TaxTMI 
TaxTMI 
2016 (6) TMI 1254
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.... that a search and seizure operation was conducted by the Investigation Wing of the department on 22.3.2011 in the case of Amtek Group of cases including the assessee M/s Lotus Buildtech Ltd which was also covered u/s 132(1) of the Income tax Act, 1961 [for short, 'the Act'], which is a group company of Amtek Group. Subsequently, the case was centralized with Central Circle -14, New Delhi and notice u/s 153A of the Act was issued to the assessee on 4.10.2011 and in response to which the assessee fled return declaring income at NIL on 24.11.2011. Further, notice u/s 143(2)/142(1) alongwith questionnaire on 7.2.2012 were issued to the assessee fixing the case for hearing on 13.2.2012. After detailed investigation and enquiry, the AO framed assessment order u/s 153A r.w.s 143(3) of the Act at total income of Rs. 41,20,000/- as against the NIL income returned by the assessee by making a sole addition on account of disallowance of expenditure u/s 40A(3) of the Act. Aggrieved, the assessee carried the matter before the ld. CIT(A) who held that disallowance u/s 40A(3) of the Act is proper. However, he directed the AO wherever the land is shown as work in progress, to the extent of....
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....pages 13 to 25 of the Revenue's paper book. The ld. DR vehemently contended that in the case of Kabul Chawla [supra] no question of law has been framed, hence it has no precedentiary value. Further, placing reliance on the decision of the Hon'ble Supreme Court in the case of Attar Singh [supra], contended that cash payments exceeding the prescribed limit attracts the payments made for acquiring stock in trade and other materials. The ld. CIT-DR also pointed out from the copies of the audited balance sheet as on 31.3.2008 of the assessee and contended that there was closing stock of Rs. 11.24 crores on 31.3.2007 which was increased to 27.66 crores for the year ended on 31.3.2008. Therefore, cash payments made by the assessee towards acquiring stock in trade and other materials in cash payments exceeding prescribed limits attracts the provisions of section 40A(3) of the Act r.w.r 6DD of the I.T. Rules, 1962 [hereinafter 'the Rules' for short]. 6. The ld. CIT-DR, in WS-I mainly placed reliance on the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of Anil Kumar Bhatia 24 Taxmann.com 98 dated 7.8.2012 to prove that the jurisdiction of the AO u/s 153A o....
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.... 8. Apropos Ground No. 1 of the Revenue, the ld. DR drew our attention towards para Nos. 4.2 to 4.7 of the assessment order and page 13 of the impugned order and pointed out that the findings of the AO has been upheld by the ld. CIT(A) by holding that disallowance u/s 40A(3) is proper. The ld. CIT-DR vehemently contended that the ld. CIT(A) misunderstood the ratio of Hon'ble Supreme Court in the case of Attar Singh [supra] and directing the AO that whenever the land is shown as work in progress to the extent o disallowance u/s 40A(3) of the Act, the value of work in progress will be reduced by this amount. The ld. CIT-DR again drew our attention towards Revenue's paper book dated 11.5.2015 pages 1 and 2 and submitted that in the present case, the assessee made payments towards investments, therefore, there would be no occasion to reduce the same from work in progress. Therefore, the directions of the ld. CIT(A) are not sustainable. 9. The ld. AR also placed rejoinder to the submissions of the ld. DR and contended that as per the decision of the Hon'ble High Court of Madhya Pradesh in the case of National Textile Corporation Vs. CIT reported 286 ITR 497 [MP] Tribunal cann....
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....ct regarding impugned disallowance. Therefore, not only on legal ground even on merits the additions made by the AO u/s 40A(3) of the Act cannot be held as sustainable and the ld. CIT(A) was right in directing the AO not to tax the same. 11. On careful consideration of the above submissions, at the very outset, we observe that the ld. CIT-DR has pressed into service the WS-I [pages 13 to 21 dated 21.3.2016] to allege that payments of Hon'ble High Court of Delhi in the case of Anil Bhatia[supra] and Filatex India Ltd [supra] have not been over ruled by the Hon'ble High Court decision in the case of CIT Vs. Kabul Chawla [supra] and ratio of this decision only applies to the cases where the assessments are completed u/s 143(3) of the Act. The ld. CIT-DR has stressed on this legal contention that the jurisdiction of the AO to make assessment u/s 153A of the Act is valid after search even if no material relating to that is found and seized. 12. The ld. CIT-DR has vehemently contended that since no question of law has been framed by the Hon'ble High Court in the decision of Kabul Chawla [supra], therefore, the same has no precedentiary value. The above contentions, we n....
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.... reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and 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 reiterate....
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....een considered and therefore, ratio of this decision is not applicable to the present case. 14. Regarding legal contentions of ld. DR placed in written submissions-II dated 21.3.2016, available at pages 21 to 25 of Revenue's paper book, we are of the view that similar legal contentions and objections against the applicability of the judgment and propositions laid down by Hon'ble Supreme Court and various Hon'ble High Court was also posed to the Tribunal in the case of Lairy Distributors Pvt. Ltd ITA No. 6947/Del/2014 and other appeals by the then ld. CIT-DR and in the order dated 27.1.2016 the legal contentions of the Revenue were considered in detail and dismissed being devoid of merits. The relevant operative part of the order of the Tribunal in the case of Lairy Distributors [supra], contention of the ld. CIT-DR which were quite similar to the written submissions-II of the Revenue filed in the present case and the similar legal contentions raised by the then ld. CIT-DR were reproduced in the order of the Tribunal dated 27.1.2016 [supra] which read as follows: "32. The ld. CIT-DR also submitted written objections regarding decisions relied by the ld. AR qua applic....
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....ssues later before the CIIT(A)/ITAT/HC. (ii) Tribunal decisions cannot be used as precedent because they run contrary to Tribunal's own decision in Apoorva Extrusions P. Ltd. (on whether assesstt was hey and 6 years mentioned u/s 153C etc.) and also contrary to what was held by the jurisdictional High Court in (i)SSP Aviations Ltd; (ii) Chetan Das Lachhman Das; (iii) Madugula Venu; (iv) Filatex India Ltd; (v) Anila Bhatia. (ii) SSP Aviation Ltd. (346 ITR 177 Delhi High Court). Para 17 of the order relied by the AR" ..Assessing officer having jurisdiction over the other person to follow the procedure prescribed hy section 153A in an attempt to ensure that the income reflected hy the document has been accounted for hy such other person. If he is so satisfied after obtaining the returns from such other person for the 6 assessment years, the proceedings will have to be closed." are clearly obiter and this would become clear from (i) para 15 where High Court clearly held that "...there is no requirement in Section 153C(i) that the Assessing Officer should also be satisfied that such valuable articles or books of accounts or documents belongin....
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....014 & 14/2014. This was the case where the order of the AO was absolutely silent on the important fact as to on what material or evidence the addition/disallowance was based and this prompted the High Court to dismiss Revenue's appeal. Clearly, the judgment is more on facts than on law. This judgment besides being inconsistent with its own earlier decisions in SSP Aviations, Filtax Ltd; Chetan Das Lacchman Das and Anil Bhatia etc. is the one case where no case law, no legal provisions are found referred or discussed & hence cannot be taken as a binding precedent as held in CIT v. B.R. Constructions { 202 ITR AP FB}. (viii) Kabul Chawla. Delhi High Court (Order dated 28-08-2013): Judgment cannot be relied as a binding precedent because; (i) In this judgment (which deals with jurisdictional issues of incriminating material etc. whereby AO's authority is being challenged) is in ignorance of applicable provisions of 124 which act as a bar to rake up jurisdictional issues later. Since this decision is rendered without reference to the statutory bars, it cannot be used as a binding precedent as held in State v. Ratan Lai Arora (2004) 4 SCC 590. (ii) Un....
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....aid 134 ITD 237 Deb Not available as precedents because; (a) These are the decisions (e.g. DSL) obtained by suppressing the fact that the Grounds (on challenging the validity of Satisfaction Note or the issue of Limitation (year falling beyond 6 years) were of the nature of additional ground as they were never raised before AO/CIT(A) and hence required specific leave of ITAT which was not obtained. (b) These decisions (DSL) runs contrary to Delhi High Court order in SSP Aviations Ltd. where too similar Satisfaction Note was involved. (c) The DSL decision is seen obtained by suppressing the fact that these jurisdictional objections were not raised within time mentioned u/s 124. (d) This is contrary to later decision of the Tribunal in Apoorva Extrusion Ltd. Without prejudice to the above this decision is found to be resulting in absurdity whereby by the search action certain years/transactions would get covered which by the time of 153C had not even taken place.Especially in case of RL Allied Industries it would be noticed that adjudication done by the ITAT is not even borne out of the grounds (that order is time barred) raised b....
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....contrary to SSP Aviations (Delhi High Court) where too similar Satisfaction was involved. (e) Objection to jurisdiction was not raised within 124 prescribed time. (xx) Qualitron Commodities Ltd {167 TTT 3S3 Del}: Cannot be relied upon for the reasons that; (i) COs of the assessee were entertained because of suppression of the crucial fact that CO was not arising out of the order of the CIT(A) whereby pure legal question challenging the validity of assessment was being challenged. {Refer Ahmedabad ITAT decision in Sandeep M Patel 22 Taxman.com 288}. (ii) CO filed was late and without giving any reason for delay it was entertained. (iii) Runs contrary to Delhi High Court order in SSP Aviation Ltd. (iv) Material fact that AO's jurisdiction was not challenged earlier within 124 time was suppressed. (v) Decision relies on Delhi High Court order (Pepsico Holdings) which was not available as precedent. (xxi) Tanvir Collections P. Ltd. 168 TTT US Deb Not applicable because; (a) It runs contrary to Delhi High Court order in SSP Aviations Ltd; (b) It relied on certain portion of SSP Aviation Ltd. which ....
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....held that : "It was contended by Mr. Manchanda, the learned Counsel for the revenue, that the appellant had a right of appeal to the Appellate Assistant Commissioner under Section 30(1A). He argued that if only he had deposited the amount computed by the Income-tax Officer, then he would have had a right of appeal to the Appellate Assistant Commissioner. Assuming that Section 30(1A) applied to facts of the case, then before having recourse to that provision a person seeking to file an appeal under that provision must comply with two requirements, namely, that he must have first deducted the tax due from the nonresident assessee and must have paid the same to the Government. This provision cannot apply to the case of a person who contends that the firm to whom he made the payment is not a non-resident firm. If he is right in his contention, then he could not have deducted the tax due from the firm to whom he made the payment. 5. For the reasons mentioned above, we allow this appeal, set aside the order of the Appellate Bench of the Allahabad High Court and remand the case back to that Court for deciding the appeal afresh. It is open to the assessee to urge all the ....
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....king for the Hon'ble Supreme Court of India, their Lordships held that the judicial system only works if someone is allowed to have the last word and the last word, once spoken, is loyally accepted. The Hon'ble Supreme Court in this judgment has itself quoted from the decision of House of Lords as follows: "We desire to add and as was said in Cassell & Co. Ltd. vs. Broome (1972) AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of Courts" which exists in our country, "it is necessary for each lower tier" "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchical system of Courts that there are decisions of the Supreme appellate Tribunal which do not attract the unanimous approval of all members of the judiciary... But the judicial system only works if someone is allowed to have the last word, and that last word, once spoken, is loyally accepted. "...The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system." (Emphasis by underlining supplied by us) 38. Furthermore, in the case of CIT Vs.....
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....n which the search takes place; assessment and reassessment pending on the date of search shall abate and total income for such A.Ys will have to be computed by the AO as a fresh exercise; the AO will exercise normal assessment powers in respect of six previous years relevant to the A.Y in which the search takes place and the AO has the power to assess or reassess the total income of the aforementioned six years in separate A.Ys for each of the six years and there will be only one assessment order in respect of each of the six A.Ys "in which both the disclosed and the undisclosed income would be brought to tax". 19. Their Lordships also held that although section 153A of the Act does not say that addition should be strictly made on the basis of evidence found in the course of search, or other post search material or information available with the AO which can be related to the evidence found during the course of search, it does not mean that the assessment can be arbitrarily made without any relevance or nexus with the seized material. 20. Their Lordships, in Para 37(iv) & (v) in the last sentence expressly held that obviously an assessment has to be made u/s 153A of the Act ....