TaxTMI 
TaxTMI 
2018 (9) TMI 869
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....urrency derivatives. The effective sole ground raised by revenue reads as under:- On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 1,35,08,000/- made in order u/s 153A r.w.s. 143(3) stating that in the absence of any incriminating material on issue, addition so made was beyond the scope and ambit of an assessment envisaged u/s 153A of the I.T.Act, 1961. The assessee, in cross objections, has supported the stand taken by Ld. CIT(A) in the following manner:- On the facts and circumstances of the case and in law, the Hon'ble CIT (A) has correctly deleted the addition of Rs. 1,35,08,000/- on account of absence of any incriminating material on issue. 2. The assessee was assessed u/s 153A pursuant to search action u/s 132(1) upon assessee on 30/03/2012 by the investigation wing of the department. In response to notice u/s 153A, the assessee offered original return of income filed by the assessee on 07/05/2010 declaring loss of Rs. 3.50 Lacs. It was noted that the assessee started business operations from 20/09/2010 and therefore, there was no business carried out by the exchange in the impugned AY. In view of the same, the....
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....sment was not pending and further the AO had lost his jurisdiction to issue a notice ufs.143(2) of the Act on the date of initiation of search on 30/03/2012. Accordingly, the assessment for the A.Y.2009-10 does not get abated in view of the second proviso to section 153A. The relevant provisions of section 153A reads as under: "Not withstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated u/s 132 or books of account, other documents or any assets are requisitioned u/s 132A after the 31st day of May, 2003, the AO shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year failing within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such oilier particulars as may 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 asse....
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....he incriminating material found during the course of search. The reason being that the assessments which are pending and get abated, the entire income has to be determined which includes material already on record and also the material found as a result of search. However, statute has carved out the exception to those assessments which have attained finality, because those assessments do not get abated. In such a situation, the income which has already been assessed, the same cannot be disturbed unless some incriminating information or material is found suggesting that the income which already stood assessed requires to be reassessed on the basis of new material found. This proposition has been upheld and clarified by the Hon'ble jurisdictional High Court in the case of M/s. Murli Agro Products Limited. 7.4 Thus on a plain reading of section 153A of the Income-tax Act, it becomes clear that on initiation of the proceedings under section 153A, it is only the assessment / reassessment proceedings that are pending on the date of conducting search under section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/ reassessments already finaliz....
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....) of the Act. Therefore, the ratio of the judgment of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Seva) (120 DTR 89) (Bom) is clearly attracted and the impugned additions should not have been made in respect of an unabated assessment which had become final in the absence of any incriminating material having been found in the course of search, qua the impugned addition relating to disallowance of expenses. Thus, I direct the AO to delete the addition of Rs. 1,35,08,0000/- made on account of disallowance of expenditure as the same are beyond the scope and ambit of an assessment envisaged u/s. 153A of the Act. Accordingly, ground no.1 is allowed. Aggrieved, the revenue is in further appeal before us. 4. The Auhtorized Representative for Assessee [AR], Shri Vijay Mehta, submitted that the issued stood squarely covered in assessee's favor by the cited judgment of Hon'ble Bombay High Court. The same has been controverted by Ld. CIT-DR, Ms. Vidisha Kalra, who submitted that the matter has not yet attained finality since Special Leave Petition against the aforesaid judgment is under consideration by Hon'ble Apex Court. The Ld. CIT-DR, by way o....
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....allowed. What was permissible was correction of errors apparent on the face of the documents accompanying the return. The Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issues. In other words, the Assessing Officer had no power to go behind the return, accounts or documents, either in allowing or in disallowing deductions, allowance or relief. The intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from 1-4-1989 to 31-3-1998, the section proviso to section 143(1)(a) required that where adjustments were made under the first proviso to section 143(1)(a) , an intimation had to be sent to the assessee, notwithstanding that no tax or refund was due from or to him after making such adjustments. With effect from 1-4-1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till 1-6-1999. The ....
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....ation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not given by any Assessing Officer, but mostly by ministerial staff. No assessment can be done by them. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provisions. [Para 13] .... In view of the conceptual difference between section 143(1) and section 143(3). Thus, the appeal was to be allowed. Therefore, a plain reading clearly establishes that in undisputed terms, Hon'ble Supreme Court has held that 143(l)(a) intimation is not assessment at all. Subsequently. Supreme Court in Dy. CIT v. Zuari Estate Development and Investment Co. Ltd. [2015] 373 ITR 661 further settled the legal position that where the return had been processed under section 143(1) of the Act, there was no 'assessment'. 2. Order of Supreme Court in Rajesh Jh....
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....ade assessment mandatory for 6 assessment years irrespective of any discovery of incriminatory evidences. By restricting the powers of AO and equating 143(1)(a) to assessment, in a large number of assessment years: practically no assessment will take place if apparently incriminating evidence is not found in search. Obviously, such cases are not being covered under reassessment as reassessment presumes assessment" on the earlier occasion. Since there has not been any assessment earlier, assessment u/s 153A as per sub section (1) clause(b) is mandatory. In fact, the legislature has overemphasized its intent by again mentioning in 1st proviso to section 153(1) that AO shall assess or reassess the total income in respect of each A.Y. falling within such six AYs. Therefore, it is logical and lawful to hold that in cases where only intimation u/s 143(1)(a) has been issued prior to date of search, assessment as defined in Sec. 143(3) is mandatory as per Sec. 153A. In such cases, there cannot be any fetters on the power of AO limiting additions on the basis of seized material alone, such fetters can, at best be, only where assessment u/s 143(3) has been completed prior to search and now A....
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.... the earlier assessment and assess' or 'reassess' such income. This would be most harmonious interpretation of 153A. 4. Limited significance of 2nd proviso to Sec. 153A(1): The second proviso to section 153A has apparently very limited significance in so far as to restrict number of assessment orders to be only one, where proceedings are 'already on' before search. It is in this spirit that sub-section (2) of 153A speaks of 'Revival of 'abated assessment' to avoid multiplicity of assessment orders. In fact, there cannot be any harmonious interpretation of provisions of section 153A as a 'whole' if hands of AO are tied while 'assessing' a 'reassessing' income for six years. 'Assessment' and Reassessment' order u/s 153A is always supposed to have comprehensive, all-encompassing jurisdiction - 'original as well as based on search findings (which may or may not be there) without such interpretation, sub section 2 and its proviso cannot be understood and do not harmoniously fit into first Subsection. Issue No.3 Raison-d'etre of 153A/153C is defeated: Such interpretation of section 153A defeats the very raiso....