TaxTMI 
TaxTMI 
2017 (4) TMI 1247
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....6-07 is given below :- "1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(Appeals) has erred in law and on facts in upholding the assessment u/s 153A/143(3) of the Act in spite of the fact that no incriminating documents whatsoever was found/seized during search operation u/s 132 of the Act pertaining to the assessment year under appeal?" 4. The facts and circumstances under which the aforesaid grounds of appeal has to be adjudicated are as follows :- The Assessee is an individual. The order of assessment is silent with regard to the assessee's source of income and her particulars of past assessments. For A.Y.2006-07 the assessee filed her return of income u/s 139 of the Act on 12.12.2006 declaring total income of Rs. 1,18,266/-. The order of assessment is silent on whether any processing of the return was done in terms of section 143(1) of the Act. Admittedly no notice u/s 143(2) of the Act was issued for making the assessment u/s 143(3) of the Act within the period laid down in the proviso to section 143 (2) of the Act namely 30.09.2007. As far as A.Y.2007-08 is concerned the assessee filed her return of income on 27.02.2008 declaring total income of ....
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.... having opened the alleged bank account on 24th May, 2005 as informed by the AO and also called upon the AO to disclose the source of his acquiring the documents. 7. The AO however was of the view that a sum of Rs. 1,22,48,403/- (equivalent to $2,71,764 @ Rs. 45.07 per USD in December 2005) relating to F.Y. 2005-06 corresponding to the A.Y. 2006-07 and two other sums of Rs. 1,36,34,587/- (equivalent to $2,93,659 @ Rs. 46.43 per USD in May 2006) & Rs.l,24,20,580/- (equivalent to $2,80,818 @ Rs. 44.23 per USD in December 2006) totaling to Rs. 2,60,55,167/- relating to F.Y. 2006-07 corresponding to A.Y. 2007-08 should be treated as undisclosed income deposited into the alleged undisclosed bank account. The Assessee was of the view that since her requested for authenticated and translated document and source of the document was not disclosed, the proposal of the AO to make the addition of income as stated above, was not legal. 8. The AO however passed the Assessment Order in her case for the AY. 2006-07 and 2007-08 U/S 153A/143(3) of the Act, making an addition of Rs. 1,22,48,403/- and Rs. 2,60,55,167/- respectively to the appellant's returned income being the alleged balance for....
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....sment year has already been concluded prior to the date of search and therefore such assessments does not abate under the proviso to section 153A (1) of the Act. In this regard our attention was drawn by the ld. Counsel for the assessee to a very recent decision of the ITAT Kolkata Bench in the case of Shri Bishwanath Garodia vs DCIT in ITA Nos. 853 to 856/Kol/2016 order dated 21.09.2016. The relevant observations in this regard are as follows :- "8. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the returns of income originally filed by the assessee for both the years under consideration were duly processed by the Assessing Officer under section 143(1) well before the date of search conducted on 28.07.2011. The said search was conducted in the case of the assessee on the basis of information received by the Assessing Officer from CBDT relating to the undisclosed account maintained by the assessee with HSBC Bank, Geneva, Switzerland. During the course of search, no incriminating material, However, was found relating to the transactions reflected in the said Bank account of the assessee with HSBC Bank or any....
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....umar Bhatia (supra). In the said case, a question was posed by the Hon'ble Delhi High Court in paragraph no. 12 of its order as to whether the Assessing Officer was empowered to reopen the proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search where an assessment order had already been passed in respect of all or any of those six assessment years either under section 143(1) or section 143(3) of the Act and such order was already in existence having been passed prior to the initiation of search/requisition. Although this question was not finally answered by the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (supra), it is quite clear from the said question raised by the Honble Delhi High Court that there was no distinction made by Their Lordships in the assessments completed under section 143(1) and section 143(3) for determining the scope of the proceedings under section 153A. However, the said question arose specifically for the consideration of Mumbai Bench of this Tribunal in the case of ACIT -vs.- Pratibha Industries reported in 141 ITD 151 and after referring to the discussion made by the Honble D....
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....t, as the assessments for the said year had become final prior to the date of search and there was no incriminating material found during the course of search to support the said addition. Our attention was also drawn to several other decisions rendered in the context of jurisdiction u/s 153A of the Act, to which we will make a reference later. 13. The learned DR has however argued where an original assessment has not been finalized under section 143(3) of the Act, there is no question of abatement and that in the present case original assessment has been made under section 143(1) of the Act. As per the Ld. Departmental Representative the provisions of section 153A empower the Assessing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which a search was conducted and, therefore, under these circumstances the Assessing Officer was duty bound to assess or reassess 'total income' of such assessment years, and, therefore, the impugned additions were justifiably made in the assessment made under section 143(3) r.w.s. 153A(1) of the Act. 14. The learned counsel for the Assessee on this aspe....
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....a result of search. It is not meant to make a roving and fishing enquiry. Section 153A of the Act is a separate and special provision that has been specially enacted to undertake search related assessments. A search u/s 132 of the Act is authorized to unearth undisclosed assets or transactions resulting in income which are not recorded in the books of account of a person. Therefore, a search puts in motion the process of assessment of the undisclosed income of a tax payer which is not disclosed to the department. Thus section 153A of the Act is limited to the assessments of income which are discovery of search. 15. In support of his contention as above, the learned counsel for the Assessee placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla 380 ITR 573 (Del) and the Hon'ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation 374 ITR 645 (Bom) and the special Bench of ITAT in the case of Allcargo Global Logistics 137 ITD 287 (SB)(Mum). 16. The learned DR submitted that the Hon'ble Delhi High Court in the case of CIT Vs. ANIL KUMAR BHATIA [2013] 352 ITR 493 (Delhi) after examining the scheme of Sec.153A of the....
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....nitiation of proceedings under Section 153A, the legal effect is the assessment gets reopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the "total income' of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened means to deal with....
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....ribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall sta....
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....osition will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) In respect of non-abated assessments, the assessment will 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 or undisclosed property discovered in the course of search" 21. It is thus clear from the aforesaid ruling of the Special Bench that where assessments have already been completed u/s.143(3) of the Act before initiation of search u/s.132 of the Act, those assessments will attain finality. The exception would be that if books of accounts or other documents were not produced in the course of original assessment but found in the course of sear....
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....ceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 23. It is not in dispute before us that with respect to the additions made during the course of assessment proceedings u/s.153A of the Act, there was no incriminating material found at....
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....g (supra) has taken the view that the decision rendered by the Special Bench is to be followed. In the subsequent decision rendered by the Hon'ble Delhi High Court in the case of Kabul Chawla (supra), the view expressed by the Special Bench of ITAT in the case of All Cargo Global Logistics (supra) has been accepted. There is no decision of the Hon'ble Calcutta High Court, which is the jurisdictional High Court on the issue. We are of the view that the view expressed by the Hon'ble Bombay High Court and the Hon'ble Delhi High Court has to be followed being views in favour of the Assessee, in the facts and circumstances of the present case. 25. We therefore hold that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search. The next aspect to be considered is as to when returns of income filed u/s.139 of the Act are shown to have been accepted without an intimation u/s.143(1) of the Act or without any notice issued u/s.143(2) of the Act within the time limit contemplated by the ....