TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1702
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.... are engaged in the business of jewellery and construction at salem. The assessees are regularly assessed to income-tax. Shri A.B. Sudarsanam had filed his regular returns of income for the assessment years 2004-05 and 2005-06 on 14.7.2004 and 31.8.2005 respectively. The assessment for the assessment year 2004-05 was completed through the intimation dated 13.8.2004, passed under Section 143(1). The assessment in the case of 2005-06 was completed under Section 143(3) on 31.12.2007. 4. In the case of Shri A.B.S. Sanjjay, the return for the assessment year 2003-04 was filed on 7.8.2003. The return filed by the assessee was acknowledged and no further proceedings were initiated and the assessment remained closed for the time being. The return for the assessment year 2004-05 was filed on 14.7.2004 and the return was processed under Section 143(1) through intimation dated 13.8.2004. The return for the assessment year 2005-06 was filed on 31.8.2005 and scrutiny assessment was completed under Section 143(3) through order dated 31.12.2007. 5. Therefore, it is to be seen that both the assessees have filed regular returns for all the impugned assessment years and the returns filed by them h....
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....ns made by the assessing authority in the course of 153A assessments are:- (1) Gifts received by the assessees (2) Difference in cost of construction These additions were taken up before Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the additions made by the Assessing Officer as against the gifts received by the assessees from the persons residing outside India. In respect of the addition made by the assessing authority towards cost of construction of the commercial building, partial relief was given by the Commissioner of Income Tax (Appeals). 11. The assessees are aggrieved by the additions sustained by the Commissioner of Income Tax (Appeals) and therefore, these second appeals before the Tribunal. 12. In all these appeals, obviously, the issues raised are the same and the grounds raised in the appeals are common. 13. The assessees have raised two set of grounds before the Tribunal. The first set of ground raised by the assessees is that no incriminating material was found out or seized in the course of search and in such circumstances, it was not possible for the Assessing Officer to make additions of those items which were alrea....
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....High Court of Rajasthan rendered in the case of Jai Steel (India) v. Assistant Commissioner of Income Tax (2013) 88 DTR (Raj) 1. In the said case, Hon'ble Rajasthan High Court has considered the scope of Section 153A. The Court has held that requirement of assessment or reassessment under Section 153A has to be read in the context of Section 132 or 132A in as much as in case nothing incriminating is found on account of such search or requisition, the question of reassessment of the concluded assessment does not arise. The Court observed that thus, the underlying purpose of making assessment of total income under Section 153A is to assess income which was not disclosed or would not have been disclosed. The Court further observed that the second proviso to Section 153A provides for abatement of assessment or reassessment which is "pending" on the date of initiation of search or requisition in as much as once a return is filed in terms of Section 153A and the Assessing Officer is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year. There is no question of any abatement of assessment or reassessmen....
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....h of six assessment years separately. In other cases, where the assessments have already been made, assessment under Section 153A will be made on the basis of incriminating materials found in the course of search and not produced in the course of original assessment. The Special Bench held that a reassessment is possible in the case of concluded assessments only if the search has brought out incriminating materials against the assessee. Where no incriminating material was found out and where assessments have already been completed, assessment under Section 153A does not allow the Assessing Officer to reassess the income already assessed earlier. 20. The learned counsel has also relied on the following decisions in support of his legal argument as explained above:- 1. M/s Jeyachandran Industries Ltd. v. Assistant Commissioner of Income Tax, ITAT, Chennai "C" Bench in I.T.A. No.238, 239 & 240/Mds/12 dated 26th November, 2012. 2. Assistant Commissioner of Income Tax v. Asha Kataria (2013) 36 CCH 082 Del Trib 3. Vishal Dembla v. Deputy Commissioner of Income Tax (2013) 93 DTR (Jd)(Trib) 1 21. On the merits of the case, the learned counsel has contended that all the gifts were rece....
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....e learned Commissioner of Income Tax contended that the whole argument of the assessees is based on the concept of block assessment conceived under Section 158BC, which is no more in force. The theme of assessment under Section 153A and that of Section 158BC are entirely different. In the case of assessment under Section 153A, what is determined is "total income", whereas, in a block assessment under Section 158BC, what is assessed is "undisclosed income". Therefore, there is no scope to make a limitation to the operation of Section 153A by arguing that the particulars furnished in the returns by the assessees will not come in the consideration zone under Section 153A. 26. In the Special Bench decision cited by the learned counsel in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner 15 I.T.A. Nos.1691 to 1695/Mds/2013 of Income Tax reported in (2012) 137 ITD 287 (Mumbai) (SB), the earlier assessment was completed after thorough scrutiny and every item disclosed by the assessee was properly examined by the assessing authority. It was in that context, the Special Bench has held that a reassessment is not justified under Section 153A on those matters sufficiently con....
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....n to furnish even the address of the donors, not to speak about any other details. The detailed order of the Assessing Officer clearly bring out the case that the story of gifts is made by him only as a make-believe arrangement. The gifts cannot be treated as genuine only for the reason that the amounts were transmitted through banking channels. At the best, it can only be one of the arguments that could be relied on by the assessees. But, all the details furnished by the assessees in these cases have been blown out by the replies given by the assessees to the detailed questions put by the assessing authority before them. 29. The learned Commissioner of Income Tax has relied on the following decisions to support the additions made by the assessing authority in the case of receipt of gifts:- 1. Commissioner of Income Tax v. P. Mohanakala (2007) 291 ITR 278 (SC) 2. Subhash Chander Sekhri v. Deputy Commissioner of Income Tax (2007) 290 ITR 300 (P&H) 3. Tirath Ram Gupta v. Commissioner of Income Tax (2008) 304 ITR 145 (P&H) 30. Regarding cost of construction of the building, the learned Commissioner of Income Tax explained that the report of the DVO was not available at the time o....
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....d. v. Deputy Commissioner of Income Tax reported in (2012) 137 ITD 287 (Mumbai) (SB). In the cited Special Bench case, the Tribunal has made it clear that an assessment under Section 153A empowers an Assessing Officer to complete the assessment for six consecutive assessment years. It is also clarified that assessments as well as reassessments are possible in the case of pending assessments. It is further clarified that where the assessments are completed and no assessment is pending at the time of assessment under Section 153A, reassessment can be made only if incriminating materials are collected in the course of search and the items concluded in the earlier assessments cannot be reconsidered through a reassessment. 35. The Hon'ble Rajasthan High Court has held the same view in the case of Jai Steel (India) v. Assistant Commissioner of Income Tax (2013) 88 DTR (Raj) 1. The Court has clearly held that in case nothing incriminating is found on account of search or requisition, the question of reassessment of the concluded assessment does not arise. The Court has declared that the underlying purpose of making assessment of total income under Section 153A is to assess income which w....
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....n 143(3). Inspite of the scrutiny assessment, Revenue has not sought investigation on the question of gifts. Therefore, there cannot be second inning in the course of assessment contemplated under Section 153A. 38. In almost all the decisions cited by the learned Commissioner of Income Tax, incriminating materials were collected in the course of search. It is in that context, the High Courts and Tribunal have held that reassessment of such items are permissible in a proceeding under Section 153A. 39. In the case of Commissioner of Income Tax v. Chetan Das Lachman Das (2012) 211 Taxman 61 (Delhi), what the Hon'ble Delhi High Court held is that seized material can be relied upon by the Assessing Officer to draw inference that similar transactions could have been taken place in the whole of the six years' period covered by Section 153A. It is not a case where the High Court has considered the scope of reassessment permissible under Section 153A. The said decision is not, therefore, applicable to the present case. Similarly, in the case of Commissioner of Income Tax v. Anil Kumar Bhatia (2013) 352 ITR 493 (Delhi), document was seized in the course of search. The debtor undertook to f....