TaxTMI 
TaxTMI 
2016 (11) TMI 1046
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....e said assessment years was not sustainable because no incriminating material concerning such additions was found during the course of search and further no assessments for such years were pending on the date of search." 2. It was submitted before us that in all the cases income had been originally assessed either under section 143(3) of the Income-tax Act, 1961, or the return filed by the assessee accepted under section 143(1) of the Income-tax Act, 1961, and the time period for issuing notice under section 143(2) had expired on the date of initiation of search, and further that no incriminating material pertaining to the impugned years was found during search conducted on the assessees and the addition made, in the course of assessment framed under section 153A, did not pertain to any incriminating material found during search. Charts reflecting the above facts in relation to all the assessees was placed before us. 3. Further, it was stated that in the bunch of cases relating to Modern Steel Ltd., Modern Diaries Ltd., Heera Moti Agro Industries, Heera Moti Agro Products, Heera Moti Health Care Products Ltd., Heera Moti Spices Pvt. Ltd., Surbhi Agro Products, Amit Jindal (Pr....
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....e of search which could warrant such addition. 7. By the order dated February 28, 2014, the learned Commissioner of Income-tax (Appeals) dismissed the appeal. The learned Commissioner of Income-tax (Appeals), relying on various judgments of the High Court held that while making assessment under section 153A of the Act, the Assessing Officer is not obliged to utilise only the incriminating material collected during the search further, the addition made under section 24(b) of the Act was also upheld. 8. Aggrieved by the same the assessee filed the present appeal before us. 9. During the course of hearing before us, the learned counsel for the assessee, Sh. Ashok Goel, submitted that the provisions of section 153A had been the subject matter of interpretation by various courts, which had clearly laid down the proposition in a number of decisions that, as per the section, where assessment proceedings were pending on the date of search the same would abate and assessment under section 153A would be framed afresh taking into consideration all material including the incriminating material found during search. While in cases where assessment had been made under section 143(1) or s....
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....laced by the learned counsel for the assessee. (3) The procedure for assessment of search cases prescribed under section 153A, section 153B and section 153C was introduced by the Finance Act, 2003, to do away with the controversies and litigation relating to "undisclosed" incomes, whether relatable to material found during search or not, as provided in the earlier block assessment procedure. By limiting addition, under section 153A of the Act, also to incriminating material, it would tantamount to bringing current procedure at par with the earlier one, thus defeating the very purpose of introducing the legislation. (4) Referring to the Central Board of Direct Taxes Circular No. 7, dated September 5, 2003 ([2003] 263 ITR (St.) 62), which dealt with the necessity of bringing the new section, the learned Departmental representative pointed out that the circular states that the Assessing Officer has to assess/reassess the "total income" (emphasis supplied) of the assessee, which was interpreted by the learned Departmental representative to mean that it should not be restricted to incriminating material only. (5) That the section began with a non obstante clau....
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....rtmental representative have already been dealt with by the High Courts in the decisions relied upon by the assessee. The learned counsel for the assessee further stated that no incriminating material vis-a-vis the addition made in the impugned year was found and also that the surrender made pertained to the assessment years relating to the year in which search was conducted and, which were not pending before the Bench. Shri Sudhir Sehgal, the learned counsel for the assessee, stated in his counter-argument, that the issue had been settled in favour of the assessee in view of various judgments of High Courts. 13. We have heard the contentions of both the parties, perused the documents placed before us as also the orders of the authorities below. 14. The undisputed facts, in the present case, are that on the date of search conducted on the assessee under section 132 of the Act, i.e., March 17, 2010, no assessment proceedings relating to the impugned year were pending. In fact the assessee had filed the return under section 139(1) of the Act on June 29, 2004, no notice under section 143(2) had been issued to the assessee and on the date of initiation of search, i.e., March 17, ....
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.... while the assessments which have attained finality cannot be disturbed unless materials gathered in the course of proceedings under section 153A of the Act established otherwise. 18. Thereafter, the Delhi High Court in the case of CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Delhi), interpreted the provisions of section153A of the Act at length, and held that as against the earlier block assessment procedure which roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments, under the present assessment procedures prescribed under section 153A/153B/153C of the Act, only one assessment order in respect of each of the six assessment years had to be passed. The hon'ble High Court held that this was sought to be achieved in case of those assessment years where assessment proceedings were pending on the date of search by abating them and framing fresh assessment including incomes relating to incriminating material found during search. In case of those assessment years where an assessment order had already been passed under section 143(1)(a) or 143(3), those assessments could be reopened and the total income reasses....
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....ts, summarised the legal position in paragraph 37, which is reproduced below (page 589) : "On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the afore mentioned decisions, the legal position that emerges is as under : (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be....
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....er section 153A can be framed only in cases where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A of the Act. Moreover, notices under section 153A(1)(a) can be issued and income assessed or reassessed of six years preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Thus the crucial words 'search' and 'requisition' appear in the substantive provision and the proviso, which throws light on the issue of applicability of the provision. Such assessments have a vital link with the initiation and conduct of search. Since search can be authorised only on the fulfilment of the conditions enumerated in section 132, those conditions will have to be taken into account while interpreting section 153A and the interpretation arrived at is that in respect of unabated proceedings assessment has to 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/property discovered in the course of search. Section 153A being enacted to a search ....
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....ssessment being made all principles of reassessment which are applicable in case of proceedings under section 147/148 shall become applicable. Thus, in cases where assessments have already been made addition to be made in proceedings under section 153A is to be restricted to incriminating material found if any. 24. It is amply evident from the above that the issue is settled, with a number of decisions of the High Courts holding that in the case of completed assessments, no addition can be made in the absence of any incriminating material. Though we do agree that there are decisions of the High Courts which hold otherwise and state that under section 153A, addition in case of completed assessments need not be restricted to incriminating material but in view of the apex court decision in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) which states that where there are two reasonable constructions of a statute, the construction favouring the assessee should be adopted, we hold that in the case of completed assessments under section 143(3)/143(1) of the Act, in the absence of any incriminating material found during the course of search, the Assessing Officer has no jurisdicti....
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....d the current procedures under section 153A/153B/153C/153D of the Act. Moreover, by prescribing one assessment for each of the six years, covered under search, the Legislature has done away with the requirement of making assessment only of undisclosed income prescribed in the earlier block assessment requirement, and thus doing away with consequent litigation regarding the same. 29. The learned Departmental representative further argued that even the circular outlying the objective behind bringing the present search assessment procedures stated that the assessee shall assess/reassess "total" income for each of the six years. The learned Departmental representative stated that the mandate of the current requirement was to assess the "total" income, hence, it cannot be restricted to the extent of incriminating material only. 30. We find that the meaning of the word "total" income in the context of completed assessment was interpreted by the Delhi High Court in the case of CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Delhi), wherein in paragraph 22, the court held that (page 508) "in cases where the assessment or reassessment proceedings have already been completed and assessmen....
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....lt and distinguished most of these decisions primarily by finding that those decisions dealt with the fact situation where material had been unearthed during search and, therefore, could not apply in situations where no material was found during search. 33. The learned Departmental representative further contented that the statement of Sh. Kishan Kumar Goyal which was recorded during the course of search conducted on the Modern group, constituted incriminating material. As per the learned Departmental representative, in the statement, Sh. Kishan Kumar Goyal admitted that incriminating documents relating to various investment companies, excess cash and jewellery were found. The assessee in consequence thereof had surrendered additional income of Rs. 11 crores. 34. The statement referred to by the learned Departmental representative is reproduced as under : "Question 3 Do you want to say anything else further ? Answer. During the course of search operation certain incriminating documents relating to various investment companies, excess cash and jewellery were found at my residence. In this connection I would like to offer additional income to the tune of Rs. 1....