TaxTMI 
TaxTMI 
2012 (7) TMI 222
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....he Commissioner (Appeals) erred in confirming the disallowance of deduction of Rs. 1,25,77,637/- u/s 80IA(4) of the Act 3. The CIT(A) erred in relying on the decision of the Appellate Tribunal in the case of Container Corporation of India Ltd. vs. ACIT [30 SOT 284 (Del.)], without appreciating that the facts in the present case are different from that of the aforesaid case. 4. The Commissioner (Appeals) failed to appreciate that the appellant is covered by the definition of the term "infrastructure facility" given in Explanation to section 80IA(4)(i) of the Act as "Ports" 5. The Commissioner (Appeals) erred in not following circular No.793 dated 23rd June, 2000 and clarification dated 16th December, 2005 issued by the CBDT which is binding on the Income Tax Authorities. 6. The Commissioner (Appeals) failed to appreciate that sub-clause (aa) of section 7 of the Customs Act, 1962 clarifies that the Customs Ports are the places which are identified and demarcated for the unloading of imported cargo and the loading of exported cargo and, therefore, the Container Freight Stations would be Customs Ports with reference to the Customs Law and, therefore,....
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....arned Senior Counsel for the Revenue submitted at the outset that ground No.1 of the appeal (supra) was not taken-up by the assessee before the Assessing Officer or the learned CIT(A) and therefore, the Tribunal should not entertain this ground at this stage without following the procedure laid down for admission of an additional ground. The rival parties addressed detailed arguments in this regard and wanted us to pass an interim order before proceeding further. The Special Bench accepted Revenue's preliminary objection and passed an interim order on 25-1-2012 treating the aforesaid ground No.1 as an additional ground. Therefore, our interim order dated 21-5-2012 should be read as part and parcel of this order. With these preliminary observations, we proceed to the questions which are referred to us by the Hon'ble President, Income Tax Appellate Tribunal. 5. The appeals involved assessment years 2004-05 to 2009-10. The facts are summarised here. In the previous years relevant to assessment years 2004-05 to 2008-09, the assessee had been operating the CFS at Jawahar Lal Nehru Port Trust. Such CFS was also operated at Chennai in the previous year relevant to assessment year 2009-....
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....is clear that from assessment Year 2002-03, structures at the port for storage, loading and unloading are be included in the definition of 'Port' for the purpose of section 10 (23G) and section 80IA. The AO considered the claim specifically in paragraph no. 5 of the assessment order. He allowed the deduction at Rs. 1,21,97,347/- against the claim of Rs. 1,25,77,637/-. The reduction is on account of disallowance of the deduction in respect of damages of Rs. 3,80,290/- 8. It is argued by the learned Counsel of the assessee before us that an assessment u/s 153A is different from regular assessment. It is made only where a search is initiated u/s 132 or books of account, other documents or any assets are requisition u/s 132A after 31.5.2003. In the course of search, generally incriminating documents etc. or unaccounted assets are found. Thus, assessment u/s 153A can be made only when books of account, incriminating documents or unaccounted assets are found or seized. Therefore, this provision is inextricably linked with the provision contained in section 132(1), which means that existence of books of account , incriminating documents or unaccounted assets is or are sine qua non of m....
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....aterial is found in the search. The contrary view is unreasonable and it is likely to be set aside, therefore, such an interpretation should be avoided. The Ld. Counsel also referred to the provision contained in section 153C, in respect of a person whose assets or documents are found in the course of search of another person. It is argued that even if nothing incriminating is found in the course of search, the literal interpretation would subject him to fresh assessments for six years. Therefore, finding incriminating material in the course of search is the essence of assessment or re-assessment to be made u/s 153A. Section 153D itself provides a safeguard that if an order of assessment or reassessment is to be made u/s 153A by an officer below the rank of Joint Commissioner, then previous approval of the Joint Commissioner is necessary. Therefore, the interpretation to be placed on the provision contained in section 153A has to take into account the safeguard so that the assessees are not put to harassment by subjecting them to reassessment in case of a completed assessment in respect of which no incriminating material has been found in the course of search. This restriction is i....
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.... extreme hardship. Thereafter the court considered its own decision in the case of KP Varghese vs. ITO 131 ITR 597, in which it was emphasized that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. It has been further mentioned that where the literal interpretation of a statutory provision leads to a manifestly unjust result which could never have been intended by the legislature, the court might modify the language used by the legislature so as to achieve the intention of the legislature and produce a rational construction. It is also mentioned that the language is an imperfect instrument for the expression of human intention. It is well to remember the warning that one should not make a fortress out of dictionary and that Statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning. The case of the Ld. Counsel is that the true intention should be found out from reading of the provision as a whole and by harmonious interpretation of provisions contained in first and second proviso to section 153A(1). 11. Further, reliance has been placed on the decis....
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....his connection, the decision in the case of CIT vs. Smt. Shaila Aggarwal 204 taxman 276 (All.), Meghmani Organics Ltd. vs. DCIT 129 TTJ 255 (Ahd), Charchit Aggarwal vs. Asstt. Commissioner of Income Tax 129 TTJ 438 (Del), and Helios Food Additives Pvt. Ltd. vs. DCIT in ITA No. 3900, and 3901/2009 have been relied upon. (a) In the case of Shaila Aggarwal, on page 283 of the report in paragraph Nos.19 & 20, it is mentioned that the second proviso refers to abatement of pending assessment or reassessment proceeding. The word "pending" is not amenable to the interpretation that where-ever the appeal against the assessment or reassessment is pending, the same alongwith assessment or reassessment proceedings also abate. The principles of interpretation of taxation do not permit the court to interpret the second proviso in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in Tribunal, the proceedings will abate. The abatement of any proceeding has serious causes and effects as it takes away all the consequences that arise thereafter. In this case, after detecting bogus gifts in the regular assessment proceedings, pena....
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....ance was that while making assessment for assessment year 2003-04 u/s 143 (3), the similar disallowance was made and the same was accepted by the assessee. It has been mentioned that two important questions have to be considered - (i) whether any assessment is pending on the date of search, and (ii) whether there is justification for partial withdrawal of deduction claimed by the assessee u/s 80IA/80IB ? It has been held that as per law applicable to the assessee, if the notice u/s 143(2) is not issued and served on the assessee within 12 months after the month in which return has been furnished, no assessment can be completed u/s 143(3) and the income declared by the assessee attains finality unless proceedings are initiated u/s 147, 263 etc. As per section 153A, second proviso thereto, the assessment or reassessment pending on the date of initiation of search abates. Since assessments for these two years were not pending as aforesaid, there is no question of applying the second proviso. Further there is also no justification for making partial disallowance of the deduction claimed u/s 80IA/80IB as no material or evidence was found during the course of search and also that it was ....
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....ow that the assessment or reassessment made in pursuance of a notice u/s 153A is not de-novo assessment, therefore, there is no merit in the appeal to make a new claim of deduction or allowance where admittedly regular assessment had been completed prior to initiation of search. We find that this decision does not deal with a case where the return has been processed u/s 143(1) (a) only prior to initiation of search. Undoubtedly in the case of Helios Foods, it has been mentioned in para No. 10 which we have adverted to earlier that if the notice u/s 143(2) is not served within the prescribed period, then no assessment can be completed u/s 143(3) and, therefore, the income declared in the return attains finality unless proceedings are initiated u/s 147 or 263. 15. The third line of the argument of the Ld. Counsel is based on the premise that in proceedings u/s 153A, the assessee cannot raise a new or fresh claim. In this connection, reliance Is placed on the decision in the case of Suncity Alloys Pvt. Ltd. and Charchit Aggarwal (supra). We have seen that the finding in the case of Suncity Alloys is that proceedings u/s 153A do not constitute de-novo assessment. The assessee is pre....
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....ind any specific finding that the revenue cannot raise any new ground for addition. As mentioned earlier, such conclusion is based on the reverse logic that what is not permitted to the assessee is also not permitted to the revenue. (c) In the case of SRJ Peety Steels, in paragraph No. 33, it has been mentioned that the additions made in assessment years 2000-01 to 2005-06 are not based on seized material found during the course of search. The returns were filed prior to initiation of search. The returns had been accepted and, therefore, no assessment can be said to be pending on the date of initiation of search, which would abate in the light of provisions contained in section 153A. (d) The question in the case of Sarya Industries Ltd. was quite different and the grievance of the petitioner was with regard to constitutional validity of section 153C read with section 153A of the Act. Section 153A applies to a person in whose case a search has been initiated u/s 132 or whose books etc. have been requisitioned. Section 153C applies in the case of a person whose books or valuables etc. have been seized from the premises of another person in the course of search. The ....
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....l fairly submitted that to his knowledge four decisions of the Tribunal are in favour of the revenue in this matter. In the case of Shivnath Rai Harnarain (India) Pvt. Ltd. Ld. Vs. DCIT, (2008) 304 ITR (AT) 271 (Del), it has been held that there is no requirement that an assessment u/s 153A should be based on any material seized in the course of search. Further, under proviso to section 153A pending assessment or reassessment proceedings in relation to any assessment year falling within the period of six assessment years referred to in section 153A(b) of the Act come to an end , which means that the AO gets jurisdiction on such assessment years for making an assessment or reassessment. In the case of Ms Shyam Lata Kaushik vs. ACIT, 306 ITR (AT) 117 (Delhi), it has been reiterated that there is no requirement under the Act that an assessment made u/s 153A should be based on material seized in the course of search. It has also been mentioned that in accordance with the second proviso, pending assessments or reassessments abate with the result that the AO has jurisdiction to make assessment or re-assessments u/s 153A. The Ld. Counsel, referring to these cases, submitted that on the fa....
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..... In such a situation the recovery of material or valuables etc. pertaining to one person can spill over a number of persons and premises. In such a situation, the relevant material in respect of a person seized from different premises or persons can be considered to make assessments or re-assessments. In this connection, our attention has been drawn towards note No. 10 made in the return of income and placed in the paper book on page No. 27. This return pertains to assessment year 2004-05. The disclosure of Rs. 3.50 lakhs has been made to cover any error, omission, discrepancy etc. It is argued that such error etc. can only be in the books of account. In such a situation, it cannot be said that no material was found in the course of search, for the simple reason that as per self incriminatory statement of the Managing Director, the discripencies exist in the books of account. In such a situation, the AO cannot restrict himself to the amount of Rs. 3.50 lacs only. It is his right as well as duty to examine the whole assessment with a view to work out the total income of the relevant year. Further, such offers have been made in every year and therefore the submissions made above in ....
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....nd. The Hon'ble Court held that the question of reading down comes in if it is found that these provisions are ultra-vires as they stand. On the basis of this decision, it is argued that there is no need to read down the provisions contained in section 153A as it has been held in the case of Saraya Industries Ltd. that the provisions are intra-vires. 23. The ld. Standing Counsel also relied on the decision in the case of Prakash Nath Khanna vs. CIT (2004) 266 ITR 1 (SC), in which it has been held that the first and foremost rule of construction is that the intention has to be found from the words used by the legislature itself. The courts interpret the law and do not legislate the law. If a provision has been misused or is absurd, it is for the legislature to amend, modify or repeal it, if deemed necessary. The legislative casus omissus cannot be supplied by judicial interpretative process. Thus it is argued that the provisions should be read as a whole and as they exist, and there is no necessity of reading them down or providing any casus omissus. 24. In the light of the aforesaid position of law in respect of interpretation of the statutes, the ld. Standing Counsel proceed....
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....Kalyan Udyog vs. ITO (1979) 117 ITR 431 (MP) regarding carry forward and set off of the losses of a registered firm u/s 75 (1), in paragraph No. 6, it is mentioned that the court is unable to accept the contention that the liberal construction should be placed on the provision. Doing so, will cause violence to the language of the section. It is well known method of construction of a taxation statute that literal construction is the only safeguard. A number of decisions have thereafter been quoted from various courts which have taken a similar view. 26. Same view is taken in the case of Shankaranarayana Construction Co. and Ors vs. State of Karnataka and ANR (2004) 276 ITR 56(Kar.), in which it has been held that nothing is to be added and nothing is to be taken away from the statute unless there are adequate grounds for doing so. The court should not so interpret a statute as to create casus Omissus when there is really none. A matter which should have been provided but has not provided in the statute cannot be provided by the courts. Therefore, the general rule of literal constructing should be followed. 27. In the case of K.G. Ashok & Others vs. Kerala Public Service Commis....
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....ational Taj Traders (1980) 121 ITR 535 (SC), it has been held that a literal construction placed on section 33B (2) (b) would lead to manifestly absurd and anomalous results which were not intended by the legislature. This consideration compels one to construe the words as applicable to suo moto order of CIT(A) in revision and not to order made by him pursuant to a direction or order passed by the Tribunal under sub-section (4) or by any other higher authority. Such a view will be in consonance with the principle that all parts of the section should be construed together and every clause thereof should be construed with reference to the context and other clauses thereof so that the construction put on that particular provision makes a consistent enactment of the whole statute. 31. In the case of Mahendra Saree Emporium vs. G.V. Srinivasa Murthy, (2005) Supreme Court cases 481, it has been mentioned in paragraph No. 13 that abatement kills the right to sue and has the effect of unceremoniously terminating pending legal proceedings without any merits. It has to be strictly construed and applied only to such cases to which its applicability is undoubtedly attracted, excepting where....
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....3A. 34. The Ld. Standing Counsel also distinguished the cases relied upon by the Ld. Counsel. 35. Ld. Standing Counsel made a reference to the decision in the case of LMJ International Limited, where a contention was raised by the assessee that the concluded assessments cannot be disturbed by the AO under the new scheme as only undisclosed income detected in the course of search can be added and charged to tax. It was held that where the words of statute are clear, plain or unambiguous, the court should give effect to the meaning irrespective of consequences. The language of section 153A is ambiguous and susceptible to more than one meanings. In such a circumstance, the literal construction is of no help and therefore recourse to other guiding rules will have to be taken. It is argued that this finding is not correct as the words are clear and unambiguous. In the case of Sarya Industries Ltd., it has been held by the Hon'ble Delhi High Court that the provisions are intra virus the Constitution. Therefore, there is no need to read down the provisions. In the case of Ramballabh Gupta vs. ACIT 288 ITR 347 (MP) (2007), it has been held that the only fetters on the powers of the A....
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....l defined limits subject to satisfaction of pre-conditions and, therefore, similar limitation may have to be read in the instant provision. His case is that reassessments are made within the ambit of relevant provision, and, therefore, the pre-conditions mentioned in the respective provision have to be satisfied. Therefore, assessments u/s 153A have to be made in accordance with the provisions contained therein. The surest way is to interpret it in literal sense as there is no ambiguity. Coming to the apprehension of the Ld. Counsel that same addition, which was made in original assessment and deleted by the higher forum, may be made in reassessment u/s 153A, it is clarified that such an apprehension is unfounded as the AO will have to follow the decision of the higher forum as a matter of judicial discipline. If that is not done, taking a cue from the decision in the case of SPS Aviation Ltd., it is argued that there are enough safeguards by way of appeals etc. to correct such misplaced addition. 37. In the rejoinder reply, Ld. Counsel referred to the decision in the case of Sarya Industries Ltd., in which it was argued that the two persons situated differently are being treate....
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....essments for the same year. Therefore, proper construction would be that in respect of completed assessments, the assessment shall be made only if incriminating documents etc. are found. In this connection, the term "assess and reassess" means that assessment shall be made in case of pending assessments and reassessments shall be made in respect of completed assessments where incriminating material is found. Such a construction would be in consonance with the principle that each clause should be read in conjunction with all other clauses and in the relevant context, so as to make enactment or consistent law. 39. Shri G.N. Gupta, the Ld. Authorised Representative for the intervener in the case of National Industrial Corporation Ltd. filed written submissions dt. 26-04-2012 which are reproduced as under: "2.1 It is submitted that the issue arising for determination by the Hon'ble Special Bench is not res-integra. The issue first came up before the Hon'ble ITAT Calcutta Bench-E in the case of LMJ International Ltd., V. DCIT which is reported in 2008 (119 TTJ) page 214. For detailed reasons, the Hon'ble ITAT Bench-E, held that no addition can be made in an assessment framed....
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....roblem arose in the context of section 147 of the Act. One view held by several High Courts was that where an assessment was opened under the provisions of section 147 in respect of an income which has escaped assessment say X, in an assessment framed u/s. 147, it was open to the AO not only to add X but also other items detected under the reassessment proceedings. However, some other High Courts had taken the opposite view that this cannot be done and in an assessment opened u/s. 147 of the Act, the AO can proceed to tax only X but not any other income. To resolve this controversy, the legislature stepped in and added Explanation 3 to section 147 by Finance Bill No.2 of 2009 w.r.e.f. 01.04.1989. As submitted earlier, by 2009. The problem under the consideration of the Special Bench had arisen namely, whether an assessment framed u/s. 153A/153C, and addition can be made which is not based on the seized material. However, no amendment was carried out under the provisions of section 153A/153C in 2009. This clearly shows that it was not the intention of the legislature to bring to tax any income not relatable to the documents seized. 2.2.3 It is an established law in selectin....
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....A.Y. 2006-2007. 2.2.4.2 The Revenue's contention is that in this reassessment proceeding, it is entitled to make additions which are not relatable to seized records. If this contention is correct, A.O. will again have to make a reference to TPO under section 92 CA. Now, the TPO can i) either follow his predecessor's order flouting the order of ITAT, may be by relying on subsequent case law which really may or may not be applicable. This would be a blatant case of judicial indiscipline or ii) follow ITAT's order without taking into account subsequent case law making the reference academic. 2.2.4.3 The same problem will be faced by DRP when considering assessee's objections against the draft order of A.O. The same problem will finally be faced by ITAT in disposing off the appeal filed under section 253(1)(d). 2.2.4.4 Surely, the law cannot postulate such an absurd, anomalous & inconvenient situation. 3. It is lastly submitted that it is settled law that where two interpretations are possible, Courts should give an interpretation which is in favour of the appellant. Accordingly, the Hon'ble Special Bench may kindly hold that in an ....
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....onsidered while making assessment u/s 153A. Thus, assessment/reassessment u/s 153A ought to be restricted to evidence/material found in search/requisition leading to undisclosed income except in cases of pending assessment/reassessment, which abates in view of second proviso to section 153A. He further submitted that literal interpretation that leads to absurdity, unjust result or mischief has to be avoided and for this proposition the reliance was also placed in K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) at pages 598-599, 604, 605, 606, 610-612, 617 and 618. He further submitted that section 153-A merely lays down the manner/procedure for making assessment/reassessment and also the maximum number of years for which assessment/reassessment can be made. However, assessment/reassessment are made in pursuance to search action and, therefore, scope of assessment/reassessment confined to undisclosed income as enumerated in section 132 and does not give sweeping powers to re-compute regular income by conducting search action. He further submitted that if cash credits considered and accepted in original assessment, same cannot be once again re-considered in 153A assessment except if som....
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.... is even pending to be processed, the return would be treated as pending before the assessing officer. Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment under section 143(3). III Return of Income filed by the Assessee - Return processed and Intimation issued under section 143(1) - Time limit for issue of notice under section 143(2) not expired. Since intimation is not akin to assessment and time limit for notice u/s. 143(2) has not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment under section 143(3). IV Return of Income filed by the Assessee Intimation passed or not passed under section 143(1) and time limit for issue of notice under section 143(2) has expired Return of income of the assessee shall be treated as having been accepted and attained finality. AO loses jurisdiction to verify the return of income. Since, no assessment would be pending there would be no ab....
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....assessment u/s. 147 being restricted to escaped incomes; (c) no authority to assess based on change of opinion; (d) reopening beyond 4 years, etc. 42. He also relied on the following cases: (a) ACIT vs. Mr. Raj Kumar Shorewala: order dated 31.03.2011 in ITA No. 5508, 5509/Mum/2009 (Mum) (Pg. 203-208 of Paper Book), (b) Parashuram Pottery works Co. Ltd., vs. ITO: 106 ITR 57 (SC), (c) M. Sharma vs. ITO: 254 ITR 772(SC) at Pg. 237 (d) Kailash Auto Finance ltd., vs. ACIT: (2009) 32 SOT 80 (Luck) at paras 17, 19 and 36, (e) L R Gupta & Ors vs. Union of India & Ors : 194 ITR 32 (P&H), (f) Ramesh Chander & ors vs. CIT : 93 ITR 244 (P&H), (g) Om Prakash Jindal vs. Union of India & Ors : 104 ITR 389 (P&H), (h) Oil India Ltd. vs. CIT : 138 ITR 836 (Cal), (i) Smt. Sujata Grover vs. Dy. CIT : (2002) 74 TTJ 347 (Del), (k) CIT vs. PNB Finance & Industries Ltd., : 340 ITR 50 (Del), (l) Smt. Mahesh Kumari Batra Vs. JCIT (2005) 95 ITD 152 (ASR) (SB) (para 23) and (m) SSP Aviation Ltd. Vs. DCIT (WPC No. 309/2011 dt. 29-03-2012) (Del HC). 43. He therefore submitted that since in thi....
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.... the present cases no incriminating/seized material was found during the course of search, therefore, the A.O. was not justified in making addition u/s 153A of the Act and therefore the same be deleted. 46. We have considered the facts, submissions and precedents cited before us. Before deciding the two questions referred to us by the Hon'ble President. Let us consider the provision contained in section 153A, in so far as it is useful for us which reads as under :- "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 the 31st day of May, 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 the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provis....
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.... under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property [ which has not been, or would not be, disclosed"] for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property) 48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue n....
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....ied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under sub-section (1) in annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending pr....
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.... of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or rea....
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....ally different facts, the ratio is that when plain literal interpretation of the statutory provision produces a manifestly unjust results which could never have been intended, the court might modify the language so as to achieve the intention of the legislature and produce rational construction. In the case of K.P. Varghese, it has been held that a statutory provision must be so construed that if possible absurdity and mischief may be avoided. An assessment or reassessment u/s 153A is made in a case where search is initiated and conducted. Our finding inter-alia is that when books of account, other documents relevant to assessment, which were not produced before the AO in regular assessment proceedings, or undisclosed income or asset is found in search, the same can be used for making assessment or reassessment in pending and completed assessments. Obviously a search is undertaken for discovering undisclosed income or asset. It is also undertaken to find books of account or other documents which had not been produced or which would not have been produced in the course of assessment. Therefore, taking into consideration all such books, documents, income or asset for making assessmen....
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....53A in isolation and as interpreted by the Ld. Standing Counsel would have the effect that in case of an assessment, which is not pending and where nothing is found, the same may be reopened. Such interpretation will produce a result that an assessment which has come to an end and for which there is no cause of reopening shall revive simple because a search has been conducted. According to us, this will not be harmonious interpretation of various provisions of sections 132(1) and 153A. (e) In the case of Electronics Corporation of India, the Ld. Counsel wanted to obliterate the difference between the Government and a Government company which has been registered under the companies Act. It was held that such an interpretation can be made only when literal interpretation leads to the charge of ultra vires. The provisions of section 153A /153C have been held to be intra vires when tested on the principles of natural justice. Therefore, what is required is that we should ensure that our interpretation does not render any provision to the ultra-vires. In our interpretation, we are not reading down the provision but reading it along side the provision contained in section 132A(1....
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....ard to merits. Such abatement takes place only in respect of a pending assessment. There is no word in the provision to the effect that even completed assessments abate. Therefore, sanctity of such assessment should be maintained except when something is found in search which go against such sanctity. We are of the view that the sanctity is violated not only on detection of undisclosed income or asset but also when books of account or other documents which should have been produced in original assessment as they were relevant to the assessment, and have not been produced, but found in the course of search. (i) The decision in the case of Ramballabh Gupta leads to the conclusion that recourse to section 147 cannot be taken for the years which are covered under section 153A. There is other finding regarding reassessment of 6 years also, which is incidental to the aforesaid finding. We may add that we have not held that the assessment can be made only for those years in respect of which books or assets etc. are found. We have come to the clear finding that assessment / reassessment for all six years will have to be made. The real question is the scope of re-assessment which i....
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.... of assets representing income believed to be undisclosed income. We have taken note of these objectives for harmoniously interpreting the provisions regarding search and search assessment. (b) In the case of L.R. Gupta vs Union of India and Others, (1992) 194 ITR 32, the writ petition was filed to challenge the authorization of search. The court concluded that the satisfaction note recorded by the DIT (Investigation) does not show that there is any information in his possession which leads to formation of opinion that any money, valuables etc. are in possession of the searched person which represent income which he has not been disclosed or would not have disclosed. Therefore, it has been held that no reasonable person could have come to the conclusion that action u/s 132(I) was called for. (c) In the case of CIT vs. S. Khader Khan son, (2008) 300 ITR 153 (Madras), the provisions contained in section 133A have been distinguished from the provisions contained in section 132, especially in regard to statements recorded in the course of operations. Board Circular dated 10.3.2003 has been highlighted that in such operations stress should be laid on discovering eviden....
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....th this observation. (g) In the case of K.M.Sharma vs. ITO (2002) 254 ITR 773, It has been mentioned on page 777 of the report at placitum "D" that proceedings which have attained finality under the existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which have already been concluded and attained finality. The observations were made while deciding an issue regarding amendment to section 150(1), as to whether this amendment is prospective or retrospective in nature. The question was raised in an altogether different context and the decision is that a provision regarding limitation is generally prospective in nature. In the instant case the question of limitation is not involved, rather the question is as to whether restrictive or expansive meaning should be placed on the provisions contained in section 153A (1) (a) and the first proviso. (h) In the case of Kunhayammed and Others vs. State of Kerala, (2000) 245 ITR 360 (SC), it is mentioned on page number 379 of the report that this court held that the crucial date for determination ....
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....nt, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 59. Having come to this conclusion we need not go into various orders of the Tribunal cited by the rival parties. The decisions inconsistent with the aforesaid view/conclusion stand disapproved and the decisions consistent with this view/conclusion are approved. 60. The second question before us is - whether, on the facts and in the circumstances in the case, the Ld. CIT(A) was justified in upholding the disallowance of deduction u/s 80IA (4) of the Act on merits? 61. The facts in the case of All Cargo Global Logistics Ltd. are that the assessee commenced CFS activities on 7.4.2003. In this connection a letter has been received from the Commissioner of Custom (Import), bearing No. 3 / 2003 dated 28.2.2003, classifying the area of 3282 square meters as customs area for the purpose of storage, stuffing / destuffing and clearance of export / import cargo. Subsequently the assessee has been certified as a custodian of Cargo under Customs Act 1962, by notifying the area as "Customs area". I....
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....erever the word "port" is used, it carries with it maritime connection or connotation. It is for this reason that the section separately refers to airport as it does not have a maritime connection. The custom clearance takes place both at the airport and port. The ICDs are land locked and it is nobody's case that they are located in such a place where ships or vessels have direct access. The goods which are brought in or removed from the ICDs are brought or taken either by railway wagons or by container trucks, as the case may be. Finally, it has been held that although ICD may not be a port, but it is an inland port. The relevant portion of the decision is reproduced below :- "19. The Tribunal erred in holding that because of the change made by the Finance Act, 2001 with effect from 1st April, 2002 by dropping the power of the CBDT to notify any other public facility of similar nature for the purpose of Section 80IA of the Act, the ICD cannot be considered as Inland Port. The error committed by the Tribunal is to overlook that both before and after the above amendment, Inland Ports were specifically mentioned as an infrastructure facility in the statutory provision and in....
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....guity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. In the light of this decision, he dealt with the claim of the assessee u/s 80(IA). It is submitted that in Board clarification dated 6.1.2011, in which circulars dated 16.12.2005 and 23.6.2000 were considered, it has been clarified that ICDs, and CFSs are not 'ports' located on any inland water way, river or canal and therefore they cannot be classified as "inland ports" for the purpose of section 80(IA)(4). It is further submitted that the certificate issued by Jawahar Lal Nehru Port Trust has been withdrawn by the Port Trust. It is also submitted that Inland Waterways Authority of India Act, 1985, provides the definition of the term "infrastructure facilities", in its clauses (f), as the structures such as docks, wharves, jetties, stages, locks, buoys, inland ports, cargo handling equipments, road and rail access and cargo storage spaces and states that the expression "infrastructure facilities" shall be construed accordingly. In this Act, inland port is included as item, thus, this term has a distinct meani....