TaxTMI 
TaxTMI 
2016 (8) TMI 725
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....ember 16, 2008. Consequent to the finding of incriminating evidence during the course of search operation in the case of the said company, a search and seizure operation were also conducted in the case of Mr. Lingam Tulasi Prasad and others in January, 2009. Thereafter, notices under section 153A of the Act were issued to the assessee on June 19, 2009, calling for the returns of income for the assessment years 2003-04 to 2008-09. In response to the said notice, the assessee filed his return of income on July 31, 2009, declaring a total income of Rs. 5,47,798. The assessee was also served with the notices under section 143(2)/142(1) of the Act requiring the assessee to file details/information, etc. However, the assessee did not furnish any information as called for nor was there any response from him. Therefore, the Assessing Officer proceeded to complete the assessment under section 144 of the Income-tax Act, 1961, for all the assessment years, i.e., the assessment years 2003-04 to 2006-07 making additions on account of (1) disallowance of interest claimed under the head "Business", and (2) unexplained credits in the capital account. 2.1. Aggrieved, the assessee preferred an appe....
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....oceed to adjudicate the same as under. 5.1. We have perused the assessment order as well as the order of the Commissioner of Income-tax (Appeals) and we find that there is no recording by the Assessing Officer that any incriminating material has been found from the possession of the assessee during the course of search. Further, we also find that the additions made by the Assessing Officer are not on the basis of any incriminating material found during the course of search but are based on the returns filed by the assessee prior to the date of the search. It is the case of the assessee that when there is no incriminating material found during the course of search, the assessments under section 153A of the Act cannot be made on the basis of the income returned by the assessee or on the basis of the books of account of the assessee. Further, it is also the case of the assessee that the assessee had filed his returns for all the relevant assessment years and since the assessments were not pending and had not abated, and that for all the years, time for issuance of notice under section 143(2) of the Act had also lapsed, the assessments cannot be made under section 153A of the Act. In ....
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....y High Court and, therefore, it cannot be said that the High Court's decision cannot be followed. In the case of CIT v. Raj Kumar Arora [2014] 367 ITR 517 (All), the hon'ble Allahabad High Court was considering the case where in addition to the material found and seized during the course of search, the Assessing Officer had made an addition of also gifts in respect of which no incriminating material was found and it was in these circumstances that the hon'ble High Court held that under section 153A of the Act, the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment. In the case of Gopal Lal Bhadruka v. Deputy CIT [2012] 346 ITR 106 (AP), the question before the hon'ble High Court was whether for the purpose of computing income under section 153A/153C of the Act, the Assessing Officer is required to confine himself only to the material found during the course of search and it was in answer to this question that the hon'ble jurisdictional High Court has held that the Asse....
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....there will 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'. (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment 'can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material'. (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment....