TaxTMI 
TaxTMI 
2010 (2) TMI 949
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....essment under sections 153C and 158BD of the Income-tax Act, 1961. He held that there was a search at the group premises as noted by the Assessing Officer and, hence, proceedings under section 153C of the Income-tax Act, 1961 were justifiably initiated and the case law relied upon are not applicable to these cases. 3. Learned counsel for the assessee submitted that a search warrant was issued in the name of Shri Subhash Gambhir Surat. Only a survey was conducted at the premises of the assessee. Neither during the search at the premises of Shri Subhash Gambhir nor during the course of survey at the premises of the assessee any valuable article or books of account or documents revealing undisclosed income were either found or seized. No valuable article or thing or any books of account or documents seized or requisitioned belongs to the present assessee and, hence, merely because there was a search in the group cases action under section 153C cannot be invoked so as to frame assessment under section 153A of the Income-tax Act, 1961. He further submitted that for invoking the provisions of section 153C, it is a condition precedent that the Assessing Officer must have satisfaction t....
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....n the other hand, relied upon the finding of the learned Commissioner of Income-tax (Appeals). He also filed before us a copy of notice issued under section 153C of the Income-tax Act, 1961 for initiating action under section 153A of the Income-tax Act, 1961. A query has been raised from the Bench as to whether any money, bullion, jewellery or any other valuable article or thing or books of account or documents seized or requisitioned belonged to the present assessee which has been handed over to the Assessing Officer having jurisdiction over the present assessee. The learned Departmental representative submitted that from the assessment order it cannot be said that any such material belonging to the assessee was either seized or handed over to the Assessing Officer having jurisdiction over the assessee. 5. We have carefully considered the relevant facts and arguments advanced. 6. Almost identical issue arose before the Income-tax Appellate Tribunal, Ahmedabad Bench "A" in ITA Nos. 2938 to 2942/Ahd/2008 dated 16-3-2009 in the case of Meghmani Organics Ltd. v. Dy. CIT [2010] 129 TTJ (Ahd.) 255 to which one of us (Accountant Member) was a party. The Tribunal in the said case he....
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....arch, under section 132 or making of requisition under section 132A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or re-assessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) of section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner : Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that- (i)save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii)in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section....
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....cer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs to or belong to a person other than the person in whose case search is conducted under section 132(1) of the Act. Therefore, for initiating action under section 153C of the Act for framing assessment under section 153A, the pre-requisite is that the satisfaction of the Assessing Officer that the money, etc., and documents, etc., belongs to a person other than the person searched under section 132 of the Act. The Assessing Officer in the assessment order has categorically held that pages 87 to 91 of annexure A-4 seized from Lalit K. Patel are his own hand written estimate for the proposed work of the assessee. Therefore, though these documents may refer to the work proposed on behalf of the assessee, the same cannot be considered as 'documents belonging to the assessee'. If a person makes some jottings/notes, etc., for his own purpose and which have no nexus to hold that it belongs to other person and also does not contain a material which reveals any income therein, cannot be used so as to initiate action under section 153C of the A....
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....ent made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under the section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. (Emphasis Supplied) 12. The assessee has filed a chart for all the years. It demonstrates that the original assessments were completed prior to initiation of action under section 153C of the Act. The following table will reveal the said fact : Assessment year Original order passed on 2001-02 4-3-2003 2002-03 9-6-2003 2003-04 29-3-2003 2004-05 30-11-2005 2004-05 17-11-2004 13. In the present assessment orders no addition has been made on account of documents stated to be pertaining to the assessee. However, deductions claimed under sections 80HHC and 80-IA of the Act have been recalculated. From the table filed in all the years, we find that the deduction under section 80HHC of the Act was reduced on the following grounds : (i)Incl....
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....f search or requisition', where warrant of authorisation is issued in the case of such person; section 263 of the Act empowers the Commissioner to revise any order which is found to be erroneous in so far as it is prejudicial to the interests of the revenue. Thus, all the different types of assessments envisage different situations. 16. The Hon'ble Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, observed as under (page 10) : 'It has been said that the taxes are the price that we pay for civilisation. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies a....
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....completed which are the subject matter of further litigation and if those very assessments are reagitated under section 153C proceedings the same will not only multiply assessment proceedings but will multiply even the appellate proceedings. This can never be the intention of the Legislature. 20. The decision of the Income-tax Appellate Tribunal Calcutta Bench in the case of LMJ International Ltd. [2009] 119 TTJ 214 relied on by learned counsel for the assessee squarely applies. In the said case the assessments were sought to be made under section 153A read with section 153C of the Act. The Tribunal in this case held as under : A reading of section 153A reveals apparent contradiction in the first proviso and the second proviso. The proviso provides that the assessment or reassessment shall be done by the Assessing Officer in respect of each assessment year falling within six assessment years preceding the year of search. The second proviso, on the other hand, provides that the assessment/reassessment pending on the date of search shall abate. In other words, the assessments which are not pending, shall hold the field. The language of section 153A is not unambiguous and is not....
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....of those things. One may also refer to the Central Board of Direct Taxes Circular No. 7 of 2003, dated September 5, 2003. A reading of the circular clearly indicates that the appeal, revision, etc., arising out of earlier assessments shall not abate. In other words, there is no merger of the earlier assessments with the assessments done under the new scheme, i.e., section 153A or 153C. The amendment made in sections 234A and 234B does not help the case of the Department. The submission of the Commissioner of Income-tax-Departmental representative that section 153A starts with a non obstante clause and excludes application of sections 147 and 148 relating to reopening of assessments is tenable. But at the same time, the scheme of the Act is very clear the regular assessments are made in terms of sections 139, 142 and 143, concluded assessments can be reopened as per sections 147 and 148 in case the Assessing Officer has "reasons to believe" that the income chargeable to tax has escaped assessment and the provisions of sections 153A to 153C can be resorted to for the assessment of undisclosed income in search cases. All the three procedures of assessment operate in different fields a....
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....nder section 158BD. As per section 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the documents seized during the course of search. However, section 153C says that if valuable article or thing or books of account or documents belonging to other persons are seized then action under section 153C can be taken against that person. In the instant case, we are satisfied that books of account or documents do not belong to the assessee and, therefore, the Assessing Officer was not justified in initiating action under section 153A read with section 153C of the Income-tax Act. The Assessing Officer is free to take proper remedial measure as per law. 22. The decisions relied upon by the learned Departmental representative will not apply in this case as in both cases the facts are that the assessments were framed under section 153A of the Act, i.e., the assessee was the person in whose case search was initiated under section 132(1) of the Act. It is also found that the assessments were pending in those cases and it was also observed that 'it is not the complaint of the assessee tha....