AI Drafter 
TaxTMI 
TaxTMI 
2017 (4) TMI 177
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....ons, certain incriminating documents relating to the assessee were found and seized. Consequent to the search, the case has been centralized to the DCIT (Central Circle)-1, Visakhapatnam vide proceedings of the CIT, Rajahmundry in F.No.62/Juris/CIT/RJY/2009-10 dated 15.6.2009. Accordingly, notice u/s 153A of the Act dated 1.1.2010 was issued requesting the assessee to file return of income for the assessment years 2003-04 to 2008-09. In response to notice, the assessee filed return of income for the assessment years 2005-06 to 2007-08 on 5.3.2010. 3. 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 authorized representative of the assessee appeared from time to time and produced the books of accounts and other information as called for. The assessment for the assessment years 2005-06 to 2007-08 have been completed u/s 143(3) r.w.s. 153A of the Act, on 30.12.2010. In the assessments, the A.O. has made additions towards notional interest on interest free advances given out of interest bearing funds borrowed from banks and financial institutions. 4. Aggr....
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.... filed the original return of income for A.Y. 2005-06 on 30.11.2006. Therefore, as on the date of Search, the time limit for issue of notice u/s 143(2) expired already and as such there are no pending proceedings for this assessment year. Therefore, the assessing officer is precluded from making any addition without reference to seized material. 5. However, the above ground was not raised before the lower authorities due to inadvertence. Therefore, it is respectfully prayed that the following additional ground of appeal may kindly be admitted and adjudicated, since all the material facts relating to this ground are already on record and the omission to take this ground of appeal was due to bona fide reasons. On the facts and in the circumstances of the case, whether the addition of Rs. 5,76,259/- made towards disallowance of notional interest from the interest payments claimed by the appellant is outside the scope of assessment completed u/s 143(3) r.w.s. 153A of the Act?" 6. During the course of hearing, the ld. A.R. for the assessee, submitted that all the material facts relevant to the legal issue are already on record and the issue as to scope of additions that c....
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....in the circumstances of the case, the A.O. is right in making additions without any seized materials in respect of assessment years for which the assessment proceedings have been concluded as on the date of search. The Ld. A.R. for the assessee, submitted that the issue has been already considered by the coordinate bench of Visakhapatnam ITAT in the case of L. Suryakantham Vs. ACIT (supra), wherein it has been observed that the A.O. has no jurisdiction to make additions in the assessment u/s 153A of the Act, for the assessments which are not pending as on the date of search. The relevant portion of the order is extracted below: "19. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 of the Act. During the course of search, incriminating documents found reveals that the assessee has inflated labour charges for the assessment years 2008- 09 & 2009-10. Based on the documents found during search, the assessee has accepted that he has inflated 10% labour charges and which is common in this line of business. Consequent to search action u....
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.... the fact that the assessment of the said years were completed or pending as on the date of search. Therefore, the A.O. has reassessed the income of six assessment years and recomputed the profits afresh after considering the relevant facts available on record. It was the contention of the assessee that the A.O. cannot disturb the completed assessments unless there was a seized material. The assessee further contended that where assessments are not pending as on the date of search and time limit for issue of notices u/s 143(2) of the Act has been expired, irrespective of the fact that those assessments have been completed u/s 143(1) or 143(3) of the Act, then the A.O. has no power to reassess the income of those completed assessment years. 21. We find force in the arguments of the assessee for the reason that the issue no longer res integra, as the issue has been already decided by the ITAT, special bench and held that where the assessments are not pending as on the date of search, the A.O. losses jurisdiction u/s 153A of the Act to reassess the income of those completed assessments. Though the provisions of section 153A of the Act does not specify abated and completed assessmen....
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....retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." 24. The assessee relied upon, A.P. High Court decision in the case of CIT Vs. M/s. AMR India Ltd. in ITTA No.354 of 2014 dated 12.6.2014. The Hon'ble High Court held that the A.O. has no jurisdiction to re-agitate the assessments which were already completed and subsiding. The relevant portion is extracted below: "We have heard Sri J.V. Prasad, learned counsel for the appellant, and gone through the impugned judgement and order of the learned Tribunal. It appears that the learned Tribunal found on fact that after completion of assessment proceedings and after reaching finality thereon, the Assessing....
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....ncluded assessments and pending assessments was not before the I1on'ble Andhra Pradesh High Court On the contrary, the above said three decisions of the jurisdictional High Court comes to the support of the assessee's contentions with regard to the legal proposition agitated before us, besides the decisions rendered by various other High Courts. Accordingly, we are of the view that the scope of enquiry in the case of unabated assessments, i.e., the assessment years in which proceedings are not pending, is that the undisclosed income should be ascertained only on the basis of materials found during the course of search. If no incriminating material showing any undisclosed income was found in the case of concluded proceedings, then the question of making any addition does not arise. in that case, the assessing officer should complete the assessment of those years by determining the very same total income that was assessed in the earlier proceeding. 24. In view of the above, we are unable to agree with the contentions of Ld Standing Counsel that the assessing officer would get unfettered powers in the case of unabated assessments, once they were reopened us 153A of th....