TaxTMI 
TaxTMI 
2016 (12) TMI 109
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the provisions of Section 143(3) r.w.s.153A of the Income tax Act, 1961 ["the Act"]. 3.2 While doing so, the A.O. failed to appreciate that the addition made was beyond the scope of assessment under section 153A of the Act. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, the initiation as well as completion of the assessment proceedings were bad, illegal and void. 4. At the outset, the ld.AR for the assessee drew our attention to the application dated 18.11.2011 filed by the assessee requesting therein to admit additional ground which was not raised earlier. The ld. AR submitted that the ground proposed to be raised in the said application was arising out of the facts available on record before the lower authorities, though the said ground was not raised before the authorities below and was of purely legal and technical in nature. The ld. AR submitted that the since the issue raised in additional ground is legal in nature and hence the same may be admitted for adjudication. The ld. AR also submitted that if the additional ground raised by the assessee is admitted no prejudice would be caused to the revenue. In defence of his arguments....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee for the financial year 2000-01 found that the assessee had received a sum of Rs. 2,25,00,000/- from Mr N. K. Rajgharia and asked the assessee to prove the identity and creditworthiness of the donor and genuineness of the transaction. Disbelieving the explanation of the assessee the AO added the same to the total income of the assessee as income from other sources u/s 68 of the Act while framing the assessment u/s 143(3) read with section 153A of the Act vide order dated 3.10.2008 by assessing the total income at Rs. 23,217,610/- by inter alia making other additions also. The additions were challenged before the first appellate authority on merit and the issue of gift received was sustained. 8. At the outset, the ld. AR submitted before us that the addition by the AO qua gift received by the assessee Rs. 2.25 crores under section 68 of the Act as income from other sources was without jurisdiction as the same was based upon any incriminating materials seized during the course of search proceedings. The ld. AR submitted that the assessee had duly disclosed said gift in the original return of income filed on 31.7.2001 by crediting the same in the capital account of the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w relied upon by the ld. DR, of Satish L Babladi (supra) has been considered and distinguished by the decision of the Co-ordinate Bench of the Tribunal in the case of Jignesh P Shah (supra) as referred to and relied upon by the assessee and therefore need not be taken into consideration for adjudicating the issue as the issue is covered by the jurisdictional High Court and by the Hon‟ble Apex Court. 11. We have considered the rival submissions and perused the material placed before us including the orders of authorities below and case laws relied upon by both the parties. We find from the record placed before us that the return of income was filed by the assessee on 31.07.2001 which processed under section 143(1) of the Act and no notice u/s 143(2) of the Act was issued the time limit for which expired on 31.7.2002. Thus the return filed by the assessee was already assessed and attained finality on the date of search which was conducted on 6.11.2006. In pursuance of search action notice under section 153A was issued on the assessee on 20.8.2007 which was complied by the assessee by filing return of income on 27.11.2007 declaring total income of Rs. 7,17,610/- same as decla....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the books of account or other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income-tax Act, 1922 or the Income-tax Act of 1961 by any person from whose possession or control they have been taken into custody. This is when the authorities have reason to believe that such powers need to be exercised. Therefore, the fetters and which are to be found in other provisions are removed and a notice of assessment in such cases is then issued. That is mandated by sub-section (1) of section 153A. It is not only the issuance of the notice but assessment or reassessment of total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition has to be made.[Para 22] There is much substance in the contentions of the assessee that the provisions such as section 153A enabling assessment in case of search or requisition making specific reference to the provisions which enable carrying out of search or exercise of power of requisition that the assessment in furtherance t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns are made in passing or that they are not binding on instant Court is not agreeable because the essential controversy before the Bench was somewhat different. Revenue urged that was only in relation to the legality and validity of the order of the Commissioner under section 263. Had that been the case, the Division Bench was not required to trace out the history of section 153A and the power that is conferred thereunder. When the revenue argued before the Division Bench that the power under section 153A can be invoked and exercised even in cases where the second proviso to sub-section (1) is not applicable that the Division Bench was required to express a specific opinion. The provision deals with those cases where assessment or reassessment, if any, relating to the assessment years falling within the period of six assessment years referred to in sub-section (1) of section 153A were pending. If they were pending on the date of the initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessment or reassessment and which are in fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3;ble Supreme Court [2015] 64 taxmann.com 34 (SC), dated 12.10.2015, which has been granted as under : "Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Infrastructure facility) - High Court by impugned order held that ICDs and CFSs are infrastructural facility entitled to deduction under sub-section (4) of section 80-IA - Whether Special Leave Petition filed against impugned order was to be granted - Held, yes [In favour of revenue] Section 153A of the Income-tax Act, 1961 - Search and seizure - Assessment in case of (Scope of) - High Court by impugned order held that no addition can be made in respect of assessments which have become final if no incriminating material is found during search or during 153A proceeding - Whether Special Leave Petition filed against impugned order was to be granted - Held, yes [In favour of revenue]" This proposition has been upheld and clarified by the Hon‟ble jurisdictional High Court in the case of Murli Agro Products Ltd. (supra) in the following manner:- "10. Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of proceedin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....during the search or during the 153A proceedings which would show that the relief under Section 80HHC was erroneous. In such a case, the A.O. while passing the assessment order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act." In the case of Jignesh P Shah (supra), the Tribunal has held as under : 7. We have heard the rival submissions on the legal issue raised in the additional grounds and the material placed on record. The chronology of events relating to status of assessment of the impugned assessment years are as under:- Event Dates Dates A.Y. 2002-03 A.Y. 2004-05 Date of filing of return of income u/s 139 31.03.2003 31.3.2005 Time limit for issuance of notice u/s 143(2) under the statute 31.3.2004 31.3.2006 Time limit for completing assessment u/s 143(3) 31.3.2005 31.3.2007 Date of search 19.6.2007 19.6.2007 From the above, it is evident that, prior to the date of search, the assessment for both the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment years. Thus, it is statutory mandate upon the assessment officer to assess or reassess the total income on which a person can be said to be assessable under the provisions of the act. The first proviso covers the income which is to be assessed i.e. emanating not only, from the declared sources but also from any material found during the course of search. However if the assessment has already been made or finalized before the date of search, then the AO can reassess the total income on the basis of material found or gathered during the course of search over and above the income which already stood assessed. However, the second proviso carves out exception/limitation that, pending assessment or reassessment relating to any assessment year following within the period of six years on the date of search, the same gets abated. In other words, the assessments which have not attained finality and are pending on the date of search, then the same does not gets abated. The assessments which have abated, fresh determination of total income would be required which can be made on the basis of material already on record as well as material gathered during the course of search. However, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned counsel for the assessee, the assessment for the assessment year 1998-99 was finalised on 29-12-2000 and search was conducted thereafter on 3-12-2003. Therefore, in the facts of the present case, initiation of proceedings under Section 153A would not affect the assessment finalised on 29-12-2000. 12. Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 13. In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sel for the appellant to the effect that once a notice under s. 153A of the Act is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. 25. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under ss. 132 and 132A of the Act it is apparent that: . (a) the assessments or reassessments, which stand abated in terms of second proviso lo s. 153A of the Act the AO acts under his original jurisdiction, for which, assessments have to be made. (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made" Thus, respectfully following the aforesaid proposition by the Hon‟ble High Courts, we hold that in this case, the assessment for the A.Ys. 2002-03 and 2004-05 had attained finality and admittedly there being no incriminating mater....