TaxTMI 
TaxTMI 
2015 (10) TMI 2021
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....t in the hands of the assessee on 04.12.2007. Consequent thereto, the assessee filed returns of income under section 153A of the Act for the years under consideration, which were taken up for scrutiny by issuing notices under section 143(2) of the Act. The Assessing Officer completed the assessments of all the years by making following additions to the income returned by the assessee:- (a) The agricultural income declared by the assessee was assessed under section 68 of the Act by rejecting the claim of availability of agricultural income. (b) Addition towards deemed dividend under section 2(22)(e) of the Act in assessment year 2002-03, 2005-06 and 2006-07. 4. In the appeal filed before Learned CIT(A), the assessee raised a legal ground that the additions could be made in the case of concluded assessments, i.e., assessments which were not abated, only on the basis of seized materials. The provisions of sec. 153A of the Act read as under:- "Assessment in case of search or requisition. 153A (1) 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 13....
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....r is required to assess or reassess the total income of six assessment years immediately preceding the year in which the search was initiated. As per the second proviso to sec. 153A(1) the assessment or reassessment, if any, pertaining to the six assessment years pending as on the date of initiation of search shall abate. In the instant case, the assessment or reassessment pertaining to assessment years 2002-03 to 2006-07 were not pending on the date of initiation of search and hence the assessment or reassessment already concluded for these years shall not abate. Hence the assessment pertaining to AY 2002-03 to 2006-07 can be classified as "concluded assessments". The Learned CIT(A) has discussed about the same in paragraph 3.2 to 3.6 of his order. The assessee's contentions are that the additions could be made in the case of concluded assessments only on the basis of any incriminating material found during the course of search. The assessee placed reliance on the following case law in support of his contentions:- a. Meghmani Organics Limited vs. Dy.Commissioner of Income Tax (2010) 6 ITR (TRIB) 360 b. Sinhgad Technical Education Society Vs. ACIT (2011) 5 DTR (Pune)(Trib) 241 c....
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....e said chapter, the "undisclosed income" found during the course of search was assessed separately. Hence the disclosed income shall be assessed under regular provisions of the Act. Hence, the block assessment was made separately, in addition to the regular assessment made under the provisions of section 139 to 143(3) of the Act. Further chapter XIV-B provided that there will be a single assessment order for the entire period covered by the search proceedings and the same was called as "Block Period". The assessment for Block period was strictly confined to the undisclosed income found out of the seized materials. However, the said scheme of block assessment has been held to be not applicable for the search initiated under section 132 of the Act after 31st May 2003 as per the provisions of section 158BI of the Act. 7. The Learned Counsel submitted that the search in the hands of the assessee took place on 4.12.2007 and hence the special procedure prescribed under chapter XIV-B is not applicable. The Income-Tax Act provided separate assessment procedure in cases of search initiated after 31st of May, 2003 and assessment scheme is prescribed in section 153A to 153D of the Act. As pe....
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....., "reason to believe" about escapement of income, availability of materials etc. are not applicable for the assessments initiated under section 153A of the Act, since the provisions of sec. 153A overrides the provisions of sec. 147 & 148 of the Act. Further the Act does not prescribe any condition in sec. 153A that the assessment should be based on the materials seized during the course of search only. Accordingly he submitted that the assessment proceedings under section 153A of the Act shall be automatically triggered once the search is initiated under section 132 of the Act after 31st day of May 2003 and further the availability of seized materials or incriminating materials is not a condition for initiating proceedings under section 153A of the Act. He further submitted that the provisions of sec. 147 authorizes the Assessing Officer to assess such other income that comes to his notice during the course of assessment proceedings in addition to the income which escaped the assessment and for which the assessment was reopened. The Act has provided so in sec. 147 of the Act, for the reason that the assessing officer is required to assess the "total income" of the assessee in the ....
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....search. In this regard, the Learned A.R drew support from the provisions of sec. 147 of the Act, which empowers the Assessing Officer to re-compute the loss or the depreciation allowance. 10. Accordingly the Ld Standing Counsel submitted the various case laws relied upon by the assessee, wherein it has been held that the additions could be made under section 153A of the Act in respect of concluded assessments only on the basis on seized materials, should not be taken support of, since they have been rendered without considering the first principles of taxation submitted by him. 11. The Learned Standing Counsel invited our attention to the decision rendered by Hon'ble jurisdictional Andhra Pradesh High Court in the case of Gopal Lal Bhadruka Vs. Dy. Commissioner of Income Tax (2012) 346 ITR 0106 wherein the jurisdictional High Court has held that the conditions prescribed under chapter XIV-B of the Act is not applicable to the proceedings prescribed in section 153A/153C of the Act. The Learned Counsel relied upon the following observations made by the Hon'ble High Court in para-17 of the order. "By virtue of section 158BI of the Act, the various provisions of Chapter XIV-B of the....
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....re pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. In the light of our discussion, we find it difficult to uphold the view of the Tribunal expressed in Para 9.6 of its order that since the returns of income filed by the assessee for all the six years under consideration before the search took place were processed under Section 143(1)(a) of the Act, the provisions of Section 153A cannot be invoked. The Assessing Officer has the power under Section 153A to make assessment for all the six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee filed returns before the date of search which stood processed under Section 143(1)(a)." The Learned Standing counsel further placed reliance on the decision rendered by Hon'ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora (2014) 367 ITR 517 wherein the High Court has made following observations: "Consequently, we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subs....
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.... reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order."....
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....ced his reliance on the decision rendered by the Jurisdictional High Court in the case of Rajnik & Co. (251 ITR 561) and submitted that the extrapolation of income on the basis of materials pertaining to a part period is approved by the Hon'ble jurisdictional High Court. Accordingly he submitted that there is no requirement of restricting the additions or making assessment only on the basis of seized materials. 12. The Ld A.R, on the contrary, submitted that the decision rendered by the Special Bench in the case of All Cargo Global Logistics Ltd (supra) has since been approved by the Hon'ble Bombay High Court by its order dated 21-04-2015 passed in ITA No.1969 of 2013 along with the appeal of another assessee named Continental warehousing corporation (ITA No. 523 of 2013) and also reported in the name of later. The Ld A.R submitted that the Hon'ble Bombay High Court has also considered the decision rendered by the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra) and the Hon'ble Karnataka High Court in the case of Canara Housing Development Corporation (supra) and has observed in clear terms that the findings given in the above said decisions do not warrant reconsi....
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....h u/s 132 or making requisition u/s 132A of the Act shall stand abated and not the assessments / reassessments, which has already been concluded. The Hon'ble Bombay High Court also referred to the Circular No.8 of 2003 dated 18-9-2003 (263 ITR (St.) 61 at 107) issued by the CBDT, wherein the CBDT has clarified that on initiation of proceedings under section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalized assessment / reassessment shall not abate. In Murli Agro products, the assessing officer revisited the deduction allowed u/s 80HHC of the Act in the original assessment without there being any material to show that the relief u/s 80HHC was erroneous. After considering the scope of the provisions of sec. 153A, the Hon'ble Bombay High Court concluded as under:- " Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80HHC of the Income tax Act as well as the loss computed under 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....
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....e jurisdictional High Court has not rendered any opinion contradictory to the one expressed by the Hon'ble Bombay High Court. 15. The ld A.R further submitted that the Hon'ble jurisdictional A.P High Court has also considered the scope of provisions of sec. 153A in the following cases and the High Court has upheld the view taken by the Tribunal, by following the decision rendered by the Special bench in the case of All Cargo Global logistics Ltd. (a) Sree Lalitha Constructions (ITTA No.368 of 2014) (b) M/s Hyderabad House Pvt Ltd (ITTA No.266 of 2013) (c) M/s AMR India ltd (ITTA No.357 /v/2014) He submitted that the Tribunal, in all the three cases, had taken the view that the additions can be made in the case of concluded proceedings, only on the basis of materials found during the course of search as pronounced in the case of All Cargo Global logistics Ltd by the Special bench. 16. We have heard the rival contentions on the legal issue and perused the record. With regard to the scope of assessments made under the provisions of sec. 153A of the Act, the first contention of the Ld Standing Counsel was that the existence of "undisclosed income" or the availability of seized ma....
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....furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. (c) The assessing officer is empowered to assess or reassess the "total income" of the aforesaid years in separate assessment orders, meaning thereby, there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. (d) Where an assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or section 143(3) of the Act, the AO is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For reopening of assessments, the strict procedure prescribed in sec. 147 & 148 have been removed by the non obstante clause prescribed in sec. 153A(1). The total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. There is no question of abatement of those proceedings, since the proc....
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....pened. 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 simply because a search has been conducted. According to us, this will not be harmonious interpretation of various provisions of sections 132(1) and 153A". The above said interpretation given by the Special bench is in contradiction to the interpretation made by Hon'ble Delhi High Court and Hon'ble Karnataka High Court. It is well settled proposition that the decision rendered by a High Court can be preferred over the decision rendered by the Special bench. In view of the decision rendered by Hon'ble Delhi and Karnataka High Courts, we are inclined to agree with the contentions of the Ld Standing Counsel that the provisions of sec. 153A shall be triggered upon initiation of search proceedings u/s 132 of the Act, in which case the concluded assessments will be reopened as per the provisions of sec. 153A of the Act and such kind reopening is not dependent upon existence or otherwise of any undisclosed income. 17. The next contention of the Ld Standing Counsel was that the total income of the six assessment years can be determined by ....
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....gistics Ltd (ITA No.1969 of 2013). The Hon'ble Bombay High Court, in paragraph 30 of its order, has clearly held that the finalized assessment cannot be touched while exercising the power under section 153A of the Act when a search was initiated u/s 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st March, 2003. 18. Accordingly in the case of assessments, which are pending on the date of initiation of search, the assessing officer shall retain the original jurisdiction as well as jurisdiction conferred on him u/s 153A. In that case, he is empowered to look into any material and his scope of investigation is not restricted to search materials alone, since his original jurisdiction gets merged with 153A proceedings. 19. However, since the assessments which are not pending on the date of initiation of search would not abate, those assessments will remain intact and they shall get re-opened by virtue of the provisions of sec. 153A of the Act. At this stage, a question that arises is as to when and how an assessment should be considered as pending as on the date of initiation of search. In this regard, the Ld A.R submitted that the a....
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.... view that such concluded assessments stand re-opened and in the re-opened assessment, the AO shall assess the income already assessed and the undisclosed income unearthed during the course of search. With regard to the scope of assessing the total income in respect of concluded assessment, the Hon'ble Karnataka High Court has expressed the view that in the re-opened assessment, the assessing authority can take note of income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass assessment order. However, the said view is in contradiction with the view expressed by the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation & All Cargo Global Logistics Ltd (supra), wherein the Hon'ble Bombay High court has expressed the following view:- "30..... Not only the finalized assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, ....
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.... for all these assessment years is to be taken into account. However, the scope of enquiry, though not confined as held by the High Court of Karnataka, it essentially revolves around the search or requisition under section 132A as the case may be. We do not find anything in these observations and reproduced above which would enable us to conclude that the Division Bench judgment of this Court in the case of Murli Agro requires reconsideration or does not lay down a correct principle of law." We have noticed that the Hon'ble Bombay High Court has upheld the view expressed by the Special Bench in the case of All Cargo Global Logistics Ltd (supra) that in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. Thus, in a nutshell, in the case of unabated assessments the assessing officer can determine the total income by clubbing the income already assessed and the undisclosed income found during the course of search and the basis for ascertaining the said undi....
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....hat the court has 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 as it must in other spheres of human activity. Our decision is in consonance with this observation." The decision rendered by the Special bench that the assessing officer can make additions in the case of concluded assessments on the basis of incriminating materials is also based upon the decision rendered by Hon'ble supreme Court in the case of Parashuram Pottery works Co. Ltd (supra). 23. We have earlier noticed that the Hon'ble jurisdictional Andhra Pradesh High Court has also upheld by the orders passed by the Tribunal by following the decision rendered by the Special bench in the case of All Cargo Global logistics Ltd (supra) in the following cases:- (a) Sree Lalitha Constructions (ITTA No.368 of 2014) (b) M/s Hyderabad House Pvt Ltd (ITTA No.266 of 2013) (c) M/s AMR India ltd (ITTA No.357 /v/2014) Further we agree with the contentions of the assessee that the decision rendered ....
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....T(A), Visakhapatnam and they relate to the assessment years 2002-03 to 2008-09. The grounds of appeal urged by the assessee give rise to the following issues in addition to the legal issue adjudicated in the preceding paragraphs:- (a) Addition of agricultural income under section 68 of the Act in all the years under consideration (b) Addition of deemed dividend in assessment years 2002-03, 2004-05 and 2006-07. 27. Ld A.R. submitted that the proceedings relating to assessment years 2002-03 to 2006-07 are not pending on the date of initiation of search and hence, they fall under the category of concluded proceedings. He submitted that the AO is entitled to make addition in respect of these years on the basis of incriminating materials found during the course of search. In this regard, ld A.R. furnished a chart showing following details: Particulars A.Y.2002-03 AY 2003-04 AY 2004-05 AY 2005-06 AY 2006-07 Date of filing of original return 3.7.2002 30.9.2003 5.11.2004 30.7.2005 30.7.2006 Income returned 70000 70000 70000 70034 100000 Last date for issue of notice u/s.143(2) 30.7.2003 30.9.2004 30.11.2005 31.8.2006 31.7.2007 Date of search 4.12.2007 4.12.....
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....ars 2007-08 and 2008-09 were pending on the date of initiation of search and hence, the said proceedings shall abate by virtue of provisions of section 153A of the Act. For these two years also, the AO has rejected the claim of agricultural income and, accordingly, assessed the same u/s.68 of the Act. The assessee had declared agricultural income of Rs. 1,60,000/- each in both the years. In the appellate proceedings, the ld CIT(A) restricted the addition to 50% of agricultural income and thus accepted the remaining amounts as agricultural income in both the years. 31. Ld AR submitted that the assessee is possessing about 7.68 acres of agricultural land situated at two different places. He further submitted that the co-ordinate bench of this Tribunal has examined the issue relating to agricultural income in the hands wife of the assessee herein named Smt. A. Ammaji vs ACIT (ITA No.337 to 343/Viz/2014) and the Tribunal, vide its order dated 21.7.2014 sustained the addition to the extent of 25% of the agricultural income. Accordingly, he prayed that the said order of the Tribunal may be followed in the present case also. Ld D.R., on the contrary, strongly supported the orders passed ....
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.... the AO holding that there was diversion of interest bearing funds as interest free advances to sister concerns. Besides above, the assessee also has raised a legal ground relating to scope of assessment under section 153A of the Act in the absence of incriminating materials. 36. The facts relating to the case are that the assessee company is engaged in the business of construction and letting out of industrial godowns. A search and seizure operation was conducted in the hands of the assessee on 4.12.2007. During the course of search proceedings, the department seized following two documents: a) A letter dated 1.11.2007 written by State Bank of India to the assessee in connection with the proposal for availing term loan of Rs. 21 crores under rent plus scheme, which is extracted as under: " Seized document ATR/B/P02/5 dt.7.1.2008 IMP ATR WH loan-interest State Bank of India, Development Banking Division Main Branch, Visakhapatnam Office: 2737560,2550190,2731841 Fax:0891-2562864 E-mail: [email protected] IP Phone: 90241,902412 Swift: SBININBB326 To: The Managing Director, ATR Warehousing Pvt Ltd., 11-8-34, Dasapalla Hills, Visakhapatnam. Lr No.DBD/ Dt.1.11.2007 ....
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....x, Suggested method is to show the same as short term capital gain without Disturbing earlier year accounts. YOU MAY PL DO WHAT EVER YOU FEEL RIGHT 2) There was an investment of about Rs. 12 crores in the shares of Usha Tubes. We need copies of shares certificates and debentures' standing in the name of the company. If the entire capital is held by ATR , we may have to examine the issue from the point of holding and subsidiary concept also. There are restrictions in investment in such cases. We need to examine the issue from the angle of Section 372. This exercise we would do only after receipt of certificate copies of shares. Is there any MOU between two companies before investment?. If so send us a copy. Balance sheet of Usha Tubes as on 31.3.06 and also 31.3.20O7 are required. Whether constitution of board of directors of Usha Tubes is same as ATR or other directors are also involved ? kindly clarify. I am mailing you the scanned copies for your reference. The directors of both the companies are same 3) The source of investment for the above is out of bank loan, Since the main business of the ATR is not that of investment activities, entire interest paid on such borrowing are ....
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....f has expressed the view that the interest paid on loans is liable for disallowance u/s.36 of the Act. Accordingly, the AO examined the details of advances given to sister concerns and disallowed the interest relating to those advances in all the years. 38. In the appellate proceedings, the ld CIT(A) gave partial relief. The relevant details are tabulated below: Particulars A.Y.2002 -03 AY 2003- 04 AY 2004-05 AY 2005-06 AY 2006- 07 AY.2007- 08 AY 2008-09 Addition made u/s.36 80,000 1710000 1824000 923000 768000 9281000 17936000 Relief given by ld CIT(A) Nil 17562 131757 16551 44683 3379601 7061563 Balance in dispute 80000 1692438 1692243 906449 721317 5901399 10874437 39. In this case also, the assessee has contended about the scope of assessments made u/s 153A of the Act. The Ld A.R submitted that the proceedings relating to assessment years 2002-03 to 2006-07 are not pending on the date of initiation of search and hence, they fall under the category of concluding proceedings. He submitted that the AO is entitled to make addition in respect of these years on the basis of incriminating materials found during the course of search. In t....
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.... by the auditors or the query raised by the bank cannot considered to be "incriminating materials" falling within the scope of section 153A of the Act. Accordingly, he submitted that the AO was not justified in treating these materials as incriminating materials giving right to the AO to disturb the concluded proceedings. 42. Ld AR further submitted that on merits also, the impugned disallowance of interest cannot be made, since there is commercial expediency in giving these loans. Further the assessee has also utilized own funds for giving loans to sister concerns. With regard to the claim of commercial expediency, the Ld A.R submitted that the sister concerns are also engaged in similar line of business and further they have offered their respective immovable properties as collateral securities to the loans availed by the assessee from banks. In this regard, he invited our attention to a chart furnished by him giving the relevant details. Accordingly, he submitted that the disallowance of interest made by the AO in all assessment years, more particularly in the assessment years 2007-08 and 2008-09, is liable to be deleted. In this regard, the ld AR has filed a written submission....
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....e given to the sister concerns. The learned C1T(A) did not give due consideration to the following facts: a) That for the loans availed by the appellant company, properties of these sister concerns were offered as collateral security. b) The amounts were advanced to the sister concerns in order to promote the overall growth of the group as a whole which in turn benefits the appellant company as well. In this regard, the appellant places reliance on the following decisions: i) order dt.28.6.2013 of Hon'ble A.P. High Court in the case of CIT vs. Balaji Industrial Corporation Ltd in ITA No.143 of 2013. ii) Order dt.4.7.2014 in ITA No.624/Viz/2013 in the case of Dr. Ch.Sri Padmavathi." 43. Ld D.R., on the contrary, submitted that the ld CIT(A) has analysed each and every loans advanced to the sister concerns in each of the assessment years and have given a categorical reply that there is no commercial expediency in giving loans. The ld CIT(A) has further examined the claim of availability of interest free funds in each of the assessment years and after recording details of interest free funds, set aside the matter to the file of the AO to examine the claim and take appropriate de....
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....aised by the auditors cannot be considered as tangible or incriminating materials, since the concerned officials have only expressed their opinion in those letters. Accordingly, in our view they cannot fall under the category of incriminating materials, which would warrant disturbance of the assessment already completed for assessment years 2002-03 to 2006-07. 45. Even otherwise, those letters cannot be considered as direct material warranting addition u/s.36(1)(vi) of the Act, since the question of disallowance to be made under that section is to be examined by considering various criteria. In fact, the ld CIT(A) has also set aside the matter to the file of the AO for assessment years 2006-07 to 2008-09 and the ld CIT(A) has granted partial relief in respect of this disallowance in assessment years 2003-04 and 2004-05. These facts show that the opinion expressed by the auditors is a debatable one and further requires examination. Hence, as already expressed by us in earlier paragraphs, these two documents cannot form incriminating material and hence, the addition made in assessment years 2002-03 to 2006-07 should be held to have been made without reference to any incriminating ma....
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....s have been used for the said purposes. Even though the Ld A.R contended that there is commercial expediency involved in the investments made in other sister concerns also in as much as, the property belonging to them have been used by the assessee to give collateral security to banks in respect of loan availed by it. In the alternative, it was contended that the AO did not examine the nexus between the borrowed funds and the investment. We notice all these contentions of the assessee require examination of facts relating to the same. Accordingly, we set aside the matter relating to disallowance of interest in respect of advances made to other sister concerns to the file of the assessing officer for fresh consideration. The order of Ld CIT(A) in respect of this issue in AY 2007-08 and 2008-09 stands modified accordingly. (c) A.AVNASH:- 49. We shall now take up the appeals filed by Shri A. Avnash for assessment years 2002-03 to 2008-09. In this case the assessments have been completed u/s 153C of the Act. The assessee has urged an additional ground in AY 2008-09 raising some legal issue. At the time of hearing, the Ld A.R did not press the additional ground and hence the same is d....
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....ng material pertaining to AY 2002-03 to AY 2007-08 and hence, initiation of proceedings u/s 153C of the Act in respect of those years is bad in law. In this regard, he placed reliance on the following case law:- (a) Sri Rama Educational Trust (ITA Nos. 31 to 35/Viz/2012 dt. 13-12-2013) (b) Gadiraju Venkata Subba Raju (ITA No.360 & 361/Viz/13 dt. 05-03-2014) (c) A.Ammaji (ITA No.337 to 343/Viz/2014 dated 21.07.2014) 52. The Ld A.R further submitted that the proceedings u/s 153C of the Act were initiated on 15.12.2008 and on that date the proceedings relating to AY 2002-03 to 2007-08 were not pending. Further, the revenue did not unearth any incriminating material relating to the additions made by the assessing officer. Accordingly, by placing reliance on the decision of special bench rendered in the case of All Cargo Global logistics Ltd (supra), which has since been confirmed by the Hon'ble Bombay High Court, the Ld A.R contended that all the additions made in AY 2002-03 to 2007-08 are liable to be quashed. 53. The Ld A.R submitted that the assessing officer has enhanced the rental income declared by the assessee in AY 2005-06 to 2007-08 on the basis of some loose materials fo....
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....f has denied the same and accordingly it was contended that the same does not form incriminating material found during the course of search. It was submitted that the jewellery was offered as income in AY 2008-09 only and accordingly it was submitted that the assessing officer did not refer to any of the incriminating material found during the course of search for making the additions in AY 2002-03 to 2007-08. Accordingly, it was contended that the very initiation of proceedings u/s 153C of the Act was not valid and even, if it is held to be valid for a moment, the additions made by the assessing officer by placing reliance on the information already available on record without referring to any of the seized materials is bad in law. 56. The co-ordinate bench of Visakhapatnam Tribunal has considered an identical issue in the case of Sri Rama Education Society (supra) G.Bangaramma (supra) and Smt. A.ammaji (supra) and in all the three cases, the Tribunal has quashed the proceedings initiated u/s 153C of the Act in the absence of any incriminating materials relating to the above said assessees found during the course of search. In the instant cases also, the AO did not refer to any o....
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.... Act was taken from Shri A.Avnash. He submitted that the jewellery belongs to his mother Smt. Ammaji, Sister Smt. Maitri and Wife Smt. Harshita and his daughter baby Aharya. He also submitted that the jewellery were reflected in their returns of income. However, he admitted that there is excess jewellery of 3 Kgs. (approx.) amounting to Rs. 30,00,000/-. He admitted that the same was his unexplained investment and agreed to offer the same for assessment year 2008-09. However, he filed an affidavit within three months before the DDI and retracted from the admission. Accordingly he did not offer the same in his return of income. Since the assessee had made the admission in the sworn statement, the assessing officer assessed the same as his income, since the assessee could not prove that the jewelleries belonged to his sister and his wife. The Ld CIT(A) also confirmed the same. 61. We heard the parties on this issue. The question no.17 asked to the assessee in the sworn statement taken u/s 132(4) of the Act states the two lockers stood in the name of assessee's parents and they were opened in the present of witnesses and the contents were brought as it is. In the reply the Shri A. Avn....
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....d against the facts surrounding the issue. Hence, we are of the view that Shri Avnash was justified in retracting from the admission made by him through the affidavit filed before the DDI. 64. Subsequently, the assessee has furnished the ownership details of the jewellery, but the said details were rejected by the assessing officer by pointing out certain defects. In respect of the jewelleries claimed to belong to the sister of Shri Avnash, the same was rejected on the reasoning that the customs documents were not available. Similarly the claim made by his wife was rejected on the reasoning that the parents and grant parents of Avnas's wife did not furnish wealth tax returns. However, in our view, what is required to be seen is -Whether the assessee could be considered to have made investment in jewellery out of his undisclosed income. The family status, the locker details, the recovery made from bed room, claim made by his sister, the submissions made by the parents of Avnas's wife, if considered from the angle of human probabilities, in our view, would give negative answer. Accordingly, we are of the view that the addition of Rs. 30.00 lakhs made purely on the basis of sworn sta....
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.... advances received by the assessee. Hence, in our view, the order passed by the Ld CIT(A) on this issue does not call for any interference. 70. The next issue relates to the enhancement of rental income. The assessee had given a property located in R.K. Beach, Visakhapatnam for monthly rent of Rs. 8000/- to a concern named M/s Supraja's Sandy Lane Bar & Restaurant from January, 2005. The revenue conducted survey operations u/s 133A of the Act in the case of M/s Supraja's Sandy Land Bar & Restaurant on 07-12-2007. From the impounded materials, it was noticed that the above said concern is paying a rent of Rs. 82,000/- per month. Further, it was noticed that the assessee had received advance of Rs. 4,83,000/-. Accordingly, the AO assessed the difference rent of Rs. 8,88,000/-(Rs.74,000/- x 12 months) and also the rent advance of Rs. 4,83,000/- , both aggregating to Rs. 13,71,000/- as rental income of the assessee. 71. In the appellate proceedings, the Ld CIT(A) agreed with the contentions of the assessee that the rent advance cannot be assessed as rental income. With regard to the difference in rental income, the ld CIT(A) confirmed the addition with the reasoning that the assessee....