ITA NO. 699/DEL/2012 IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .No.-966/DEL/2012 (ASSESSMENT YEAR 2005-06) ACIT vs Bluebird Software Pvt. Ltd. Central Cirlce-22 2A, Avenue Cassia, New Delhi Westend Greens, Rajokari New Delhi (APPELLANT) AACCB5605P (RESPONDENT) Appellant by Sh. Ravi Jain, CIT DR Respondent by Sh. Salil Kapoor, Adv & Ms. Arinita Kapoor, Adv. Date of Hearing 17.08.2016 Date of Pronouncement 20.10.2016 ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by Revenue against order dated 8/12/2011 passed by CIT(A)-III, New Delhi. 2. grounds of appeal are as follows:- 1. On facts and in circumstances of case, CIT(A) has erred in law and on facts in deleting addition of Rs.2,00,00,000/- made by Assessing Officer u/s 68 of Income tax Act, 1961 on account of bogus share application money/share premium received by assessee company. 2 ITA NO. 699/DEL/2012 2. order of CIT(A) is erroneous and is not tenable on facts and in law. 3. assessee company was formed to carry on business of development of computer software, to establish and run computer data processing/computer entries etc. Search and seizure action was initiated on assessee group on 6/11/2008 u/s 132 of Income Tax Act, 1961. search warrant was also issued and executed in name of appellant. original return of income u/s 139 of Act was filed by assessee on 29/10/2005, at total income of Rs. Nil. Thereafter, case of assessee was centralized in Central Circle-22 New Delhi and notice u/s 153A of Income Tax Act, 1961 was issued on 30/10/2009 and assessee filed return of income u/s 153A of Act on 27/11/2009 declaring nil income while income of assessee was assessed at Rs.2,00,00,000/-. Assessing Officer made addition to that extent. assessee filed appeal before CIT(A). 4. CIT(A) allowed appeal of assessee. CIT(A) held in para 3.2 (extracts for perusal) that not only in previous scrutiny assessment genuineness of share application money has accepted but also that during course of search at appellants premises nothing incriminating was found reference to impugned share application money. Thus for this reason too, addition made Rs.2,00,00,000/- is liable to be deleted. In result appeal is allowed. 3 ITA NO. 699/DEL/2012 5. Ld. AR at time of hearing submitted that present case is squarely covered by CIT Vs. Kabul Chawla 380 ITR 573. Hon ble High Court held in para 37 as under: On conspectus of Section 153A(1) of Act, read with provisos thereto, and in light of law explained in aforementioned decisions, legal position that emerges is as under: (i) Once search takes place under Section 132 of Act, notice under Section 153 (1) will have to be mandatorily issued to person searched requiring him to file returns for six AYs immediately preceding previous year relevant to AY in which search takes place. (ii) Assessments and reassessments pending on date of search shall abate. total income for such AYs will have to be computed by AOs as fresh exercise. (iii) AO will exercise normal assessment powers in respect of six years previous to relevant AY in which search takes place. AO has power to assess and reassess total income of aforementioned six years in separate assessment orders for each of six years. In other words there will be only one assessment order in respect of each of six AYs in which both disclosed and undisclosed income would be brought to tax . (iv) Although Section 153 does not say that additions should be strictly made on basis of evidence found in course of search, or other post-search material or information available with AO which can be related to evidence found, it does not mean that assessment can be arbitrary or made without any relevance or nexus with seized material. Obviously assessment has to be made under this Section only on basis of seized material. (v) In absence of any incriminating material, completed assessment can be reiterated and abated assessment or reassessment can be made. word assess in Section 153 is relatable to abated proceedings (i.e. those pending on date of search) and word reassess to completed assessment proceedings. 4 ITA NO. 699/DEL/2012 (vi) Insofar as pending assessments are concerned, jurisdiction to make original assessment and assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on basis of findings of search and any other material existing or brought on record of AO. (vii) Completed assessments can be interfered with by AO while making assessment under Section 153 only on basis of some incriminating material unearthed during course of search or requisition of documents or undisclosed income or property discovered in course of search which were not produced or not already disclosed or made known in course of original assessment. Conclusion present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On date of search said assessments already stood completed. Since no incriminating material was unearthed during search, no additions could have been made to income already assessed. 6. Ld. DR relied upon earlier order prior to Kabul Chawla and relied on order of Assessing Officer. 7. We have heard both parties and perused material available on record and from CIT(A) s order there is clear finding that no incriminating document or material was found related to property which corroborates allegation made by Assessing Officer. In Para 3.2, CIT(A) clearly mentioned that documents were filed before Assessing Officer. Thus, besides these documents there was nothing incriminating found by Assessing Officer. CIT(A) also observed that during course of search at appellants premises nothing incriminating was found reference to impugned share application money. 5 ITA NO. 699/DEL/2012 There is no need to interfere with order of CIT(A). present case is also squarely covered by judgment of Hon ble Delhi High Court in case of Kabul Chawla. 8. In result, appeal is dismissed. order is pronounced in open court 20th of October, 2016. Sd/- Sd/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Dated: 20/10/2016 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date 1. Draft dictated on 17.08.2016 PS 2. Draft placed before author 18.08.2016 PS 3. Draft proposed & placed before .2016 JM/AM second member 4. Draft discussed/approved by JM/AM Second Member. 5. Approved Draft comes to 20.10.2016 PS/PS Sr.PS/PS 6 ITA NO. 699/DEL/2012 6. Kept for pronouncement on PS 7. File sent to Bench Clerk 20.10.2016 PS 8. Date on which file goes to AR 9. Date on which file goes to Head Clerk. 10. Date of dispatch of Order. ACIT, Central Circle-22, New Delhi v. Bluebird Software Pvt. Ltd