TaxTMI 
TaxTMI 
2013 (9) TMI 439
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....has relied upon the judgment of Hon'ble ITAT, Delhi in the case of Shivnath Rai Hrnarain (India) Ltd. Vs. DCIT, (2009) 17 ITD 74 without appreciating the fact that the same has been overruled by Hon'ble ITAT, Delhi in its later judgment in the case of Shri Anil Kumar Bhatia & Ors. Vs. ACIT, (2010) 1ITR (Trib) 484 (Del) which was brought to his notice vide appellant's letter dated 8/6/2010. 2. The Ld. CIT (A) has grossly erred on facts as well as in law in confirming the disallowance of set off of Rs. 1,65,09,929/- on account of accumulated losses including unabsorbed depreciation of M/s Compact Motors Ltd., the amalgamating company, especially in view of the following:- a) In ignoring the specific provisions of scheme of amalgamation which was duly approved by the jurisdictional High Court regarding accumulated losses and unabsorbed depreciation and directed to be binding on all concerned. b) In relying on the case law which is not applicable to the appellant. 3. The Ld. CIT (A) has grossly erred on facts as well as in law in confirming the charging of interest under various sections of the IT Act, 1961. 4. The appellant crav....
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.... income of Rs. 50,04,700/- for assessment year 2005-06. Both the returns were same as were filed originally u/s 139 (1) of the Act, on 30.10.2004 and 27.10.2005 respectively. Notices u/s 143(2) and 142(1) along with questionnaires were issued to the assessee on 18.09.2009 requiring the assessee company to file necessary details and in response, the Ld. AR of the assessee company filed various details and attended the proceedings from time to time. 3. During the assessment proceedings, the Assessing Officer observed that assessee was dealing in the business of car dealership and service stations. He further observed that during the assessmsent year 2004-05 the assessee had entered into an amalgamation agreement with M/s Compact Motors Ltd. pursuant to the scheme of amalgamation of the erstwhile M/s Compact Motors Ltd. with the assessee company. He further observed that assessee had prepared amalgamated accounts with effect from appointed date i.e. 1st April, 2003 and all assets and liabilities of M/s Compact Motors Ltd. were incorporated in the books of assesssee at their book values. He further observed that assessee had set off an amount of Rs. 1,65,09,929.93 against its busine....
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.... years from the date of amalgamation. In the A. Y. 2007-08, the company has sold land amounting to Rs. 37,93,375/-. The above land was added to the assets of the assesssee company in the scheme of amalgamation. By the above sale the amalgamation company has violated provisions of sub-section (3) of section 72A of the Income Tax Act, 961. Therefore, otherwise also the assessee company is not allowed to set off the accumulated loss and depreciation of the amalgamating company. An amount of Rs. 1,65,09,929/- being profit shown in the profit and loss account of the company is treated as the income for the year under consideration. The assessee shall not be allowed to carry forward the accumulated business loss and unabsorbed depreciation of the amalgamating company to the next assessment year." 4.4. For A. Y. 2005-06, the Assessing Officer disallowed the carried forward business loss of Rs. 15,22,410/-, by holding as under: 4. In the computation of income the assessee has set off an amount of Rs. 15,22,410/- as unabsorbed business loss and depreciation which could not be set off during the assessment year 2004-05. In the assessment order for the assessment year 2004-05, the asses....
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....erence to incriminating search materials as in earlier section 158BB/158BC, to which the assessment has to be confined. Thus, assessment or reassessment u/s 153C/153A does not have to be based on incriminating material found during search." Futher, the Delhi Tribunal in the case of Shivnath Rai Harnarain (India) Ltd. Vs. DCIT (2009) 17 ITD 74 (Delhi) has observed that: "Sec. 153A, r.w.s.132 of the IT Act,1961- Search and seizure- Assessment in case of-Assessment years 1999-2000, 2002-03 and 2003-04- A search and seizure operation u/s 132 was conducted at business premises of assessee- company on 18/06/2003-Subsequently notice u/s 153A was issued to it on 31/05/2005 wherein it was required to file returns for relevant assessment years-Assessee filed returns and assessment were framed thereon-On appeal, assessee contended that as there was no seized material based on which assessment had been completed by Assessing Officer in its case, assessment so framed by Assessing Officer u/s 153A should be held to be null and void- Whether since there is no requirement for an assessment made u/s 153A being based on any material seized in course of search, contention raised by assess....
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....essment year falling within the period of 6 assessment years pending on the date of initiation of search shall abate and in view of this provision he argued that completed assessment u/s 143(3) will not abate and in the case of assessee the assessment was not pending as it was already completed on 18/12/2006. He further argued that for assessment u/s 153A purpose of section 132 has to be considered which is that for completed assessments additions can only be made on the basis of undisclosed income or undisclosed property found during search. In view of the above, the Ld. AR argued that basic purpose of assessment u/s 153A is to tax the undisclosed income and not to review/ examine the completed assessments and argued that it is the reason that legislature has not provided for abatement of completed assessments. 9. Reliance in this respect was placed on the case law of All Cargo Global Logistics Ltd. vs. DIT, 2012-TIOL-391-ITAT-Mum-Special Bench, wherein it was held that in case of completed assessments the assessment u/s 153A has to be made on the basis of incriminating material only. The Ld. AR further invited our attention to Hon'ble Delhi High Court's order in the ca....
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....GF Automobiles Ltd., the Transferee Company for the year in which the amalgamation is effected from the appointed date w.e.f. 01.04.2003 and other provisions of the Income Tax Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly." In view of these findings of Hon'ble High Court, it was argued that as per scheme of amalgamation the accumulated loses and unabsorbed depreciation of M/s Compact Motors Ltd. were deemed to be loss/ unabsorbed depreciation of appellant for assessment year 2004-05 irrespective of provisions of Income Tax Act. He further argued that Hon'ble High Court has given its sanction to the scheme of amalgamation and therefore its terms of sanction were binding on concerned parties. Our attention was also invited to paper book page 63 where copy of letter written by DCIT, Circle -6(1), New Delhi, conveying it's no objection to the merger was placed. 12. On the other hand, the Ld. Departmental Representative referred to the case law of Anil Kumar Bhatia decided by Hon'ble Delhi High Court and read para 18 to 23 of the said order and relied heavily on it wherein the Hon'ble Court had held tha....
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.... of the Act. We therefore, express no opinion as to whether section 153A can be invoked then in such a situation that question is therefore left open." 14. Hon'ble ITAT (Mum) in the case ACIT vs. Pratibha Industries Ltd., ITA No.2197 to 2199/Mum/2008 has considered the case law of Anil Kumar Bhatia as decided by Hon'ble Delhi High Court and after considering the findings of the court has arrived at the following findings in similar situations:- "4.1 On going through the provisions of section 153A,2nd proviso and the various decisions cited before us, three possible circumstances emerge on the date of initiation of search u/s 132 (1) of the Income Tax Act, (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found in the course of search, indicating some income and/or assets not disclosed in the return and (c) proceedings are not pending and no incriminating material has been found. 4.2 When we treat to trace the correct and logical answers to the above circumstances, circumstances (a) is answered by the Act itself, that is, since the proceedings are still pending, all those pending proceedings are abated and the A....
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....e are finalized assessment proceedings and no incriminating material indicating any escaped income (Situation 2B in the graphic). Taking a cue from the decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (Supra) we can tread on the same premise and hold that on clubbing, what remains in the income originally determined or assessed (i.e. income originally determined+Zero= income originally determined- as there was no incriminating material)." 15. Similar views were held by ITAT (Mum) in the case of Shri Gurinder Singh Bawa Vs. Dy. CIT, ITA No. 2075/Mum/2010 and LMJ International Ltd. Vs. DCIT,(2008) 119 TTJ (Kol) 214 and in the case of Anil P. Khimani vs. DCIT,2010- TIOL-177-ITAT-Mum. During proceedings before us the bench had asked a question to Ld. AR as to whether any statement u/s 132(4) was recorded during search to which the Ld. AR replied in negative and Ld. Departmental Representative also showed his ignorance about such statement. This question was asked because the view of the Bench is that if during course of search some statement is recorded u/s 132(4) and, in that statement certain facts are recorded from the interpretation of which Assessing Of....