AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 1147
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....e circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that there was a willful evasion of tax by the assessee, by not furnishing accurate particulars of income. 2. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored." 3. The brief facts of the case are that a search & seizure action u/s 132(1) in the case of Patel Group of cases was carried out by the Revenue on 17th January, 2008 in which the assessee was also covered. Survey proceedings u/s 133A of the Act was also carried out simultaneously in the business premises of Patel Group of cases. During the course of search/survey action by Revenue on 17-01-2008, number of incriminating documents were found and seized/impounded by Revenue. The assessee has originally filed return of income u/s 139(1) on 25-08-2005 declaring total income of Rs. 15,90,638/-. There was no scrutiny assessment originally framed by the Revenue u/s 143(3) and return of income was processed u/s 143(1). The assessee derived income from salary, share of profit from partnership firm, derivative income, capital gain, interest income and dividend in....
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.... purchase of residential house (new asset) vide allotment letter dated 15-10-2001. I had made full payment towards the purchase of the said residential house and the receipt in respect of the said purchase enclosed with the original return of income for A. Y.2002-03 filed by me on 31-07-2002. I have filed with my original return of income u/s. 153A for A.Y. 2005-06 identical to the original return of income filed for A.Y. 2005-06. During the course of my checking of the computation of income filed with the return of income for A.Y. 2005-06, I realized on my own that I should have declared deemed capital gain u/s.54F(3) in asst. year 2005-06, since the allotment letter was cancelled in financial year 2004-05 relevant to asst. year 2005-06 i.e. the new asset was transferred in asst. Year 2005-06.It is however pertinent to note here that the amount paid towards purchase of the residential house was kept with the builder for more than three years. Consequently, I am filing herewith voluntarily revised return of income u/s.153A and I request you to consider the same at the time of completion of the assessment. In view of my voluntarily revising the return of i....
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....Y 02-03 and the deduction claimed was of the order of Rs. 1,03,44,000/- . Since the purchase was cancelled within 3 years from the date of purchase, the appellant was required to surrender the deduction already claimed as deemed capital gains within the meaning of Section 54F(3) but he omitted to do so. Hence, the appellant has filed revised return surrendering the deemed capital gains of Rs. 1,03,44,000/-. The AO accepted the returned income and initiated penalty proceedings u/s 271(1)(c). The AO also charged interest u/s 234B and 234C of the Act. Initiation of penalty proceedings and charging of interest u/s 234B and 234C are contested in the appeal. 3.2 I find that the taxes due on the income estimated in the revised return is not paid before filing the appeal . Rs. 33,74,206/- of taxes on admitted income has been paid on 17/02/2010, that is much after filing of appeal on 29/01/2010. 3.3 According to the provisions of section 249(4)(a), for an appeal to be admitted, one of the pre requisite is that, the admitted tax is paid before filing of appeal. Here, in the instant case, the appellant has failed to pay the taxes and, therefore, the appeal does not qualify to be admi....
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....ntire amount would have gone tax free. It was observed by the AO that the said omission to hide income was deliberate and intentional act on the part of the assessee and hence revised return of income could not absolve an assessee from presumption as to concealment of income in original return of income. The assessee submitted that the assessee had made a bonafide claim of deduction u/s 54F of the Act for A.Y. 2002-03. It was submitted that the assessee had invested net consideration i.e. with respect of the capital asset sold in the new asset within the specified time laid down under the relevant section u/s 54F and the amount paid towards purchase of the new asset was kept with the builder for more than three years. The purchase was not completed by way of a registered agreement and the allotment was cancelled. It was submitted that the assessee did not own more than one residential house other than the new asset on the date of transfer of the original asset, hence, assessee was entitled for deduction u/s 54F of the Act in assessment year 2002-03. There was a condition that the new asset could not be transferred within a period of three years from the date of purchase in financia....
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....hed the decisions cited by the assessee and held that it is only when the assessee was cornered by the AO as the AO noticed that deemed capital gains were not offered for taxation that the assessee came forward to declare the deemed capital gains u/s 54F(3) as income in revised return of income filed on 22-12-2009 and that too at fag end of scrutiny proceedings. It was held that if the AO would not have noticed this wrong claim of the assessee, the entire deemed capital gain of Rs. 1,03,44,000/- would have gone tax-free. Thus, it was held by the AO that the said omission was deliberate and intentional and thus filing of revised return of income cannot absolve an assessee from presumption as to the concealment of income in original return of income. Further, It was also observed by the A.O. that assessee has long term capital gain of Rs. 3,54,77,653/- from the sale of shares and out of the said amount the assessee had submitted three receipts towards booking of flat bearing No. 1301, 1302, 1401 and 1402 at Dhawalgiri Building from Neelkanth Mansion Private Limited and claimed exemption u/s 54F of the Act of Rs. 1,03,44,000/-. The A.O. observed that the said amount was not reflect....
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....er dated 30-03-2012 passed u/s 271(1)(c) of the 1961 Act. 4. Aggrieved by the penalty order dated 30-3-2012 passed by the A.O. u/s 271(1)(c) of the 1961 Act levying penalty of Rs. 23,21,194/-, the assessee carried the matter in appeal before the ld. CIT(A) wherein the assessee reiterated the submissions as were made before the A.O.. The assessee submitted before learned CIT(A) that there was no detection by the A.O. which is evident from the assessment order and the said income has been declared before it has been pointed out by the A.O. The assessee referred the order sheet entry which is reproduced below: "Order sheet entry recorded by Assessing Officer on 22.12.2009. In response to notice u/s. 142 (1) Shri Gyaneshwar Kataram attended on behalf of the assessee. It is stated that the assessee has already filed details in response to notice u/s. 142(1) on 11.12.2009 in Tapal. In regard to the assessment year 2005-06, the assessee sated that through oversight the assessee has not declared the deemed capital gain u/s. 54F(3) as the flat which was purchased during the assessment year 2002-03 was surrendered by the assessee within 3 years from purchase. Hence the a....
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....at since no assessment is pending on the date of initiation of search on 17-01-2008, there would be no abatement of any assessment. Thus, the scope of the assessment u/s. 153A of the Act was restricted only to incriminating material found during the course of search . It was submitted that it is evident from the assessment order framed u/s 153A r.w.s. 143(3) that no addition has been made on the basis of any incriminating seized material found during the course of search. It was submitted that the said deemed income was not arising out of any incriminating seized materials and such deemed income was voluntarily offered by the assessee before any detection by the Revenue, hence, no penalty u/s. 271(l)(c) of the Act can be levied. The assessee relied upon the decision of Mumbai ITAT, Special Bench in the case of All Cargo Logistics Limited v. DCIT 137 ITD 278 and decision of Delhi ITAT in the case of MGF Automobiles Limited v. ACIT in ITA no. 4212 & 4213/Del/2011 dated 28-06-2013 . The assessee contended that the above said contention is now accepted by Hon‟ble Bombay High Court in the case of CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom). It was prayed that ....
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....e additional tax due thereon." According to the ld. CIT(A), the contention of the assessee that he had surrendered the additional income voluntarily appears to be correct. It was observed that the A.O while framing the assessment order u/s 153A r.w.s 143(3) of the Act had not referred to any incriminating document/material found during the course of search u/s 132(1) at the assessee‟s premises. It was observed by the ld. CIT(A) that the scope of section 153A of the Act is limited to making addition only on the basis of incriminating material found during the search. This case, thus is an unabated assessment and there was no pending assessment on the date of initiation of search u/s 132(1). It was observed by the ld. CIT(A) that the search u/s 132(1) had been initiated on 17th January, 2008 and the return of income u/s 139(1) of the Act was originally filed on 25th August, 2005 hence the time limit for completing the processing had already expired on 31st March, 2007 i.e. one year from the end of the financial year. The learned CIT(A) observed that the notice u/s 143(2) could have been issued by the AO by 31st August, 2006 i.e. 12 months after the end of the month in which ....
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....bmitted that then the assessee could have declared the said deemed capital gain income u/s 54F(3) of Rs. 1,03,44,000/- even at the time of search conducted by Revenue u/s 132(1) on 17.01.2008 but the assessee did not declare the said deemed capital gains income u/s 54F(3) . It was submitted that even at the time of filing of return of income u/s 153A on 10-10-2008, again the assessee chose not to declare the deemed capital gain income u/s 54F(3). It was submitted that notice dated 27-11-2009 was issued by the AO u/s 142(1) and even in reply dated 03-12-2009 (filed on 11-12-2009) filed by the assesse with the AO, said deemed capital gain u/s 54F(3) was not offered for taxation while details of capital gains earned by the assessee were, inter-alia, specifically called for by the AO. In the said reply dated 3-12-2009, the assessee furnished bank statements and it was evident from the bank statement that huge amount was received by the assessee on cancellation of the allotment of flats booked with Neelkanth Mansion Private Limited in AY 2002-03 including an amount of Rs. 1,0,3,44,000/- being deemed capital gains u/s 54F(3). It is submitted that only when the assessee was cornered and c....
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....early reflected which has not been offered for taxation by the assessee voluntarily in the return of income filed u/s 139(1) on 25-08-2005 and also filed u/s 153A on 10-10-2008. Thus, it is only when the assessee was cornered by the Revenue that the said deemed capital gains u/s 54F(3) was declared and offered for taxation by the assessee. Thus, the ld. D.R. submitted that the assessee has not declared deemed capital gains while filing return of income u/s 139(1) nor the said income was declared at the time of search u/s 132(1) and also said income was not declared at the time of filing of return u/s 153A. Further, the notice was issued u/s 142(1) of the Act on 27-11-2009, but still the assessee chose not to offer the said deemed capital gain income u/s 54F(3) for taxation and only at the fag end when the assessment was about to be concluded, the said income was offered for taxation on 22-12-2009. In support, ld. D.R. relied upon the decision of the Hon‟ble Supreme Court in the case of Mak Data Private Limited v. CIT (2013) 358 ITR 593(SC). 7. The ld. counsel for the assessee submitted that the return of income u/s 139 of the Act was filed by the assessee on 25th August, 2....
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....) that no addition could have been made u/s 54F(3) towards deemed capital gains and hence no penalty is exigible has become final as the Revenue has not challenged this finding of the AO. The ld. counsel relied on the decision of the tribunal in the case of M/s Kakade Construction Company v. ACIT in ITA No. 97 and 98/PN/2013 for assessment years 2003-04 and 2004-05, vide orders dated 30.04.2013 and also decision of the Hon‟ble Bombay High Court in the case of CIT v. Kakade Construction Company in IT Appeal No. 2095 of 2013 dated 23rd April, 2015, and it was submitted that the penalty is not leviable. It was submitted that the penalty proceedings are independent proceedings and reliance was placed on the decision of Hon‟ble Allahabad High Court in the case of Jaidyala Pyarelala v. CIT reported in 1973 Tax L.R.880. The reliance was also placed on the decision in the case of All Cargo Global Logistics Limited v. DCIT (2012) 137 ITD 287(Mum) and CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom) . The ld. counsel also relied on the decision of the Hon‟ble Bombay High Court in the case of CIT v. Gurinder Singh Bawa in IT Appeal No. 1839 of 2013 dated 5th ....
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....ed more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961." The learned DR submitted that it is only after detection by Revenue that the assessee submitted revised return of income followed by letter dated 22-12-2009 wherein the said deemed capital gain u/s 54F(3) was declared. It was submitted that no Cross Objections were filed by the assessee after admission by the assessee af....
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....flected as part of credits in bank statements of the assessee . This bank account was duly declared by the assessee to Revenue even in original return of income filed u/s 139(1) but the deemed capital gains u/s 54F(3) was not declared and disclosed by the assessee for taxation purposes and no taxes was paid by the assessee on this deemed capital gains u/s 54F(3). The said Neelkanth Mansion Private Limited is admittedly an assessee‟s family concern. The assessee did not declare this deemed capital gains of Rs. 1,03,44,000/- u/s 54F(3) while filing return of income u/s 139(1) on 25-08-2005. The assessee did not deposited any advance tax on this deemed capital gains of Rs. 1,03,44,000/- earned by the assessee u/s 54F(3) as is required to be deposited under Chapter XVII-C. The assessee was searched u/s 132(1) on 17-01-2008 and the assessee did not declare the said income of Rs. 1,03,44,000/- arising out of deemed capital gains u/s 54F(3) on the date of search also before the search party. The assessee was issued notice by the AO on 05-09-2008 u/s 153A to file return of income in pursuant to search u/s 132(1), which return of income was filed by the assessee on 10-10-2008 but the ....
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....ue u/s 143(1) and no scrutiny assessment was originally framed by Revenue u/s 143(3) r.w.s. 143(2). It is pertinent to mention that the assessee‟s other income are to the tune of only Rs. 15,90,638/- which stood declared in return of income filed with Revenue and due taxes paid, while deemed capital gains earned by the assessee u/s 54F(3) was whopping to the tune of Rs. 1,03,44,000/- which was not declared by the assessee to the Revenue in return of income filed u/s 139(1) on 25-08-2005 and also filed u/s 153A on 10-10-2008. This disclosure of the deemed capital gains u/s 54F(3) was finally made by the assessee by filing revised return of income on 22-12-2009 which was claimed by the assessee to be voluntary and bonafide disclosure of income without detection by the Revenue and prayer is made before the Bench by the assessee‟s counsel to uphold the appellate order of learned CIT(A) deleting the penalty levied u/s 271(1)(c), while Revenue is contending that when the assessee was cornered by the AO, the assessee had no choice but to surrender the said deemed capital gains u/s 54F(3) which was an involuntary action of the assessee under compulsion as the AO detected the sa....
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....erewith. *** *** 2. I have submitted to you all the details sought by you in terms of your notice u/s 142(1) . It is evident from the above that substantial details were already submitted by me on 31-7-09 and balance details sought by you for the first time on 1-12-09 it submitted herewith . I will submit to you and additional details and particulars that you may desire from my end. I assure you of my full co-operation in the assessment proceedings. *** " It is pertinent to mention at this stage that when the assessee filed letter dated 03-12-2009 on 11-12-2009 before the AO in pursuance to notice u/s 142(1) requisitioning the details of capital gains, the assessee did not disclosed and offer for tax deemed capital gains of Rs. 1,03,44,000/- earned by the assessee u/s 54F(3) arising on cancellation of allotment of flat during financial year 2004-05 within three years of allotment . The assessee earlier also filed details of capital gains before AO on 31-07-2009 but again deemed capital gains u/s 54F(3) were not declared and disclosed . Thus, the assessee submitted wrong declaration of capital gains earned by the assessee before the AO on 31-07....
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....0-2001. I had made full payment towards the purchase of the said residential house and the receipt in respect of the said purchase enclosed with the original return of income for A. Y.2002-03 filed by me on 31-07-2002. I have filed with my original return of income u/s. 153A for A.Y. 2005-06 identical to the original return of income filed for A.Y. 2005-06. During the course of my checking of the computation of income filed with the return of income for A.Y. 2005-06, I realized on my own that I should have declared deemed capital gain u/s.54F(3) in asst. year 2005-06, since the allotment letter was cancelled in financial year 2004-05 relevant to asst. year 2005-06 i.e. the new asset was transferred in asst. Year 2005-06.It is however pertinent to note here that the amount paid towards purchase of the residential house was kept with the builder for more than three years. Consequently, I am filing herewith voluntarily revised return of income u/s.153A and I request you to consider the same at the time of completion of the assessment. In view of my voluntarily revising the return of income consequent upon the genuine mistake of not considering the provisions....
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.... of Section 54F(3) but he omitted to do so. Hence, the appellant has filed revised return surrendering the deemed capital gains of Rs. 1,03,44,000/-. The AO accepted the returned income and initiated penalty proceedings u/s 271(1)(c). The AO also charged interest u/s 234B and 234C of the Act. Initiation of penalty proceedings and charging of interest u/s 234B and 234C are contested in the appeal. 3.2 I find that the taxes due on the income estimated in the revised return is not paid before filing the appeal . Rs. 33,74,206/- of taxes on admitted income has been paid on 17/02/2010, that is much after filing of appeal on 29/01/2010. 3.3 According to the provisions of section 249(4)(a), for an appeal to be admitted, one of the pre requisite is that, the admitted tax is paid before filing of appeal. Here, in the instant case, the appellant has failed to pay the taxes and, therefore, the appeal does not qualify to be admitted. Accordingly, I dismiss the appeal." The A.O. had observed during penalty proceedings u/s 271(1)(c) that the act of the assessee in omitting to declare deemed capital gain chargeable to tax u/s 54F(3) was deliberate and intentional act of the a....
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....sessment year 2002-03. There was a condition that the new asset could not be transferred within a period of three years from the date of purchase in financial year 2001-02 which condition could not be complied with as the said allotment was cancelled in AY 2005-06. The assessee submitted that he should have declared the deemed capital gain u/s 54F(3) of the Act in A.Y. 2005-06 as income in the return of income. It was submitted that the assessee, on realizing the genuine mistake in not returning the deemed capital gain u/s 54F(3) of the Act, voluntarily filed the revised return of income returning the deemed capital gain u/s 54F(3) of the Act which was brought to the notice of the A.O., vide letter dated 22.12.2009. Thus, the assessee submitted that the conduct and the intention of the assessee was bonafide and proper explanation was given by the assessee before the A.O. In support of his contention, the assessee relied upon the relevant provisions of section 139(5) of the Act. The assessee also relied upon various case laws wherein it is held that no penalty is exigible if an assessee had committed default under a bonafide belief which was rectified by filing a revised return o....
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....concealment has been detected by the Revenue and such concealment would not absolve the assessee from the default of concealment committed in the original return of income filed u/s 139(1) on 25-08-2005 and return of income filed in pursuant to notice u/s 153A(a) on 10-10-2008. Thus, the AO had held that merely because assessee admitted concealment of income and filed a revised return of income on 22.12.2009 just two days before the date of passing of the assessment order on 24-12-2009 u/s 153A r.w.s. 143(3) would not absolve the assessee from the penalty provisions of Section 271(1)(c) . Thus, it was observed by the AO that the intention of the assessee was to hide the income and to avoid paying correct tax liability. The AO held that had this not been detected by the AO, the said income would have gone tax free and the said omission by the assessee was intentional and mere filing of revised return of income would not absolve assessee from presumption as to concealment of income in original return of income and hence the assessee was guilty of furnishing of inaccurate particulars of income as per provisions of section 271(1)(c) of the Act, the AO imposed penalty of Rs. 23,21,194/-....
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....tax due thereon." According to the ld. CIT(A), the contention of the assessee that he had surrendered the additional income voluntarily appears to be correct. It was observed that the A.O while framing the assessment order u/s 153A r.w.s 143(3) of the Act had not referred to any incriminating document/material found during the course of search u/s 132(1) at the assessee‟s premises. It was observed by the ld. CIT(A) that the scope of section 153A of the Act is limited to making addition only on the basis of incriminating material found during the search. This case in the opinion of learned CIT(A) thus is an unabated assessment and there was no pending assessment on the date of initiation of search u/s 132(1). It was observed by the ld. CIT(A) that the search u/s 132(1) had been initiated on 17th January, 2008 and the return of income u/s 139(1) of the Act was originally filed on 25th August, 2005 hence the time limit for completing the processing had already expired on 31st March, 2007 i.e. one year from the end of the financial year. The learned CIT(A) observed that the notice u/s 143(2) could have been issued by the AO by 31st August, 2006 i.e. 12 months after the end of ....
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....), the assessee filed, inter-alia bank statements and details of capital gains vide reply dated 03-12-2009 filed on 11-12-2009. In the said reply filed on 11-12-2009 the assessee chose not to declare said deemed capital gains u/s 54F(3) of Rs. 1,03,44,000/- while other capital gains earned by the assessee were declared. The assessee also filed details of capital gains on 31-07-2009 before the AO in proceedings u/s 153A but the assessee did not declare deemed capital gains u/s 54F(3) of Rs. 1,03,44,000/- on 31-07-2009. At this stage vide reply filed by the assessee on 11-12-2009, the AO came into possession of bank statements wherein the said amount of refund received from builder on cancellation of flat was credited which included deemed capital gains earned by the assessee u/s 54F(3). The deemed capital gains earned by the assessee u/s 54F(3) was whopping to the tune of Rs. 1,03,44,000/- while the other income earned by the assessee in aggregate was only Rs. 15,90,638/-. Then on 22-12-2009, the assessee filed revised return of income declaring said income from deemed capital gains u/s 54F(3) of Rs. 1,03,44,000/- and also filed letter dated 22-12-2009 intimating about the disclosur....
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....e assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961." In the instant case, several successive stages have passed wherein the assessee continued with non disclosure of said income to the Revenue as we have seen in preceding para‟s and it is only at the fag end when assessments were about to be concluded, at the requisition of information by the AO u/s 142(1) vide notice dated 27-11-2009, the as....
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....he said income of deemed capital gains u/s 54F was only surrendered on 22-12-2009 i.e at the fag end of assessment proceedings u/s 153A when the assessee was cornered by the AO and hence this disclosure was not a voluntary disclosure made by the assessee as the assessee never had the intention of disclosing this income to the Revenue. Twice during the course of assessment proceedings u/s 153A on 31-07-2009 and 11-12-2009, wrong declaration of capital gains earned by the assesse which excluded this deemed capital gains u/s 54F(3) was filed by the assessee. b.)The assessee has taken a plea that since no incriminating material was found during the course of search u/s 132(1) on 17-01-2008 and hence no additions could have been made by the AO in quantum assessment wherein reliance is placed on the decision of All Cargo Global Logistics Limited v. DCIT (2012) 137 ITD 287(Mum) and CIT v Murli Agro Products Limited (2014) 49 taxmann.com 172(Bom), the plea has been taken by the assessee that the leviability of penalty is not justifiable as quantum itself is not sustainable as the assessment was an unabated assessment for AY 2005-06. The factual matrix of the case before us is clea....
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....s 143(3) r.w.s 153A on 24-12-2009. Article 265 of the Constitution of India stipulates that no tax shall be levied or collected except by authority of law. The Income-tax Act,1961 provides and mandates for levying and collection of income-tax. The assessee‟s are required to disclose their true and correct income and pay taxes in accordance with provisions of the 1961 Act by filing their true and correct return of income. To say by concealing the said admitted income from Revenue, assessee got immunity will be infringement of Article 14 of the Constitution of India vis-à-vis honest tax-payer wherein there will be premium on dishonesty which cannot be permitted as the Courts will not perpetuate dishonesty. It is not the claim of the assessee that the Revenue is trying to bring the said income within ambit of tax laws by disturbing concluded assessment in the absence of incriminating material as otherwise this income was claimed by the assessee as an income not chargeable to tax as per provisions of the 1961 Act but for Revenue bringing to tax the same under 153A assessment without any incriminating material, nor is the claim of the assessee that Revenue is taking a diffe....
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....tlined the ambit and scope of the powers conferred by section 153A and observed thus : "(8) We find it difficult to accept the above contention raised on behalf of the revenue. The object of inserting Sections 153A, 153B and 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Income-tax Act, as stated in the Memorandum explaining the provisions in the Finance Bill 2003 (see 260 ITR (St) 191 at 219) was that under the existing provisions relating to search cases, often disputes were raised on the question, as to whether a particular income could be treated as 'undisclosed income' or whether a particular income could be said to be relatable to the material found during the course of search, etc. which led to prolonged litigation. To overcome that difficulty, the legislature by Finance Act 2003, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. (9) What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is mad....
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....on 153A would not affect the assessment finalised on 29-12-2000. (12) Once it is held that the assessment finalised 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 I.T. 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 153 A 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 would show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Sec....
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....uments or any assets are requisitioned under section 132A after 31st March, 2003. There is a mandate to issue notices under section 153(1)(a) and 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. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro Products Ltd. (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under : "48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In suc....
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....n this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, the two are inextricably linked with each other. 49. Before proceeding further, we may now examine the provision contained in sub-section (2) of section 153, which has been dealt with by Ld. Counsel. It provides that if any assessment made under sub-section (1) is annulled in appeal etc., then the abated assessment revives. However, if such annulment is further nullified, the assessment again abates. The case of the Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also make....
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.... the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. ....
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.... not supported by incriminating material found during search or gathered during proceedings u/s 153 A of the 1961 Act but rather this is a case where the income is reflected in the bank statements of the assessee declared to Revenue but the said income was not declared in return of income filed with Revenue u/s 139(1) nor it was declared in return of income filed u/s 153A.The bank statement was gathered by the AO during assessment proceedings u/s 153A which compel the assessee to surrender said deemed capital gains u/s 54F(3) by filing revised return of income on 22-12-2009, which was accepted by Revenue. The assessee had filed revised return of income on 22-12-2009 wherein declaration of said deemed capital gains u/s 54F(3) to the tune of Rs. 1,03,44,000/- was made and the AO thereafter framed an assessment bringing to tax income declared in the revised return of income. It is not the case, where the AO has made any additions which is not qua incriminating material but it is the assessee which when cornered by Revenue filed revised return of income declared and offered for tax deemed capital gains of Rs. 1,03,44,000/- u/s 54F(3). The bank statements wherein the said deemed capital....