appeal, the assessee has raised the following original ground :

 On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) has erred in confirming an addition of Rs.1,03,000/-on account of low withdrawals. 8. The learned counsel for the assessee Mr. S.M. Jain, submitted that the entire addition is made based on mere surmises and conjectures. He submitted that there is no material whatsoever based on which, the AO made the additions. On additional ground No. 1, which pertains to jurisdiction of the AO to frame the assessment order on the plea that the requirement of recording of reasons, for transfer of the case and not communication of the same to the assessee, is not pressed. In view of this submission of Mr. Jain, we dismiss the first additional ground on the issue of transfer of case from one jurisdiction to another, as not pressed. 9. Mr. Jain emphasised on the fact that nothing incriminating was found during the course of search which could be said to have resulted in the above addition. He relied on the following case laws : LMJ International Ltd. vs. DCIT, Kolkata `E Bench (2008) 119 TTJ (Kol) 214. He also relied on the decision of the Delhi Bench of the Tribunal in the case of Anil Kumar Bhatia vs. ACIT for the proposition that section 153A does not authorise denovo assessment and non pending assessment do not abate and that the additions must be confined to such material. On 5 merits, Mr. Jain submitted that the AO has not raised any query whatsoever, on the issue of low withdrawals during the course of assessment proceedings. Thus he submits that the entire addition is made just on surmises. He submits that the assessee was residing at Dahisar premises, owned by his wife and hence estimation of expenditure was on the higher side. He submitted that the assessees father was a farmer and necessary proof was produced before the CIT(Appeals) and the assessee was getting food grains, cereals etc. from his native place. He prayed for relief. On a query from the Bench, he submitted that he would be given written submissions on the legal issue. Till date no such submission has been filed. 10. The learned DR Mr. Abhijit Patankar, on the other hand, vehemently opposed the contentions of the assessee and submitted that the basis of assessment u/s 153A is different from the basis of assessment u/s 158BC and that the argument that the addition should be based on seized material is bad in law. He submits that the AO can proceed and make additions based on the books of account, the returns filed and other material which may come to his notice during the course of assessment. He sought one weeks time from the Bench to file written submissions on this legal issue and also to put forth his view on the decision of the Delhi Bench of the Tribunal in the case of Anil Kumar Bhatia and the decision of the Calcutta Bench of the Tribunal in the case of LMJ International Ltd. (supra). On merits he relied on the order of the CIT(Appeals) and submitted that the withdrawals were extremely low and the AO was very considerate in making a fair estimate.

11. Till the date of this order, the learned DR has not filed any written submission as stated in the course of hearing. Thus we propose to 6 dispose of this case without waiting any further for written submissions from either side. 12. Rival contentions were heard. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below and the case laws cited, we hold as follows. 13. A perusal of the assessment orders in all these cases, clearly demonstrate that the sole addition in question is on account of low withdrawals. This had not been made, based on any material found either during the course of search or during the course of assessment proceedings. Under the circumstances, we examine the legal position. The Delhi Bench of the Tribunal in the case of Anil Kumar Bhatia vs. ACIT held as follows : S. 153A provides that where a search is initiated u/s 132 the AO shall assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. The first proviso states that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years while the second proviso state that the assessment or reassessment relating to the said six assessment years pending on the date of initiation of the search under section 132 shall abate. In the assessees case, search action was initiated and assessments under s. 153A were framed for six assessment years making various additions. The assessee claimed that the additions were not tenable as regular returns had been filed where the particulars relating to the additions had been disclosed and the and the same had been accepted u/s 143(1) and also that no material had been found during the search to justify the additions. The revenue claimed that the effect of the provisos to s. 153A was that all assessments abate and there had to be a de novo assessment in which the AO was not confined to the material found during the search. HELD rejecting the claim of the Revenue. 7 (i) S. 153A does not authorize the making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that complete assessments do not abate. There can be two assessments for the same assessment year. Assessments which are not pending before the AO on the date of search but are pending before an appellate authority will survive. (ii) An assessment can be said to be pending only if the AO is

statutorily required to do something further. If a s.143(2) notice has been issued, the assessment is pending. However, the assessment in respect of a return processed u/s 143(1) is not pending because the AO is not required to do anything further about such a return. (iii) The power given by the Proviso to assess income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. (iv) On facts, s the returns had been processed u/s 143(1), the assessments were not pending and as no material was found during the search, the additions could not be sustained. Respectfully following the same, we delete all the additions made and allow the appeals of the assessee. 14. In the result, all the appeals of the assessee are allowed. rd Order pronounced on this 23day of February, 2010. Sd/(Asha Vijayraghavan) Judicial Member. Sd/(J. Sudhakar Reddy) Accountant Member. rd Mumbai, Dated : 23February, 2010.