TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1076
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....de not based on search material found in the action taken by the department which is illegal in law in view of the decision of Hon'ble ITAT in the matter of All Cargo Global Logistics Ltd. Vs. DCIT ITA no.5018 to 5022 and 5059/M/2010. 2. That on facts and in circumstances of the case the ld.CIT(A) XXXI has erred in disallowing the capitalization of expenses of Rs.1,37,153/- in the cost of fixed assets illegally and therefore is liable to be quashed." 4. The relevant facts giving rise to these appeals are there was a search and seizure operation under Section 132 of the Income-tax Act, 1961 in Rajdarbar Group of cases on 31st July, 2008. It is stated that during search operation, certain documents were seized which belonged to the assessee company. In view of the above, the proceedings were initiated against the assessee company by issuing notice under Section 153C of the Act dated 23rd July, 2010 for the six assessment years preceding the assessment year in which the search had taken place. The assessee filed the return for all the assessment years under consideration pursuant to the notice issued under Section 153C of the Act. 5. It is relevant to state that the assessee compan....
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....er considering the submissions of the assessee, has held that as per Section 153A/153C of the IT Act, the Assessing Officer is duty bound to issue notice requesting for filing returns separately for each of the assessment years immediately preceding the assessment year relevant to the previous year in which search has been conducted or requisitioned under Section 132A has been made. That there is a mandate in the Section to assess or reassess the income for all such assessment years. Thus, the Assessing Officer is required to assess the income afresh. That the legislature in their wisdom have deemed it fit not to restrict the assessment under Section 153A/153C to undisclosed income found during the search. That there is no requirement that assessment can be made only if evidences relating to undisclosed income have been seized. There is also no requirement that assessments need to be based only on the evidences gathered in the course of action under Section 132 or requisitioned under Section 132A. The learned CIT(A) further stated that assessment under Section 153A/153C is not comparable to the block assessment under Section XIV-B, where there was a concept of assessment of undiscl....
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.... the IT Act. The learned AR submitted that no such incriminating material was found nor any incriminating material was seized during the course of search, and the Assessing Officer has also not made any additions on the basis of documents seized or incriminating material found, the additions made are not justified and the assessments, thus made have to be held not valid. The learned AR, to substantiate his submissions, also referred to the decisions of ITAT, Delhi Bench as under:- (i) ACIT Vs. PACL India Ltd. - Order dated 20th June, 2013 in ITA No.2637/Del/2010. (ii) MGF Automobiles Ltd. Vs. ACIT - Order dated 28th June, 2013 in ITA No.4212 & 4213/Del/2011. (iii) Kusum Gupta Vs. DCIT - Order dated 28th March, 2013 in ITA No.4873/Del/2009 & others. 11. The learned AR also submitted that similar issue was also considered by the Special Bench of ITAT in the case of All Cargo Global Logistics Ltd. Vs. DCIT - [2012] 137 ITD 287 (Mumbai)(SB) wherein it was held that where the proceedings have reached finality before the date of search and in case where no incriminating material has been found indicating undisclosed income and in that case Assessing Officer would not be justified to ....
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....h a case where no incriminating material was found during the search conducted under Section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open." 13. The learned DR also filed a note from the book of Dr. Rakesh Gupta on page 473 and submitted that in Section 153A, the word used is "the Assessing Officer shall issue notice" and it makes it mandatory on the part of the Assessing Officer to issue notice and make assessment/reassessment for the previous six years in all cases where search had been initiated. That the assessment/reassessment under Section 153A are not assessments for undisclosed income only. The requirement of making assessment/reassessment under Section 153A has no relation with the nature of incriminating material found or not found in the course of search. Even if there is no incriminating material relating to the person searched found or the incriminating material found is relating to some other person and with respect to such other incriminating material, such other person shall be required to be assessed under Section 153C, still the person searched shall be re....
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.... no condition in the Section that addition should be strictly made on the basis of evidence found in the course of search or other post search material or information available with the Assessing Officer which can be related to the evidence found. The learned DR submitted that the assessments for the assessment years under consideration have been validly made and the addition should be sustained irrespective of the fact that the said additions are not based upon the search material or incriminating material found during the course of search. 14. I have carefully considered the orders of authorities below and the submissions of the learned representatives of the parties. I have also gone through the cases cited by the learned representatives of the parties and have also carefully considered the written submission/note filed by the learned DR which comprises of five pages. I may state that the learned DR has strongly substantiated his submission to justify the orders of the first appellate authority that for the purpose of making the assessment under Section 153A/153C of the IT Act for each of the six assessment years immediately preceding assessment year, the Assessing Officer has ....
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.... drawn that there could be similar transactions throughout the period of six years covered by Section 153A of the Act and accordingly the additions made by the Assessing Officer for the preceding six years relevant to assessment year in which search had taken place was held to be justified. On the other hand, in the case of SSP Aviation Ltd. (supra), Hon'ble Delhi High Court, after discussing the scheme and scope of making the assessment for the six assessment years preceding the assessment year in which the search had taken place, vide paragraph 14 to 17, have held that when the Assessing Officer of the searched person is satisfied that some documents or valuable assets or books of account belonged to the other person, in whose case search is not conducted, the Assessing Officer of the searched person after recording a satisfactory note will provide the books of account or other valuable article or document belonging to the other person to the Assessing Officer of the other person and thereafter, the Assessing Officer of the other person will have the jurisdiction to proceed against him and issue notice to that person in order to assess or reassess the income of such other person ....
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....53A/153C is set in motion, the Assessing Officer can go beyond the search material or incriminating material found during the course of search to make the assessment as if it is a fresh assessment. The same very issue has been considered by the ITAT Delhi Bench in the case of PACL Ltd. (supra) and, that too, having been decided after considering the decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) on which the learned DR has made his forceful submissions to justify the action of the Assessing Officer and to support the order of the learned CIT(A) but, I hold that the said decision of Hon'ble Delhi High Court does not support the stand of the learned DR and rather supports the submission of the learned AR that only where original assessment proceedings are pending on the date of the search on the date when the reference has been received by the Assessing Officer of the other person from the Assessing Officer of the searched person, the issues outside the scope of search material can be raised as those original assessment proceedings stand merged/abated in the proceedings under Section 153A/153C of the Act but, in the case where the assessments are not pe....