TaxTMI 
TaxTMI 
2008 (2) TMI 457
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....l grounds taken by the assessee required to be decided by the Tribunal, are stated as under :- "(1) That the assessment under section 153A is without jurisdiction as same is not based on any seized material or a case of any undisclosed income and as such same is not sustainable under the law. (2) That the provisions of section 153A does not provide and contemplate assessment or reassessment in respect of any income which has already been considered at the time of original assessment. (3) It is contented that addition due to retrospective amendment in the provision of section 80HHC of the Income-tax Act, 1961 as wrong, incorrect, erroneous, immoral, bad in law and is against the natural justice." 4. Briefly stated, the facts relating to the issue involved in the grounds of appeal of the assessee are that a search and seizure operation under section 132 of the Income-tax Act, 1961 was conducted at the business premises of the assessee on 18-6-2003. Since, this search was initiated under section 132 of the Act after 31-5-2003, notice under section 153A was issued to the assessee on 31-5-2005 wherein the assessee was required to file the returns for the as....
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....given by the Bench of five judges of Hon'ble Supreme Court. Moreover, the appellant has not filed any petition before High Court on this issue and no material is also made available that the appellant is a party to any of such writ petition before any High Court. Considering this and clarity of legal provisions, the request not to dispose the appeal is not acceptable. Since the Assessing Officer has correctly worked out the allowable deduction under section 80HHC of Income-tax Act for assessment year 1999-2000 and nil deduction for assessment year 2002-03 as well as for assessment year 2003-04. Therefore, the same is hereby confirmed by rejecting the only ground of appeal taken by the appellant." 6. We have considered the rival contentions of both the parties, perused the records and carefully gone through the orders of the tax authorities below as well as the relevant case law relied upon by both the parties. 7. Before us, the learned counsel for the assessee in support of Ground Nos. 1 and 2 of its appeal relating to the issue of framing of assessment under section 153A of the Act submitted that as there was no seized material based on which the assessment was completed by ....
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....he learned AR for the assessee, does not help the assessee in resolving the issue under consideration before us. On the contrary, there are two recent decisions, relied upon by the learned DR for the revenue, in the cases of Abhay Kumar Shroff v. CIT [2007] 290 ITR 114 (Jharkhand) and Ramballabh Gupta v. Asstt. CIT [2007] 288 ITR 0347 (MP) which provided assistance to the Tribunal in understanding the validity of the provisions of section 153A of the Act. 9. For better appreciation of section 153A of the Income-tax Act, 1961, the same is reproduced hereinbelow :- "153A. Assessment in case of search or requisition.-Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31-5-2003, the Assessing Officer shall- (a)issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in t....
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.... the manner in which such income is to be computed. The main objectives for the introduction of the Chapter XIV-B were avoidance of disputes, early finalization of search assessments and reduction in multiplicity of proceedings. The idea was to have a cost-effective, efficient and meaningful search assessment procedure. However, the experience on implementation of the special procedure for search assessments (block assessment) contained in chapter XIV-B, has shown that the new scheme has failed in its objective of early resolution of search assessments. The new procedure postulates two parallel streams of assessment, i.e., one of regular assessment and the other for block assessment during the same period, i.e., during the block period. Controversies have sprung up questioning the treatment of a particular income as "undisclosed" and whether it is relatable to the material found during the course of search, etc. Even where the facts are clear, litigation on procedural matters continue to persist. The new procedure has thus spawned a fresh stream of litigation. It is proposed to provide that the provisions of this Chapter shall not apply where a search is initiated....
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....d that the provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after 31-5-2003, by inserting a new section 158B(1) in the Income-tax Act. Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after 31-5-2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any a....
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....er section 132 or requisition under section 132A shall abate. In other words, if on the date of initiation of search or requisition under section 132 or section 132A any assessment or reassessment proceeding is initiated relating to any assessment year falling within the period of six assessment years, it shall stand abated and the assessing authority cannot and shall not proceed with such pending assessment after initiation of search or requisition as contemplated hereinabove. These amendments will take effect from 1-6-2003. From reading section 153A and second proviso to section 153A, it is further clear that on the date of initiation of search or requisition under section 132 or section 132A the pending assessment or reassessments relating to any assessment year falling within a period of six assessment years shall stand abated but, assessment or reassessments can be done under section 153A of the Act in cases of completed assessments or in cases where assessments have not been framed due to non-filing of returns etc. for the above-mentioned assessment years even if such assessment made under section 153A is not based on material found during course of search. The word "ab....
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....er consideration i.e. 1999-2000, 2002-03 and 2003-04, the total turnover of the assessee in each assessment year is more than Rs. 10 crores. The assessee has shown impugned receipts on sale of DEPB and special import licence in each of the above-mentioned assessment years, respectively and claimed deduction under section 80HHC of the Act thereon. It is also not in dispute that after the insertion of section 28(iiid) and provisos under sub-section (3) of section 80HHC of the Act through the Taxation Laws (Amendment) Act, 2005, it is inserted that any profit on transfer of the DEPB License is also an export incentive and 90 per cent of the same has to be deducted from the profit calculated as per the provision of section 28 to arrive at the profit of the business. The profits so computed shall be further increased by the amount which bears to 90 per cent of any sum referred to clause (iiid) of section 28, if the assessee has export turnover exceeding Rs. 10 crores during the previous year and fulfils the following two conditions:- (a) the assessee had an option to choose either the duty draw back or the DEPB Scheme, being the Duty Remission Scheme; and (b) the rate ....