TaxTMI 
TaxTMI 
2017 (11) TMI 1372
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that in the absence of any material found during search, no addition/ disallowance can be made in the assessment u/s 153 A or 153C of the Act in a case where the assessment is not pending. 4. On the facts and in the circumstances of the case, the CIT (A) has not correctly interpreted the provisions of section 153C r.w.s. 153A of the Income tax Act, 1961. 5. The order of the Ld. CIT (A) is erroneous and is not tenable on facts and in law. 6. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." Grounds of Cross-objection: "1. That in view of the facts & circumstances of the case and in law the CIT (A) has erred in not holding that the notice issued U/s 153C and the assessment order passed U/s 153C/143(3) are illegal, bad in law and without jurisdiction. 2. That the documents found during search proceedings, as referred to in the satisfaction note, do not belong to assessee. Hence, the notice issued U/s 153C, based on said documents, is illegal, bad in law and wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of proceedings for assessment year 2003-04 were barred by limitation and, therefore, the assessment order passed u/s 153C was a nullity and the Assessing Officer was directed to delete the additions. Now aggrieved, the department has approached the ITAT by way of this appeal and the assessee has also filed the C.O. supporting the order of the Ld. CIT (A). 3. Ld. CIT DR, at the outset, placed reliance on the order of the Assessing Officer and submitted that the date of search was 14.2.2008 and since the Assessing Officer of the searched party as well as the assessee was the same, there was no physical handing over of the seized documents and, therefore, although the recording of satisfaction was done on 2.11.2009, the assessment years falling within the purview of section 153C would be six assessment years preceding the date of search i.e. 14.2.2008 and not 2nd November, 2009 as had been held by the Ld. CIT(A). It was submitted that provisions of section 153C and section 153A(1)(b) have to be read together and, therefore, assessment year 2003-04 would also be covered u/s 153C. 3.1 The Ld. CIT DR submitted that there was no ambiguity in the said provision and the issue had bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also placed reliance on the following judicial precedents in support of her submissions:- i) Apoorva Extrusion Pvt. Ltd. in I.T.A. 3308/D/2010 (ITAT Delhi) ii) Anil Kumar Bhatia 24 Taxmann.com 98 (Delhi High Court) iii) Filatex India Ltd. in I.T.A. No. 269/2014 (Delhi High Court) iv) Raj Kumar Arora in I.T.A. No. 56/2011 (Allahabad High Court) 3.3 Ld. CIT DR also placed reliance on the order of the Hon'ble Delhi High Court in the case of SSP Aviation and also in the case Sarvesh Kumar Agarwal. She also referred at length to the satisfaction note of the Assessing Officer dated 2.11.2009 and submitted that in the present appeal, incriminating material had been found during the course of search and, therefore, the facts of the case were distinguishable from the facts of the case in Kabul Chawla (Delhi High Court). It was also submitted that the case laws relied upon by the Ld. CIT (A) were distinguishable on facts. She also sought to place on record written submissions, which read as under:- " Submissions of Revenue The Revenue reiterates that the provisions of section 153C unambiguously state that 153C. Assessment of income of any other person.- (1) Notwithstand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'ble Delhi High Court * Jurisdiction of Assessing Officer u/s 153A and procedure thereon "A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.200' 3. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as 'block assessment' because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as 'block period'. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars, in which both the disclosed and the undisclosed income would be brought to tax."(Para 19) Assessing Officer is empowered to reopen the proceedings u/s 143(l)(a) or u/s 143(3) to re-assess the total income, taking note of the undisclosed income, if any. The assessing officer is entrusted with the duty of bringing to tax the total income of an Assessee whose case is covered by Section 153A, by even making re-assessments "A question may arise as to how this is sought to be achieved 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. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition Officer is empowered to reopen those proceedings and reassess total income, taking note of the undisclosed income, if any, unearthed the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessment orders for each of those six years determining the total income of the Assessee which would include both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the Assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the Assessee. Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 115 JB of the Act. The said argument has no substance and has to be rejected. Under Section 153A of the Act, the additions need not be restricted or limited to the incriminating material, which was found during the course of search. There cannot be multiple assessments, once Section 153A of the Act is applicable. Section 153A (1) postulates one assessment, computing the total income of six assessment year. Immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made. Total income is assessed or reassessed n the order under Section 153A of the Act and the Section applies notwithstanding Sections 139, 147, 148, 149, 151 and 153 of the Act." Further Hon'ble Delhi High Court has clarified the decision of Chetan Dass, Laxman Dass decided earlier by observing in Para 3 that "Learned counsel for the appellant assessee has relied on the decision of this Court in CIT Vs. Chetan Dass laxman class, (2012) 254 CTR (Del) 392. The said decision notices insertion of Section 153A by Finance Act, 2003, its purpose and object, had the earlier proceedings for block assessment under Chapter XIVB, the difficulties and the legal i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (c) of sub-sec(l) 153A which required the Assessing Officer to Assessee or reassess the total income." Hon'ble Allahabad High Court has decided at the end in favour of revenue which is reproduced as under:- "Consequently we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the Assessee. The assessing officer, while exercising the power under section 153A of the Act, would make assessment and compute the total income of the Assessee including the undisclosed income, notwithstanding the Assessee had filed the return before the date of search which stood processed under section 143(l)(a) of the Act. In the light of the aforesaid, the reasons given by the Tribunal that no material was found during the search cannot be sustained since we have held that the Assessing Officer has the power to reassess the returns of the Assessee not only for the undisclosed income, which was found during the search operation bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... On the contrary, it is expressly provided under section 153A of the Act the Assessing Officer shall assessee or reassess the "total Income" of six assessment years which means they said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and that assessing authority shall take note of the sad income also in determining the total income of the Assessee when the earlier proceedings are reopened and that income also shall become the subject matter of said proceedings." Recently same view is also expressed by Hon'ble Delhi Bench in the case of Apoorva Extrusion Pvt. Ltd., ITA No. 3308/Del/2010 for the A.Y. 2002-03, vide order dated 09.10.2014. The relevant portion is mentioned as below:- "5. In order to answer whether the quashing of the initiation of assessment for the year under consideration on the given count is valid or not, we need to consider the m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be prescribed 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:" 7. On circumspection of the clause (a) of the above provision, it is amply clear that the AO shall issue notice to such person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years as referred to in clause (b) and, the latter clause, provides that the Assessing Officer shall 'assesss or reassess the total income of six assessment year immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.' When we read section 153C in conjunction with section 153A of the Act, the position which follows is that if the books of account or document etc. belonging to assessment or re-assessment of such other person is required t o be made of 'six assessment years immediately preceding assessment year....
X X X X Extracts X X X X
X X X X Extracts X X X X
....expression "books of account or documents' employed in section 153C (1) is accompanied by the works "money, bullion, jewellery or other valuable articles or things'. It is axiomatic that 'money or jewellery' etc. belonging to the other person found from the premises of the person searched cannot per se be related to a particular assessment year. If we test the contention of the Ld. AR on the touchstone of 'money or jewellery' etc., belonging to the Assessee found from the person searched, then it will be very difficult at the stage of initiation of assessment or reassessment of the other person to relate it to a particular year, there by jeopardizing the whole scheme of assessment pursuant to search or requisition. To a specific query it was candidly accepted by the Ld. AR that in items of section 153A. the initiation of assessment or reassessment for all the six assessment years in the case of person searched is not dependent on the findings of any incriminating material. It is beyond our comprehension that when such a course of action is permissible u/s 153A in the case of person searched, then how can there be any bar on the initiating or making of assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee." Recently Hon'ble ITAT Hyderabad Bench in the case of Smt. M. Vijaya & Ors. Vs. DCIT dated 06.06.2014 has followed this order and held that even if there is no incriminating material to indicate any undisclosed income or income escaped assessment during the original assessment completed u/s 143(3), the AO is bound to make assessment u/s 153A for all these assessment years. On the basis of the above judgments/decisions by Hon'ble Courts/Tribunal the plea of the appellant that u/s 153A addition only on account of seized material has to be made deserves to be dismissed. Decisions in favour of Revenue of ITAT Apoorva Extrusion Pvt. Ltd. - ITA No. 3308/Del/2010(Delhi A-Bench) dated 09.10.2014 (Para 8) 1. Nandini Delux (Banglore C-Bench) [2015] 54 Taxmann.com 162 (Para 6.3.9) 2. Heavy Hearts Hospitals Ltd. vs. Asstt. CIT [2010] 130 TTJ 700 (Chennai Bench) (Para 2.12). Reliance is also placed on the following recent ordersthat strengthen the case of Revenue: 1. Smt Dayawanti v CIT [2016] 75 taxmann.com308 (Delhi) Reference to Head notes & Para 23. Case of CIT v Kabul Chawla [380 ITR 573] has also been discussed. 2. E.N Gopakumar v CIT(Central) [201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Services Ltd. in I.T.A. No. 1720 & 943/D/2013 which is also a group company of M/s Wings Pharmaceutical Pvt. Ltd. i.e. the searched party. A notice u/s 153C of the Act was served upon this company for assessment years 2002-03 to 2007-08 and the ITAT on identical facts held that assessment/reassessment in respect of assessment years 2002-03 and 2003-04 was beyond the period of six assessment years as computed with reference to the date of satisfaction recorded by the Assessing Officer of the searched person. Reliance was also placed on another judgment of Hon'ble High Court in the case of Pr. CIT vs Lata Jain in I.T.A. 214/2016 and 276/2016 wherein the Hon'ble Delhi High Court vide order dated 29.4.2016 held that where no incriminating material for the assessee is found, the assessment framed u/s 153C was not legally tenable. 5. We have heard the rival submission on this issue and also perused the judgment dated 30th October, 2015 of the Hon'ble jurisdictional High Court in the case of CIT Vs RRJ Securities in ITA No. 164/2015 and ITA No. 175 to 177/2015. For ready reference, the relevant Para of the judgment is reproduced as under: "24. As discussed hereinbefore, in term....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year." 5.1 The fact that satisfaction u/s 153C of the Act in the case was recorded on 2nd November, 2009, is not disputed by both the parties. In the judgment cited above, the Hon'ble High Court has held that when the Assessing Officer of searched person and such other person in whose case proceedings under section 153C are initiated, is the same officer, then the date of recording of satisfaction would be construed as the date of handing over of the seized records by the Assessing Officer of s....