TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 1051
X X X X Extracts X X X X
X X X X Extracts X X X X
....wing the benefit of indexation." 3. "On the facts and in the circumstances of the case the Ld. CIT(A) has erred in directing that the A.O. should follow and recomputed Interest U/s 234B without pointing an error in computation of Interest U/s 234B done." (ii) I.T.A.No. 2141/Del/2013: "On the facts and in the circumstances of the case, the Ld CIT (A) has erred in directing to allow the benefit of carry forward of losses for the A.Y. 1998- 99 under capital gain on sale of Gold/Silver utensils against Capital Gain for the A.Y. 1999- 2000." 2. The assessee has also filed cross objections against these appeals and the ground of cross objections taken by assessee are reproduced as under: (i) C.O. No.159/Del/2009:- "1. That the learned DCIT erred in assessing the income of the appellant at Rs. 4,15,17,250/- against income returned at Rs. 34,59,120/- without providing sufficient opportunity to the appellant. 2. 2.1 That the learned DCIT failed to appreciate the original assessment in the instant case was completed u/s- 143(3) vide order dated 9th August 2000, accepting the returned income and claim of carry of capital loss amounting to Rs. 87,64,069/- and again in the proceedings ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le return u/s 153A to which assessee submitted that the original return filed by her be treated as return filed u/s 153A of the Act. During the assessment proceedings in Assessment Year 1998-99, the A.O. observed that the assessee had claimed a gross capital loss of Rs. 90,69,085/- and after setting off against other capital gain an amount of Rs. 87,84,069/- has been claimed to have been carried forward. The A.O. observed that the assessee had incurred long term capital loss on the sale of gold and silver utensils after claiming indexation. The A.O. confronted the assessee that these assets were personal effects and does not get covered by the definition of capital asset. However, the assessee submitted that the assets declared under VDIS were never shown as personal effects and were never used as personal assets and the same qualifies for being classified as capital assets. The A.O. did not agree with the contention of assessee and made an addition of Rs. 3,77,58,105/- by holding as under: "The reply of the assessee has been considered carefully. Bulk quantity of silver and gold utensils clearly goes to show that they were clearly 'personal effects'. Now) the law is well ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) and Ld. CIT(A) has deleted the addition made by A.O. by holding as under: "As regards to substantial issue is concerned, I am of the view that the appellant has merit in her submissions. The AO has denied the benefit of indexation in the computation of capital gains on sale of gold and silver items by holding them as 'personal effects'. By excluding the value of indexation, the AO has taken the total sale proceeds on those articles as income and applied normal rate of taxes. It is very relevant to refer to section 2(14) which define what constitutes a 'capital asset'. Capital asset means property of any kind held by an assessee but excludes certain items from its purview. Apart from stock in trade, raw materials, consumable stores, this section specifically excludes 'personal effects'. In turn the 'jewellery' has been taken out of the category of 'personal effects'. Again 'jewellery' has been given inclusive meaning in this provision. In effect the jewellery do fall under capital asset for the purpose of section 2(14) of IT Act. As per clause (ii) of subsection 14 of section 2, ornaments made of gold, silver and other precious ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. CIT(A). In the Assessment Year 1999-2000, the revenue is aggrieved as Ld. CIT(A) has directed the A.O. to allow benefit of carry forward of losses from Assessment Year 1998-99. Against both appeals the assessee has filed cross objections and one of the objections taken by assessee in Assessment Year 1998-99 is regarding jurisdiction of A.O. to make assessment u/s 153A in view of the fact that already assessment was completed twice i.e. once u/s 143(3) and again u/s 143(3) read with respect to section 147 and in these two assessments no such claim of capital loss was denied and therefore denial of capital loss in assessment proceedings u/s 153A on the same facts and circumstances will amount to change of opinion which was not permissible. The assessee has further taken the ground that in the absence of incriminating documents no addition can be made u/s 153A of the Act. 6. At the outset, Ld. D.R. submitted that the question to be decided by Hon'ble Bench is as to whether the gold and silver utensils sold by assessee during the year 1998-99 can be classified as personal effects or can be classified as capital assets. Ld. D.R. submitted that there is no dispute about the fact that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s declared in VDIS, the same utensils having some weight, were sold as is apparent from declaration of VDIS and the sale bills of such utensils and therefore, cannot be said that the same were used as there is no difference in weight of utensils and it was submitted that in case these were used for personal purposes, there must have been some wear and tear to them. Ld. A.R. further relied upon the case law of Faiz Murtaza Ali Vs CIT decided by Hon'ble Delhi High Court reported at 360 ITR 200. Ld. A.R. submitted that in that case the claim of assessee that the items inherited by him were items of personal effects was decided in favour of assessee on the basis of an affidavit filed by assessee. Ld. A.R. submitted that in the present case also, the assessee has filed affidavit and has claimed that these were her personal effects and the affidavit has not been rebutted by the Revenue. Ld. D.R. replying in her rejoinder submitted that the case law decided by ITAT is not relevant as the issue has been decided by Hon'ble Calcutta High Court which has been relied upon by her and regarding the case law of Faiz Murtaza Ali Ld. D.R. submitted that it was a case of sale of items like ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 09.08.2000 and, which stood completed on the date of search, i.e. on 09.12.2003 and therefore, addition if any could have been made only on the basis of some incriminating material. In support of this, Ld. A.R. placed his reliance on the following case laws: i) Jai Steel (India) 259 CTR 281 (Raj.) ii) MGF Automobiles Ltd. in I.T.A.No. 4212 & 4213/Del/2011 iii) Kusum Gupta in I.T.A.No. 4873/Del/2009, 2510, 3312, 2833 /Del/ 2011. iv) PACL India Ltd. in I.T.A.No. 2637/Del/2010 v) Deepaen A. Paraekh, Mumbai I.T.A.No. 467, 469, 460/2011 vi) Jigsnesh P. Shah, Mumbai I.T.A.No. 1553 & 3173/Mum/2010 vii) Parsvnath Developers Ltd., Delhi I.T.A.No. 5188/Del/2013 viii) Kabul Chawla, Delhi I.T.A.No. 779, 780, 781, 782/Del/2013 ix) DCIT Vs Kurele Pape Mills Pvt. Ltd. I.T.A.No. 3761/Dle/2011. 8. Ld. A.R. further submitted that interest charged u/s 234B was excessive and was not as per law. Ld. D.R. while replying to the Cross Objections submitted that the provisions of Section 153A are very clear and in a search case the provisions of Section153A automatically becomes operative and assessments of 6 years has to be reopened and she further argued that it is not a case of change in o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decided by Karnataka High Court. 9. Ld. D.R. also placed her reliance on the case law of CIT Vs Kpil Jain 50 DTR 342 decided by Hon'ble Delhi High Court for the proposition that the question of jurisdiction has to be raised within a month from the date of service of notice u/s 158BD of the Act. Ld. D.R. submitted that since the provisions of Secsiton158 BD are peri materia with the provisions of Section 153A, therefore, question of jurisdiction u/s 153A can be raised only within one month from the date of service of notice, which in the present case has not been done, therefore, legal objections raised by assessee are not tenable in law. As regards the issue of charging of interest u/s 234B, Ld. D.R. submitted that in the case of assessee herself, :Hon'ble Tribunal in Assessment Year 2000-01 has decided the issue in favour of Revenue and in this respect invited our attention to para 8 & 9 of the order placed in paper book pages 31 & 32. 10. We have heard rival parties and have gone through the material placed on record. As the assessee has raised legal issue in cross objections therefore, we first take up cross objections. In cross objection No.159/Del/2008, the assessee has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en A.O. is bound to include this income in the assessment u/s 153A irrespective of the fact that earlier in proceedings u/s 143(3), the same was not considered. The Hon'ble High Delhi Court in the case of Anil Kumar Bhatia 24 Taxman.com 98 vide order dated 07.08.2012 has held as under: "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 assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, 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. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d her reliance on the case law of Apoorva Extrusion Ltd. in I.T. A.No. 3308/Del/2001. However, we find that in that case, the Hon'ble Tribunal had held that under the provisions of Section 153A, the initiation of assessment or reassessment for all the 6 Assessment Years in the case of person searched is not dependent on findings of any incriminating material. We do not have any contrary view in this regard as we have already held that provisions of Section153A are mandatory and since a person is searched, the proceedings u/s 153A has to be completed by passing a fresh assessment order. The question is as to whether any addition can be made if there is no incriminating material found during search, which in our opinion, is not as the only purpose of search is to unearth the undisclosed income and if during search, no incriminating material leading to existence of undisclosed income is found, then completed assessments cannot be disturbed and this view has been taken in various case laws as relied upon by Ld. A.R. Ld. D.R. has also relied upon the case law of Filatex India Ltd. in I.T.A. No. 269/2014 for the proposition that addition u/s 153A can be made even in the absence of materi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... respect of additions to be made u/s 153A: "(i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in narrowing down the scope of assessment u/s 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during search could be brought to tax ? (ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in law in holding that the scope of Section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the AO? (iii) Whether on the facts and in the circumstances of the case, the Hon'ble !TAT was right in limiting the scope of Section 153A only to undisclosed income when as per the section the A.O. has to assess the total income of the six assessment years." 18. The findings on these questions of law are contained in para 18 which are reproduced below: "18. Mr. Dastur would submit that the Revenue is protected completely in this case. The power is of drastic nature and has to be exercised within constitutional parameters. However, though the second p....