TaxTMI 
TaxTMI 
2015 (7) TMI 5
X X X X Extracts X X X X
X X X X Extracts X X X X
....A)/C-III/10-11 both dated 28.10.2011. Assessments were framed by ACIT, CC-XXIII, Kolkata u/s. 153A read with section 143(3) of Act for Assessment Years 2008-09 & 2009-10 vide his separate orders all dated 31.12.2010. 2. I.T(SS)A Nos. 17 to 19/Kol/2012 by revenue and Cross Objection Nos. 18 to 20/K/2012 by assessee are arising out of common order of CIT(A), Central-III, Kolkata in Appeal Nos. 103, 104 & 105/CC-XXIII/CIT(A)C-III/10-11 dated 16.12.2011. Assessments were framed by ACIT, CC-XXIII, Kolkata u/s. 153A read with section 143(3) of the Act for Assessment Years 2004-05 to 2006-07 vide his separate orders all dated 31.12.2010. 3. At the outset, Ld. counsel for the assessee stated that there is a legal issue raised in the Cross Objections of the assessees, hence the same should be heard first. 4. The first legal issue raised by assessee in their Cross Objections is as regards to validity of assessment framed u/s. 153A of the Act despite the fact that there is no incriminating material pertaining to share application money or loans for the relevant Assessment Years. For this, assessees have raised common grounds in all these Cross Objections. Hence, we will decide all Cr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f survey u/s 133A conducted today in your business premises at 52, Weston Street, Kolkata-700012, the names of number of companies mostly having their registered offices at the said premises have been found. Please furnish details of these companies along with their nature of business. Ans.- I don't remember the names of all the companies right now. However, some of the companies running from my office are:- I. M/s Alfa Tie-Up Pvt. Ltd. II. M/s. Rang Vardhan Febtrade Pvt. Ltd. III. M/s. Cygnus Publishers Ltd. IV. M/s. Payaagpur Vyapaar Pvt. Ltd. V. M/s. Anuvrat Transport System Ltd. VI. M/s. Manush Distributors Ltd. VII. M/s Teji Mandi Securities Pvt. Ltd.' VIII. I will furnish the detailed list of the above on 12/5/2009. 9. Are you director in any of the companies maintained in Ans. No.-8? Ans.-No. However, I am a director in M/s. More highrise Pvt. Ltd., 52, Weston Street, Kolkata-700012. In the other companies the directors are my brother Sri Raj Kumar More and my employees, Sri Ravi Agarwal etc. 10. Please explain the nature of business conducted by the above mentioned companies. Ans.-All the above mentioned companies are engaged in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the names of the persons and companies from whom you procure cheques in lieu of cash. Ans.- I procure cheques in lieu of cash from various "Entry operators". In the case of the concerns of the Surana group, were procured from Sr. Debesh Upadhyay and Sr Vinod Jaiswal, having their offices at Waterloo Street and Girish Park, respectively. However, I will check the records and submit details of the same on 12/5/2009. 15. What is your remuneration for laundering the unaccounted money of Sri Shanti Kumar Surana by routing it through accommodation entries in the books of your companies. As enumerated above by you? Ans.- I earn on an average 0.6% of the cash received as gross commission income for carrying out the aforementioned activities. After accounting for expenses, my net commission income is approximately 0.35% of the cash received from Sr. Shanti Kumar Surana 16. In cases where cash received from Sr Shanti Kumar Surana is routed back to his companies through unsecured loans from your companies, how is the interest thereon received and subsequently accounted for? Ans.- The interest on unsecured loans is in the range of 6% to 12% and is received in cheque, net of TDS....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. 13 and 14. Ans.- Out of the 19 companies, 2 companies namely Anuvrat Transport Systems Pvt. Ltd., and Manush Distributors Ltd., are my companies, I also confirm that amounts of Rs. 3,97,98,082/- and Rs. 4,83,76,460/- were received in cash from Sri. Surana and routed back to the books of Bikaji Mercantiles Pvt. Ltd., in the form of unsecured loans. I further confirm that during the year amounts of Rs. 4,07,98,082/- and Rs. 4,53,76,460/- were received in cheque and the sae amounts were returned back either in cash or through cheque in the form of share capital in M/s Bikaji Mercantiles Pvt. Ltd., I will submit the details after verifying our records on 12/5/2009." 6. During the course of assessment proceedings, the AO provided copies of all statement of Shri Sambhu Kr More to the assessee and another statement of assessee was recorded u/s 131 of the Act on 15.09.2010, by virtue of which he denied having made any disclosure of Rs. 8 cr. during the course of post search proceeding and also denied having taken any entries in lieu of cash from the various companies as admitted by Shri More. The relevant details of entries noted by the AO in assessment, which reads as under: &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; Sub Total 16,79,00,000 19,84,00,000 90,21,304 Bikaji Mercantiles Pvt. Ltd. Manush Distributors Ltd. 2005-06 2,73,00,000 4,03,00,000 6,27,090 Bikaji Mercangiles Pvt. Ltd. Anuvrat Transport Systems Ltd 2005-06 1,00,00,000 1,50,00,000 4,44,493 Shanti Kr. Surana Manush Distributors Ltd. 2005-06 3,40,00,000 4,60,00,000 15,63,288 Shanti Kr. Surana Anuvrat Transport Systems Ltd. 2005-06 2,00,00,000 2,00,00,000 2,95,726 Amar Impex Pvt. Ltd. Anuvrat Transport Systems Ltd. 2005-06 1,20,00,000 1,20,00,000 91,726 S.A. Suppliers Pvt. Ltd. Manush Distributors Ltd. 2005-06 0 50,00,000 1,79,178 S.A. Suppliers Pvt. Ltd. Anuvart Transport Systems Ltd. 2005-06 0 50,00,000 1,80,822 Sub Total 10,33,00,000 14,33,00,000 33,82,323 Shanti Kr. Surana Payagpour Vyapaar Pvt. Ltd. 2006-07 1,35,00,000 1,35,00,000 1,70,137 Amar Impex Pvt. Ltd. Anuvrat Transport ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Devanshi Consultants Pvt. Ltd Payagpour Vyapaar Pvt. Ltd. 2005-06 35,00,000 Devanshi Consultants Pvt. Ltd Teji Mandi Securities Pvt. Ltd. 2005-06 35,00,000 Devanshi Consultants Pvt. Ltd Alfa Tie-Up Pvt. Ltd. 2005-06 35,00,000 Devanshi Consultants Pvt. Ltd Cygnus Publishers Ltd. 2005-06 24,00,000 S.A. Suppliers Pvt. Ltd. Cygnus Publishers Ltd. 2005-06 20,00,000 S.A. Suppliers Pvt. Ltd. Teji Mandi Securities Pvtx. Ltd. 2005-06 20,00,000 S.A. Suppliers Pvt. Ltd. Anuvrat Transport Systems Ltd. 2005-06 25,00,000 S.A. Suppliers Pvt. Ltd. Payagpour Vyappar Pvt. Ltd. 2005-06 20,00,000 Sub Total 5,29,65,000 Grand Total 8,29,45,000 7. The AO added all these share application money and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ectly admitted of having entered into transactions with the aforementioned companies through Sh. Shambhu Kumar More. 2. During the course of post search proceedings, D.D.I.T(Inv.) conducted selective enquiries from ABN Amro Bank (the bank where the assessee and the other group concerns maintained their accountts0 to trail the source of deposits of various unsecured loans and share capitals in the bank accounts of the assessee and the other group companies. The undersigned also conducted similar enquiries from the said bank. From such enquiries the following facts were discovered - a. Cash of Rs. 4,50,000/- and Rs. 3,70,000/- deposited in the account (No.-1033167) of Sh. Vikas Kumar Agarwal on 22/12/2004 and 23/12/2004 respectively. Cash of Rs. 3,50,000/- and Rs. 50,000/- deposited in the account (No.-992328) of M/s. MJ Enterprise on 23/12/2004 and 24/12/2004 respectively. Both of them utilized this amount to advance Rs. 9,20,000/- by transfer to the account (No.-968357) of M/s. Nitya Commodities Ltd., on 24/12/2004. This concern then utilized this amount to advance Rs. 9,00,000/- by transfer to the account (No.-475870) of M/s. Cygnus Publishers Ltd. (a company controlled by S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tails of transaction of 2.5 lakh in the name of SKS(H) and Rs. 5 lakh in the name of Prabha. Page No.-58 contain details of transactions of Rs. 21 lakh, Rs. 70,000/- and Rs. 1,50,000/- in various names. Page No. 51 contain details of transactions @ 4 and @ 2 in the name of various persons. Page No. 49 contain details of transactions of Rs. 30 lakh, Rs. 10 lakh, Rs. 50 lakh and Rs. 10 lakh in the name of various persons. Page No. 44 contain notings of transaction of Rs. 15 lakh in the name of Prabho. Page No.-41 contain notings of transaction of Rs. 2,64,726/- and Rs. 6,66,534/-. Page No.-38 contain notings of transaction of Rs. 50,000/- in the name of Pradyumna Agarwal and page no. 34 contain notings of transaction of Rs. 90,593/- and Rs. 1,22,874/- in the names of Bose Developers and Sub Developers. Sri Surana was asked to furnish page wise explanation of these loose sheets. In his reply, he stated that these are rough notings or account information. But no basis of such notings was furnished. 5. Sri Surana was provided with the copies of all the statements of Sri More recorded u/s. 132(4) before D.D.I.T.(Inv) and u/s 131(1) by the undersigned and he was given an opportunity....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment has been completed with a closed mind. 6.9 As is apparent from the assessment order the O has added the unsecured loans for all the assessment years solely on the basis of a statement made by a third party namely - Sri Sambhu Kumar Moe and certain facts stated in the order which in his view corroborate the statement of Sri Sambhu Kumar More. Not only that, similar assessments were also made in the case of five other assessees belonging to the Surana Group for various assessment years. In total unsecured loan amounting to approximately Rs. 43 crores and share subscription amounting to approximately Rs. 8 core have been added U/s. 68 in respect of assessee s of this Group. It is an admitted fact that no incriminating documents or evidence were found during the course of the search in the premises of the appellant which even remotely suggest that the appellant has resorted to introduce its unaccounted cash through accommodation entries. The premises of Sri Sambhu Kumar More were also searched but no incriminating evidence or document to this effect was found. Even surveys conducted U/s. 133A in the business premises of the companies, who are loan creditors and share subs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ures from the books of accounts of the company relating to all the loans and share subscriptions given to the entities of Surana Group. 6.11 Certain other factors emerged from the statement which requires to be mentioned here. (a) In the statement dated 09.05.2009 Sri Sambhu Kumar More has categorically stated that in the case of concerns of Surana Group cheques in lieu of cash were procured from Sri Debesh Upadhyay and Sri Vinod Jiswal having their offices at Waterloo Street and Girish park respectively. However, surprisingly no efforts were made to reach these persons, trace their bank accounts or obtain their statements. (b) In the statement dated 21.10.2010 Sri More has also categorically stated that he did not personally handle the cash and all the cash transactions have been handled by one Mr K.K. Bhartia. Once again no effort has been made to examine Sri K. Bhartia who was another vital link in the alleged accommodation entry transaction. 6.12 These factors clearly indicate that the investigations in these cases were made in a very half hazard manner with a closed mind. The statement of a third party i.e. Sri More has been accepted as gospel truth in spite of his....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ish without being read do him in Hindi has dubious evidentiary value. Thirdly, apparently there is no corroborative evidence or documents unearthed during the search which could prove that he had undisclosed income except Rs. 1,25,50,000/- on a/c. Of undisclosed cash and jewellery which Sri Surana declared in his individual return filed U/s. 153A. Thus, I am of the opinion that the disclosure of Rs. 8 crore in no way corroborates the statement of Sri More regarding the alleged accommodation entries. (b) Secondly, the AO mentions about cash deposits in certain accounts in the ABN Amro Bank which have been rerouted to the appellant company as loans. This point has been discussed in detail in the assessment order which is also made a part of this order. It is seen that cash was deposited in relation to the accounts of Sri Vikash Kr. Agarwal, M/s M.J. Enterprise and M/s M.A. Trading Co. In the statement Sri More has categorically stated that in respect of Surana Group cheques in lieu of cash were procured from Sri Debesh Upadhyay and Sri Vinod Jiswal. Apparently these accounts do not belong to these persons. Therefore, no nexus could be established between the statement of Sri More ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion. Therefore, I am of the opinion that this issue also does not in any way corroborate the statement of Sri More. 6.13 To sum up - (a) The appellant discharged his initial burden by furnishing overwhelming material evidence regarding the loans obtained by him to prove the identity and creditworthiness of the loan creditors as well as the genuineness of the transactions. As against the voluminous documentary evidences brought on record which remained uncontroverted, the AO did not bring on record any material to disprove the genuineness of the evidence fu9rnished by the appellant, nor brought on record any material which proved his conclusion that cash received from the assessee was returned in cheque form. On the facts and circumstances of the case I am convinced that the criterion laid down by the Hon'ble Gujarat High Court in relation to the case of DCIT Vs. Rohini Builders (256 ITR 360) and Hon'ble Gujarat High Court in the case of Nemichand Kothari Vs. CIT (264 ITR 254) were satisfied in the appellant's case. (b) No incriminating papers or documents were found in the search operation in case of the appellant indicating that loans were obtained through accommodation e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....leted and the proceedings cannot be revived unless the same is abated. In these assessment years the completed assessment cannot be abated in term of the provision of section 153A(1) of the Act . 9. Before us, Ld. counsel for the assessee first of all stated that for Assessment years 2003-04 to 2007-08 assessments were completed originally u/s. 143(3)/143(1) of the Act and no proceedings, whatsoever, were pending before the authorities under any of the provisions of the Act before the date of search i.e. 19.03.2009. After the completion of search the AO issued notices u/s. 153A of the Act in respect to these assessment years just based on the statement of Shri Sambhu Kr More recorded u/s. 132(4) of the Act on 09.05.2009. According to Ld. counsel, the Income tax Department conducted a survey u/s. 133A of the Act on the business premises of Shri Sambhu Kr More on 09.05.2009 and the same was converted into search and seizure operation u/s. 132 of the Act on the very same day. The department on the basis of Shri Sambhu Kr More came to conclusion that he has provided accommodation entries to Shri Shanti Kr Surana, the assessee, and his group companies in lieu of unaccounted cash. Apa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the course of search in these group cases. The Ld. CIT, DR is also requested to produce the search materials and assessment records in the case of Shambhu Kumar More and their group cases so that it can be corroborated, if any search material is linked to the statement of Shri Shambhu Kumar More with that of assessee's group cases, i.e. Shanti Kumar Surana and group cases. The Ld. CIT, DR is also directed to give the details of cash introduction, vis-à-vis the cheque as stated by Shri Shambhu Kumar More in his deposition during the course of search on 09.05.2009 on their residence and business premises. In terms of the above, the case is kept as part heard and adjourned to 28.04.2015. Both the parties are informed in the open court." And the matter was adjourned for 28.04.2015 and again on 28.04.2015 revenue asked for adjournment and the matter was adjourned finally for 29.04.2015. On 29.04.2015 again Ld. CIT, DR was directed to produce the search material and the relevant order sheet entry reads as under: "29.04.2015: When these matters were called up, the Ld. CIT, DR Shri Vijay Kumar stated that he has brought appraisal report prepared by ADIT in these grou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....closed herewith a copy of the ITAT order sheet noting dated 23.4.2015. I only received copy of Appraisal report with three Annexures on 27.4.2015 evening. It does not apparently satisfy Para 2 of ITAT instructions dated 23.4.2015. Today, Shri Rajat Datta, DCIT case. Since all papers are not available, the matter is refixed for 29.4.2017. There are two issues. One, action u/s. 153A/153C is challenged. Panchnama and seized/impounded material should take care of that. The material needs to be produced. The next issue relates to bogus share capital. It is covered, in department's favour by the following decisions of Kolkata Benches. 1) ITA Nos. 1533-1537/Kol/2012 etc. orders dated 12.09.2014, referred to as Patangi Trade & Holdings Pvt. Ltd. case. 2) ITA No. 1493/Kol/2013 dated 19.09.2014, referred to as Bisakha Sales Pvt. Ltd., Kolkata." In term of the above factual position and opportunities given on number of times to the revenue, revenue could not produce the incriminating material found during the course of search in relation to share capital/premium and loans added by AO while framing assessment u/s. 153A of the Act. 11. We have heard rival contentions and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ard, I would like to submit before your kindself that the details and documents mentioned above were available at the time of assessment proceedings also and these were considered while framing the assessments of the assessee. These were not nay additional evidence as mentioned in Rule 46A(1) of the I.T. Rules, 1962. Hence, the question of examination of the same again at this end does not arise. As regards your query as to whether any incriminating document / evidence was found and gathered during the course of search or post search operations I would like to state that no such document or evidence was found. But Shri More was very categorical in his statements recorded u/s. 132(4) and 131(1) on various occasions about the modus operandi! Involved and clarifying that he had rerouted the said loans after taking these from the assessee in cash and transferring again to the assessee through various layers of banking transactions involving a number of concerns. The facts have been discussed in the assessment orders itself. As regards your query as to whether there was any material evidence to prove the chain of transactions leading to the destination of the said cash, I would li....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... paras the AO has given certain names & amounts." We find that the assessee was never confronted this report as argued by Ld. counsel for assessee before us now and even before CIT(A). 12. From the above facts we find that the assessee has obtained loans/share money/premium in all the assessment years which are under appeal. It is a fact that the loan confirmations are on record along with bank statements in support of the fact that the transactions of loan were by cheques. The assessee has collected statement of audited accounts of those limited companies, from where the assessee has obtained loans, the same are with ROC. It is also a fact that the statements of account proved that those loan creditors that all of them have funds and they have invested in shares and loans of the assessee in the year under assessments. But now it is to be seen from the correspondence between the CIT-in-charge of the assessment and CIT, DR that revenue could not produce the incriminating material found during the course of search despite number of opportunities provided to revenue as is evident from the order sheet entries reproduced above. In such circumstances whether in the absence of any i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the Concise Law Dictionary (P. Ramanatha Aiyer) as follows:- "Abatement. "Abatement" means, in respect of any chargeable accounting period, ending on or before the 31st day of March, 1947 a sum which bears to a sum equal to- (a) in the case of a company, not being a company deemed for the purposes of Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having- (i) nor more than two working partners, one lakh of rupees, or (ii) three working partners, one and a half of rupees, or (iii) four or more working partners, two lakh of rupees, or (c) in the case of a Hindu undivided family, two lakhs of rupees, or (d) in any other case, one lakh of rupees,- The same proportion as the said period bears to the period of one year and, in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. [Business Profits Tax Act (21 of 1947), S.2 (1)] Removal or destruction, (as) of a nuisance; failure; premature end,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the Assessing Officer. 16. We do not find force in the submission of Shri Ashish Bansal that where a notice under Section 153A has been given after the search operations under Section 132, for filing assessment for the block period of 6 years, and if such period includes any of the assessment year, the abatement of assessment and re-assessment proceedings, to give way to reassessment considering the additions in the assessment under Section 153A, will also include the assessment or re-assessment, which has been completed. If as a result of search, some undisclosed income is found to have escaped assessment, the Assessing Officer, may initiate steps for reassessment after sanction of competent authority, within the prescribed period of limitation. 17. A Circular No.7 of 2003 dated 5.9.2003 issued by the Commissioner of Income Tax has clarified the position in para 65.5 as follows:- "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 assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271 (1) (c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty." 14. In a recent judgment Hon'ble Bombay High Court, on the very issue, in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. in ITA No. 523 of 2013 dated 21.04.2015 also considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics 137 ITD 287(SB) (Mum) considered the issue that, whether scope of assessment u/s. 153A of the Act in respect to completed assessment is limited only to undisclosed income and undisclosed assets found during the course of search or not. Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Income-tax Act, as stated in the Memorandum explaining the provisions in the Finance Bill 2003 (see 260 ITR (St) 191 at 219) was that under the existing provisions relating to search cases, often disputes were raised on the question, as to whether a particular income could be treated as `undisclosed income' or whether a particular income could be said to be relatable to the material found during the course of search, etc. which led to prolonged litigation. To overcome that difficulty, the legislature by Finance Act 2003, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. 9) What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated therein, in respect of six assessment years i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143 (3) of the I.T. Act could not have disturbed the assessment / reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/ reassessment were contrary to the facts unearthed during the course of 153 A proceedings. 13) In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80 HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act." 29. We are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich such search is conducted or requisition is made. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under : "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 notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 subsection (1) is 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 proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssess 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 reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-06. One of the questions and which was termed as substantial question of law was the correctness of the Tribunal's order holding that the Assessing Officer wrongly invoked section 153A of the IT Act. The facts as noted were that in the case of an individual assessee and who was carrying on business in the name and style of M/s. A.K. Traders, there was a search of his residence and business premises on 13th December, 2005 under section 132 of the Act. Pursuant to the search, the Assessing Officer issued notice under section 153A of the IT Act and called upon the assessee to file the return of income for the six years as envisaged in that section. Notices under section 142(1) and 143(2) alongwith a detailed questionnaire were issued in response to which the assessee submitted an explanation. After consideration thereof, the Assessing Officer made additions to the income returned in respect of the assessment years under consideration which included an amount of Rs. 1,50,000/- given by the assessee as a loan to Smt. Mohini Sharma on 10th December, 2003. This information was made available but the loan was not reflected in the return of income filed by the assessee for the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....here the Delhi High Court disapproves the view taken by the Tribunal that its observations can be read torn from the context. Once these observations and noted by us from the paragraphs cited by Mr. Pinto are read as a whole and in entirety, it is not possible to agree with Mr. Pinto that the High Court of Delhi reached a conclusion different than the view taken by our Division Bench. 36. Similar is the case with the Division Bench judgment of the High Court of Karnataka at Bangalore. There as well a real estate firm was the assessee. A return of income was filed and when an order under section 143(3) of the Act came to be passed on 31st December, 2010, for assessment year 2008-09 that a search took place in the premises of the assessee on 12th April, 2011. In the course of search, incriminating material leading to undisclosed income was seized. Therefore, the proceedings under section 153A of the Act calling upon the assessee to file return of income under section 153A(1)(a) came to be initiated by a notice dated 13th January, 2012. Return of income was filed pursuant to receipt of such notice and for six years as required by the provision. When this return was under considerat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by Section 153A, by even making reassessments without any fetters, if need be. Therefore, it is clear even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid sub-section on the date of initiation of the search under Section 132, the said proceeding shall abate. If such proceedings are already concluded by the assessing officer by ini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be confined only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power under Section 263. In the entire scheme of 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided under Section 153A of the Act the Assessing Officer shall assess or reassess the "total income" of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said income also in determining the total income of the assessee when the earlier proceedings are reopened and ....