AI Drafter 
TaxTMI 
TaxTMI 
2017 (4) TMI 176
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....proceedings, certain incriminating documents relating to the assessee were found and seized. Consequent to search, the case has been centralized to the DCIT, Central Circle-1, Visakhapatnam vide proceedings of the Commissioner of Income Tax-6, Hyderabad in F.No.CIT/6/Juris/3/2009-10 dated 18.6.2009. Accordingly, notices u/s 153A of the Act, were issued to the assessee on 1.2.2010 requiring him to file return of income for the assessment years 2003-04 to 2008-09. In response to notices, the assessee filed return of income for the assessment years 2003-04 to 2008-09 on 23.2.2010. The assessee also filed return of income for the assessment year 2009-10 on 23.2.2010. 3. Subsequently, the case has been selected for scrutiny and accordingly, notices u/s 143(2) & 142(1) of the Act, along with detailed questionnaire were issued. In response to the notices, the assessee Sri G. Ramakrishnam Raju appeared from time to tome and produced books of accounts and necessary information as called for. The assessment for the assessment year 2003-04 to 2009-10 have been completed u/s 143(3) r.w.s. 153A of the Act, on 30.12.2010. In the assessment, the A.O. has made additions towards cash deposits in....
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.... made in an assessment u/s 143(3) r.w.s. 153A?" 6. During the course of hearing, Ld. A.R. for the assessee submitted that all the material facts relevant to the above issue are already on record and the issue as to scope of additions that can be made in an assessment u/s 143(3) r.w.s. 153A of the Act, is purely a legal issue which can be raised at any time before the Tribunal. Therefore, requested to admit the additional ground of appeal and pass such orders as may be appropriate in the interest of rendering substantial justice. The Ld. D.R. on the other hand, strongly opposed admission of additional grounds filed by the assessee. 7. Having heard both the sides and considered material on record, we find that facts which are necessary for adjudication of legal issue raised by the assessee, by way of additional ground is already on record and no new material or evidence was relied upon to challenge the legal issue. Therefore, we are of the view that additional ground raised by way of petition dated 17.3.2017 can be admitted for adjudication. Accordingly, we admit the additional ground raised by the assessee and dispose off the appeal. 8. During the course of hearing, the Ld.....
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....d that the provisions of section 153A of the Act, shall be attracted upon initiation of search proceedings u/s 132 of the Act in which case, the concluded assessment will be re-opened as per the provisions of section 153A of the Act, and such re-opening is not depending upon existence or otherwise of any undisclosed income. The Ld. D.R. referring to the decision of Hon'ble Karnataka High Court, in the case of M/s. Canara Housing Development Company Vs. DCIT in ITA No.38 of 2014 dated 25.7.2014, submitted that u/s 153A of the Act, the assessing officer has been given the power to assess or re-assess the total income of the 6 assessment years in question in separate assessment orders. The A.O. is empowered to re-open those proceedings and re-assess the total income, taking note of the undisclosed income, if any, un-earthed during the search. When, once the proceedings are initiated u/s 153A of the Act, the legal effect is that, even in the case where the assessment order is passed it stands re-opened and in the eyes of law there is no order of assessment. Once the assessment is re-opened, the assessing authority can take note of the income disclosed in the earlier return, any undiscl....
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....l income disclosed during the course of search. The case has been selected for scrutiny. During the course of assessment proceedings, the assessee was asked to produce books of accounts and relevant bills & vouchers in support of expenditure claimed. In response, the assessee filed written submission and stated that the books of accounts are not available and hence cannot be furnished. Therefore, the A.O. issued a show cause notice and asked to explain why the net profit from the business shall not be estimated. In response to show cause notice, the assessee has filed a written reply and contended that the income for the assessment year 2004-05, 2005-06 and 2007-08 cannot be tinkered with, as there was no incriminating material found during the course of search for the above assessment years and as such no additions can be made to the returned income. It is further submitted that as per sec. 153A of the Act, de-novo assessment can be made only in respect of the assessment year for which the assessment proceedings had been abated and that in respect of assessment years for which the assessment had already been reached a finality, such assessment could not be made u/s 153A of the Act....
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.... by the CBDT. When the law has explained the position of abated assessments, then the same way the completed assessment should be treated so as to understand that those assessments are reached finality and which cannot be tinkered with unless there was a seized document. Therefore, we are of the considered opinion that where search is initiated, all pending assessments are merge into one and only one assessment for each assessment year shall be made separately on the basis of findings of search and other material existing or brought on record by the A.O. In respect of non abated or completed assessments, the assessment will be made on the basis of books of accounts or other relevant documents found during the course of search, but not produced in the course of original assessment. 22. In the present case on hand, on perusal of the document available on record, we find that the assessment for the assessment year 2004-05 to 2007-08 were not pending as on the date of search. The fact that the assessment has been completed u/s 143(1) & 143(3) of the Act are not material. The time limit for issue of notice u/s 143(2) of the Act has been expired. On further verification of the documen....
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....assessee has relied upon the coordinate bench decision of ITAT, Visakhapatnam in the case of A.T. Rayudu in ITA No.373 to 379/Vizag/2014. The coordinate bench, under similar circumstances held the issue in favour of the assessee. The relevant portion is reproduced hereunder: "22. In this regard, it is also pertinent to refer to the following observations made by the Special bench in the case of All Cargo Global logistics Ltd (supra):- "57 (f) In the case of Parashuram Pottery works co. Ltd Vs. ITO (106 JTR 57)(SC), it has been mentioned in the last paragraph of the judgment that the court has to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity. Our decision is in consonance with this observation". The decision rendered by the Special bench that the assessing officer can make additions in the case of concluded assessments on the basis of incriminating materials is also based upon the dec....
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....ion in his favour, when two contradictory views have been expressed by the High Courts. In the instant case the Hon'ble jurisdictional High Court comes to the support of the assessee in respect of the legal proposition in addition to the decision rendered by the Hon'ble Bombay High Court. Accordingly, we find merit in the contentions of the assessee on the legal issue." 26. Considering the facts and circumstances of the case and also respectfully following the coordinate bench decision in the case of All Cargo Logistics Pvt. Ltd. (supra), we are of the opinion that the A.O. has made reassessment u/s 153A/153C of the Act on the basis of information/material available in the return of income, without referring to any seized material. Therefore, following the special bench decision (supra) we hold that the A.O. had no jurisdiction to make additions u/s 153A of the Act for the assessments which are not pending as on the date of search. In this case, the search was conducted on 14.7.2009. The assessment for the assessment years 2004-05 to 2007-08, were not pending as on the date of search. The time limit for issue of notice under sec. 143(2) has been expired. Therefore, the A.O. ....