TaxTMI 
TaxTMI 
2016 (8) TMI 1233
X X X X Extracts X X X X
X X X X Extracts X X X X
....e circumstances that these appeals are being disposed off by a common order. The issue involved in all these appeals is: "Whether the addition made to the income of the assessee for the 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 Act or the return filed by the assessee accepted u/s 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 assesses was placed before us. 3. Further it was stated, that in the bunch of cases relating to Modern Steel Ltd, Modern Diaries Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....material was found during the course of search which could warrant such addition. 7. By the order dated 28.2.2014, the learned CIT (Appeals) dismissed the appeal. The learned CIT (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 utilize 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 u/s 153A would be framed afresh taking into consideration all material including incriminating material found during search. While in cases where assessment had been made u/s 143(1) or 143(3) of the Act, there would be no abatemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 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 CBDT Circular No.7, dated 5.9.2003, which dealt with the necessity of bringing the new section, the learned D.R. 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 D.R. to mean that it should not be restricted to incriminating material only. 5) That the section began with a non-obstante clause and the Assessing Officer was bound ("shall") to issue notice for all six years to assess/reassess the total income. 6) Reliance was placed on several case laws more specifically Rajat Trade Com India (P) Ltd. Vs. DCIT, 120 ITD 48 and Canara Housing Development Company Vs. DCIT [2014] 52 taxmann.com 172. 7) It was pointed out that the controversy in question whether assessment under section 153Acoul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh 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 u/s 132 of the Act, i.e 17-03-2010, no assessment proceedings relating to the impugned year were pending. In fact the assessee had filed return filed u/s 139(1) of the Act on 29-06-2004, no notice u/s 143(2) had been issued to the issue and on the date of initiation of search i.e 17-03- 2010 the time limit for issuing notice u/s 143(2) had expired. Thus, on the date of search no assessment proceedings were pending. Further in the assessment made u/s 153A of the Act, the only addition made pertained to disallowance of interest u/s 24(b) of the Act in the absence of any documentary proof for claiming the same by the assessee. No incriminating material, found during the course of search, pertaining to the addition/disallowance made was referred to while making the disallowance. 15. The issue before us is, whether in case of assessments framed under section 153A of the Act, addition could be made in the absence of any incriminati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h 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 reassessed taking note of the undisclosed income if any unearthed during search, the fetters to reopening, being removed by insertion of the non-obstante clause to section 153A. The entire thrust of the judgment rested on the interpretation that there cannot be multiple assessment orders in case of search assessments under section 153A/B/C of the Act and, therefore, where assessments were pending they would abate to enable the Assessing officer to assess the total income including undisclosed income, and where assessments or re- assessments had been completed, they would not abate and the Assessing Officer would only reopen the completed assessments and include therein undisclosed income. The High Court went on to hold that such determination would....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....53A (1) states that on initiation of proceedings u/s 153A, the assessment/reassessment proceedings pending on the date of conducting search or making requisition u/s 132A of the Act, shall stand abated. The CBDT Circular no. 8 of 2003 dt.18-09-03, clarifies that proceedings in appeal, revision or rectification against finalized assessments/reassessments shall not abate. Reading the two together, the Courts have stated that as per section 153A, Assessments/reassessments already finalized do not abate, meaning thereby that they attain finality, which cannot be disturbed unless some incriminating materials are gathered during the course of search. 3. That the words "assess" or "reassess" has been used at more than one place in the section and a harmonious construction of the entire provision would lead to the conclusion that the word "assess" has been used in the context of abated proceedings and "reassess" has been used for completed proceedings which would not abate as they are not pending on the date of initiation of search or making of requisition. 23. We may add that that the requirement of the section is limited to opening or reopening of the cases for the purpose of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve, the issue is no longer res integra, we shall still deal with the arguments of the learned D.R. 26. The first argument of the learned D.R. that the issue had been decided against the assessee by the Chandigarh Bench of the I.T.A.T. in the case of Vipan Kumar Verma Vs. ACIT vide its order dated 22.8.2012, merits no consideration in view of the numerous judgments of the higher authorities i.e. High Courts on this issue. 27. The argument of the learned D.R. that the Hon'ble Supreme Court has granted SLP against the High Courts ruling in the case of Continental Warehousing (supra) does not disturb the current status of the interpretation of the proposition since the fact remains that as on date there are several judgments of the High Courts upholding the proposition that no addition can be made in the absence of incriminating material in the case of completed assessments under section 153A of the Act. 28. The next argument of the learned D.R. was that if addition under section 153A of the Act is to be restricted to the extent of incriminating material found/undisclosed income" (term used by the learned D.R.) there would be no difference between the procedures prescribed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income.(emphasis supplied by us) In such a case, to reiterate, there is no question of any abatement of the earier proceedings f or the simple reason that no proceedings f or assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. 31. It is evident from the same that the understanding of the learned D.R. that by including only undisclosed income discovered as a result of search, in the assessment framed undersection 153A in those cases where assessment have been completed earlier under section 143(3)/143(1) of the Act, the "total income", is not assessed is misplaced. What section 153Aof the Act prescribes is that where assessments are completed, they shall be reopened, incomes relating to incriminating material found during the search determined and added to the already assessed income and thus total income computed. Thus, restricting the addition made to the extent of incriminating material would not mean, that total income is not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e find that the disallowance was made for want of evidence and not on the basis of any incriminating material found during search. Further we find that the statement is general with no reference to any specific document or asset found during search and the assessee has admittedly surrendered Rs. 11 crore on account of the same and paid taxes thereon. The statement therefore cannot be stated to be incriminating material for the purpose of disallowing interest on housing loan. 35. Moreover the Delhi Bench of the ITAT in the case of M/s Best Infrastructure (India) Pvt. Ltd. Vs ACIT in ITA No.1698/del/2014 dt.31-05-2016, held that any statement recorded during search cannot on standalone basis without reference to any other material discovered during search be treated as "evidence found during search". The relevant findings of the coordinate Bench at para 23 (ii) is as follows: "(ii) Any statement recorded during the course of search cannot on a standalone basis without reference to any other material discovered during search and seizure operation would empower the Assessing Officer to make the addition. The words "evidence found as a result of search" would not take within....