TaxTMI 
TaxTMI 
2015 (12) TMI 1280
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....the office premises of M/s Sai Lakshmi Township Pvt. Ltd., Visakhapatnam and survey operations in its branch offices on 22/08/2008. During the course of search, certain incriminating documents were seized and as per the seized documents, it was noticed that the assessee along with others have invested an amount of Rs. 230 lacs for purchase of lands situated at Singavaram Village, Denkada Mandal, Vijayanagaram District measuring 14 acres 81 cents and given to M/s Sai Lakshmi Township Pvt Ltd., for development and marketing. During the course of search proceedings, the assessee's were summoned by the Deputy Director of Income-tax (Inv), Visakhapatnam. In response to summons, the assessee appeared on 26-9-2008 and his statement was recorded. During the course of investigation proceedings, before the DDIT(Inv) to a specific question the assessee had agreed that he along with other associates have invested an amount of Rs. 230 lacs for purchase of 14.81 acres lands and furnished the source for investments to the extent of Rs. 206 lacs and the balance was admitted as unexplained investments. The DDIT(Inv) -Unit -III(2), completed the investigation and forward a report to the ....
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.... same as required by law by producing credible and verifiable evidences and as such the addition made by the Assessing Officer is purely on surmises and conjectures. 3. The appellant crave leave to add to/alter/substitute/delete/modify all or any of the above grounds. 4. The ld. AR, at the time of hearing submitted that in this case, the assessment was framed consequent to a search operation u/s 132 of the Act, therefore assessment order passed u/s 143(3), r.w.s.147is bad in law and liable to be quashed. The AR further submitted that the AO has no jurisdiction to issue notice u/s148 to re-open the assessment in the case of a person, where search is conducted u/s 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May 2003, therefore, the only option available to the Assessing Officer is to issue notice u/s 153C and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted or requisition is made. The AR further submitted that in this case, the assessment is reopened based on the search proceedings in the case of ....
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....explained which is contrary to the evidences filed before the investigation officer. The AR further submitted that the assessee has taken unsecured loans from parties who are agriculturists and the assessee has furnished copies of the documents and other proof as to identity and creditworthiness of the creditors. The assessee has also produced confirmation letters from the respective creditors, their bank statements, pattadar passbooks evidencing the ownership of agricultural lands and the pass books issued by the tobacco board, a statutory board created by the Govt. of India as evidence of receipt of agricultural income. The Assessing Officer failed to give an iota of explanation how these documents cannot meet the credible evidence, without even a fair inquiry from his side. Thus, the Assessing Officer cannot allege that the assessee has not produced credible evidence. The AR further submitted that the onus cast upon the assessee to explain the credits by providing identity, creditworthiness and capacity of the creditor and genuineness of the transaction. Once, the initial burden is proved then, the burden shifts to the Assessing Officer to prove otherwise. Therefore, for the rea....
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....r, based on the assessee statement issued notice u/s 148 to reopen the assessment and completed the assessment u/s 143(3), r.w.s. 147. The assessee contention is that the assessment cannot be reopened u/s 147 but, the Assessing Officer can issue notice u/s 153C r.w.s. 153A and proceed to assess or reassess the total income of each of assessment year falling within six assessment years as referred to in section 153A. 8. Now, the question before us is (i) whether the Assessing Officer is right in reopening the assessment u/s 147, where the Assessing Officer is satisfied that any money, bullion, jewellery or valuable article or thing or books of account or documents seized or requisitioned belongs to a person other than the person referred to in section 153A. The Income tax Act, 1961, by section 153A, 153B and 153C provides for new scheme of assessment of cases, where the search is taken place on or after 31st Day of May 2003. Until, insertion of section 153A to 153C, the search assessments was governed by separate provisions of Block assessment under section 158BC and as per the said provisions, the concept of block assessment was in force. The amendment brought in to the statue w....
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....ection 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under subsection (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." 10. Section 153C deals with cases of persons other than the persons referred to in section 153A. As per the provisions of section 153C, where the Assessing Officer satisfied that any money, bullion, jewellery or valuable article or thing or books of account or other documents seized or requisitioned belongs to a person other than the person referred to in section 15....
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....vision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act shall apply to the assessment or reassessment 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 this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time-limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment....
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....on 153A. 65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from 1st June, 2003. 11. A careful study of section 153A to 153C and also the circular issued by the CBDT explaining the procedure of assessment in search cases, it shows that these are separate provisions independent of other provisions relating to reassessment, because of the non abstante clause begins with the said sections. The language used in these sections, i.e. 'notwithstanding anything contained' in section 139, section 147, section 148, section 149, section 151 and section 153 made it clear that provisions of these sections are not made applicable to the assessments covered by the provisions of section 153A. Prior to the introduction of these three sections, there was a separate chapter XIV -B of the Act, by section 158BC to 158BE which governs the search assessments which is popularly known as Bl....
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....opinion that though, the Assessing Officer from both sections empowered to tax the income escaped from tax, both are works in a different situations, i.e. section 147 comes in to operation where there is an escapement of income chargeable to tax and section 153A comes in to operation where there is search u/s 132. 13. Under the provisions of section 153A, the Assessing Officer is bound to issue notice to the assessee to furnish the returns of income for each assessment years falling within the six assessment years immediately preceding the assessment year in which search or requisition is made. Another significant feature of this section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid period which includes disclosed and undisclosed income. Therefore, the new provisions has given wide powers to the Assessing Officer to assess or reassess the total income of six assessment years falling within the period of those six assessment years immediately preceding the assessment year in which search is conducted. Under the new provisions of section 153A, the statute is provides wide powers to the Assessing Officer in respect of....
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....eves that there is an escapement of income chargeable to tax, either from the return already filed or through some external material evidence came to his knowledge, which shows the escapement of income. Whereas, section 153A comes into operation when there is search u/s 132 or books of accounts, or any other asset or other documents requisitioned u/s 132A. If Assessing Officer justified in proceeding with section 147 to reopen the assessment, then there would be no relevance to section 153A, which was inserted in to the Act to deal exclusively with search cases. The legislators in their wisdom clearly spelt out the provisions of law applicable to search cases by using the word shall to begin with section 153A, made it mandatory that the Assessing Officer bound to issue notice u/s 153A or 153C, thereafter proceed to assess or reassess the total income, where search is conducted u/s 132 or requisition is made u/s 132A. Therefore, in our opinion, the AO is not justified in reopening the assessment u/s 147 and his order is illegal and arbitrary. 15. A similar issue came up for consideration before the Special Bench of this tribunal and the special bench had an occasion to deal....
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....r words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jur isdict ion to make or iginal assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O. b) 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." .. .... ... 58. Thus, question No.1 before us is answered a) as under (a) In assessments that are abated, the A.O. retains the original jurisdiction as wel l as jurisdiction conferred on him under s. 153A for which assessments shall be made for each of the six assessment years separately ; 16. In yet another case, the ITAT Mumbai Bench, in the case of State Bank of India vs. Deputy Commissioner of Income Tax (2013) 22 ITR 609, had considered the issue. The Mumb....
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....ady noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income' of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the ,,total income of the six assessment years in question in separate assessment orders. 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. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessme....
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....ssment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisi tion. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee s total income a....
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....tances of the case and also applying the ratios of the above mentioned decisions, we are of the considered opinion that the Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed. 18. Since, we have allowed the assessee ground on legality of reopening of assessment u/s 147 and quash....