TaxTMI 
TaxTMI 
2016 (10) TMI 972
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....ty of Section147." 3. The assessee is a partnership firm and is engaged in the business of excavation, transportation of coal and other allied activities. For assessment year 2007-08 the assessee filed return of the income on 30.10.2007 declaring a total income of Rs. 82,47,737/-. The said return was accepted u/s.143 (1) of the Income Tax Act, 1961 (Act). 4. There was a search and seizure operation carried by the Revenue u/s.132 of the Income Tax Act, 1961 (Act) in the EMTA group of cases on 15.02.2009. The assessee was also searched. A notice u/s.153A of the Act dated 29.09.2009 was issued for assessment year 2007-08. The assessee by letter dated 25.01.2010 requested the AO to treat the return of income already filed on 30.10.2007 as a return filed in response to the notice u/s.153A of the Act. The AO passed an order u/s. 153A read with section 143(3) of the Act dated 31.12.2010, wherein, the AO determined the total income of the assessee at Rs. 84,35,250/-. While concluding the assessment, one of the claim made by the Assessee that was considered by the AO was with regard to grant of additional depreciation in respect of dumpers and tippers etc. The AO made the following ob....
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.... percentage on the written down value thereof as may be prescribed. Explanation- For the purposes of this proviso- (a) The expression "commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "medium goods vehicle' and "medium passenger motor vehicle" but does not include "maxi-cab", "tractor" and "road - roller"; (b) The expressions "heavy goods vehicle", "medium passenger motor vehicle", "light motor vehicle", "medium passenger motor vehicle""maxi-cab", "motor-cab", and "road-roller", shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988) Further we are to state that we have claimed depreciation of dumpers and tippers which are registered under the motor vehicles Act 1988 ( 59 of 1988) as public carrier and for ready reference we are enclosing herewith the Xerox copies of some of the R. C. Books for ready reference along with sample copies of Road Tax Challan duly paid on such vehicles for your perusal and to substantiate our submission as to proper depreciation claimed by us." The assessee firm has also furnished copies of Registration Certificate iss....
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....ion of any article or thing. According to CIT, the assessee was, therefore, not entitled to additional depreciation u/s32(1) (iia) of the Act, since the condition for claiming additional depreciation is that the Assessee should be engaged in activity of manufacture of production. Accordingly the CIT issued show cause notice u/s.263 of the Act calling upon the Assessee to show cause as to why the order of the AO should not be revised u/s.263 of the Act. 6. The assessee in response to the show cause notice u/s. 263 of the Act submitted that the issue with regard to allowing additional depreciation cannot be subject matter of assessment proceedings u/s.153A of the Act because no incriminating document whatsoever was found in the course of search so as to disallow the claim of the assessee for additional depreciation. The assessee submitted that the return of income filed u/s.139(1) of the Act was accepted by the Revenue and no notice u/s.143(2) of the Act was issued within the time limit contemplated by law. Therefore, the claim for additional depreciation already allowed cannot be disallowed in the assessment u/s.153C of the Act, without there being incriminating material found in....
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....it came to notice for the first time after search. In the only assessment done in this case, as to what is its business( and therefore consequences regarding wrong claim of depreciation). I, therefore, hold that the order passed by the AO u/s. 153A/143(3) on 31.12.2010 is erroneous is so far as it is prejudicial to the interest of Revenue, as he failed to understand settled position of law in this respect and thereby reached a wrong conclusion and allowed the claim of additional depreciation. For this reason the assessment order dated 31.12.2010 is set aside with the direction that the AO shall pass appropriate order after giving opportunity of hearing to the assessee." 8. Aggrieved by the order of the CIT the assessee has preferred the present appeal before the Tribunal. We have heard the rival submissions of the Ld. Counsel for the assessee and the Ld. DR. The Ld. Counsel for the assessee firstly submitted that the return originally filed by the assessee u/s.139(1) of the Act was accepted u/s.143(1) of the Act and no notice u/s 143(2) was issued within the time required in law and therefore the claim of the Assessee is deemed to have been accepted in an asses....
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....ng the course of assessment proceedings u/s.153A of the Act, there was no incriminating material found at the time of search and that the AO while concluding the assessment u/s.153A of the Act dealt with the claim of the additional depreciation in the course of verification of various claims made in the return of income filed in response to the notice u/s.153A of the Act. It is also not disputed that with reference to the original return of income filed under section 139(1) of the Act on 30.10.2007, no notice under section 143(2) of the Act was issued within the time limit prescribed u/s.143(2) of the Act and, therefore, such assessment proceedings stood completed and that in any case on the date of search i.e. on 15.1.2009, the assessment for the impugned assessment year of 2007-08 was not pending. Therefore the assessment u/s.143(1) of the Act, for AY 2007-08 does not abate in terms of the Second Proviso to section 153A(1) of the Act. It is the plea of the learned counsel for the Assessee that the impugned additions made by the Assessing Officer could not have been made in the impugned assessment proceedings as they are not based on any material seized or found during the course ....
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....e normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to 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. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns f....
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....n assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of....
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.... 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 inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A 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, if need be. Therefore, it is clear even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed in....
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....hich is not disclosed in the earlier return or which is not unearthened during the search, in order to find out what is the "total income" of each year and then pass the assessment order. Therefore, the Commissioner by virtue of the power conferred under Section 263 of the Act gets no jurisdiction to initiate proceedings under the said provision because the condition precedent for initiating proceedings under Section 263 is any order passed under the Act by the Assessing officer is erroneous insofar as it is prejudicial to the interest of the revenue. Once the order passed by the Assessing officer gets reopened, there is no order which can be said to be erroneous insofar as it is prejudicial to the interest of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction." 13. The Special Bench of ITAT Mumbai in the case of All cargo Global Logistics Ltd. (2012) 16 ITR (Trib.) 380 (Mum)(SB) had to consider the following question: "1. Whether, on the facts and in law, the scope of assessment u/s 153A encompasses additions, not based on any incriminating material found, during the course of search"?" The Special Bench answer....
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....e proceedings u/s.143(1) of the Act can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act. Section 153A of the Act, uses the expressing "pending assessment or reassessment". When a return is filed and acknowledgement or intimation issued u/s.143(1), the proceedings initiated by filing the return are closed, unless a notice u/s 143(2) of the Act is issued. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed under section 143(1) of the Act, thereby resulting in non-abatement of such assessment in terms of the Second Proviso to section 153A(1) of the Act. 17. In the light of the discussion above, our conclusion is that in the present case, the issue with regard to additional depreciation could not and ought not to have been examined by the AO in the assessment proceedings u/s.153....