TaxTMI 
TaxTMI 
2018 (10) TMI 420
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....idavit of the Managing Director of the assessee, Shri Leelesh Hirji Mamniya, who has admitted that the CIT(A)'s order dated 09.01.2014 was received on 21.01.2014 and last date for filing of appeal before Tribunal was 22.03.2014 but actually the appeal was filed on 02.06.2014. According to the learned Counsel, there was delay of 72 days in filing of this appeal. The reason stated in the affidavit was that on receipt of the appellate order of CIT(A) dated 09.01.2014, which was received on 21.01.2014, was forwarded to the tax consultant of the assessee company in the second week of February for further action. According to the affidavit, the tax consultant finalized the appeal and forwarded the same for signing in the last week but the Managing Director Shri Leelesh Hirji Mamniya, who was looking after the finance and tax related matters, was out of the town and returned back to Mumbai on last week of May 2014 and after signing the same, the appeal was filed before the Tribunal on 02.06.2014 and therefore, the appeal was delayed by 72 days. The learned Counsel for the assessee pointed out the relevant clauses i.e. clause 1 to 7 as under: - "1. That, the appellant order dated ....
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....hich are identically worded and hence, the ground has taken in AY 2005-06 in ITA No. 4024/Mum/2014 reads as under: - "2. Order passed under section 153A r.w.s. 143(3) of the Income Tax Act 1961 is bad in law a. The Ld. CIT(A) erred in upholding the assessment order passed by Ld. AO under section 153A r.w.s. 143(3) of the Act on the basis of show cause notice issued by excise department. The Appellant, therefore, prays that the order passed under section 153A r.w.s. 143(3) of the Act is abinitio-void and the same may be quashed. b. The Ld. CIT(A) failed to appreciate that no incriminating material was found during the course of search action conducted on 10.03.2011 under section 132(1) of the Act. The Appellant, therefore, prays that the order passed under section 153A r.w.s. 143(3) is without any basis and the same may be quashed." 6. Brief facts relating to the above issue are that a search action u/s. 132(1) of Act was conducted in the case of Shri Arun Mohanlal Joshi on 10.03.2010. The office premises of the assessee firm at Shop no. 2, Suvart Apartments. Tembhi Naka. Thane(W) was also covered under this search. Consequently, notices under section 1....
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.... by the assessee company from which the unrecorded Gutkha was produced and sold. In the show cause notice, the Excise Department computed the unaccounted sales for the period F.Y. 2004-05 to 2007-08 at Rs. 475.60,41,349/-. Year wise breakup is as follows: FY AY Unaccounted sales 2004-05 2005-06 1056238560 2005-06 2006-07 1194135930 2006-07 2007-08 1246128390 2007-08 2008-09 1176546540 Based on the show cause notice of the Central Excise Department, Vapi, the AO issued a show cause notice dated 05/12/11 to the assessee asking it as to why the income from undisclosed sales should not be added to its taxable income. The assessee submitted that the show cause notice is based on guess work, assumption and projected calculation of sales based on trial and error method as per ratio of raw material consumption for the finished goods produced by the company. There are no corroborating evidences for the same. Various objections were raised assailing the estimation made in the show cause notice issued by the Central Excise Department. The AO however, was not convinced by the arguments of the assessee. The assessee also made the arguments that ba....
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....ed an opportunity to cross examine the department's witness. - The conclusion of the Central Excise Department is based on statements giver by the third party, opportunity of cross examination has not been provided to them. Certain case laws were cited in respect of natural justice and the necessity of providing opportunity for cross examination. The additions in the assessment proceedings can be made only on the basis of material evidences found during the search action. In the instant case the A.O. has made addition on the basis of show cause notice issued by the Central Excise Department and not on the basis of material found during the course of search proceedings. Reliance is placed on All Cargo Global Logistics Ltd Vs DCIT. 5.3. During the appellate proceedings. the appellant was asked to furnish the latest status of the proceedings before the Commissioner of Excise Authorities consequent to the show cause notice issued. At the hearing held on 02/09/13 no details were filed regarding the status of the proceedings. In the meanwhile, a remand report was called from the Assessing Officer vide this office letter dated 14/11/12, on ....
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....s set out at length including the narration of the facts gathered. The submissions of the appellant including the argument that opportunity for cross examination was not given had been dealt with on page 164 onwards in this order of Commissioner of Central Excise. It elaborately records the opportunity for cross examination granted and the personal hearing given to the appellant. This order clearly shows that all the objections of the appellant have been considered including opportunity for cross examination. Finally on page 198 onwards of this order, the Commissioner of Central Excise has discussed and narrated his findings in respect of show cause notice. He has appraised the evidences and confirmed that MIs. Yogesh Associates procured raw materials and packing material illicitly with the appellate firms with close nexus with MIs. Yogesh for production and clandestine production and sale of GOA 1000 Gutkha. The arguments of the appellant in respect of the objections to the statements recorded and evidence covered has also been dealt with. Since then computation of the clandestine production and removal of Gutkha produced has been confirmed in this order of the Commissioner of Cen....
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....e opportunity for cross examination given is recorded. The defence arguments are dealt with on pages 205 onwards. The references to the relevant portions in this regard has been mentioned earlier in this appellate order. It will be a repetition to quote from the adjudication order. 5.7. To conclude, the main plank of the appellant's argument that the action of AO is based on SCN of Central Excise department where the proceedings are not concluded fails since an order has been passed. The statements were recorded by the Excise Authorities over a long period of investigation. In the adjudication, the Commissioner has recorded his conclusions on the issue of natural justice. Further, the AO in the remand proceedings has also to a limited extent allowed opportunity of cross examination. Estimation of income based on material found in investigation is not an alien concept in Income Tax assessments (refer Commissioner of Sales Tax vs /Esufali H M Abdulali (SC) 90 ITR 271). In light of the discussion in the earlier paragraphs, I do not find any reason to interfere in the order of the assessing officer and Ground of appeal no 1 is dismissed." 8. Similarly, the CIT(A) also c....
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.... 2. Ad-hoc addition made by calculating gross profit on alleged unrecorded sale. 3. Addition on account of undisclosed initial investment 2. 4025/M/2014 2006-07 3. 4026/M/2014 2007-08 4. 4027/M/2014 2008-09 10. For all the assessment years i.e. AY 2005-06 to 2008-09 returns originally filed much before the date of search under section 132 of the Act i.e. 10.03.2010 and the details filed by assessee under section 139(1) of the Act and returns of income filed in response to notices issued under section 153A of the Act and income assessed as a result of notice under section 153A read with section 143(3) of the Act is summarized as under: - Sr. No. AY Gross Total income u/s 139(1)/ Date of filing of return of income Income declared u/s 153A/Date of filing of return of income 1. 2005-06 47,71,915/ 31.10.2006 47,71,915/ 05.07.2011 2. 2006-07 40,07,185/ 28.10.2007 40,07,185/ 05.07.2011 3. 2007-08 88,26,324 30.09.2008 88,26,324/ 05.07.2011 4. 2008-09 173,779,788 30.09.2008 173,779,788/ 05.07.2011 11. The assessee before the DDIT Investigation filed a letter dated 12.05.2010 explaining the conten....
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....ntral Excise Department and which was again considered and show cause notice was issued by Income Tax Department on 31.08.2009 much prior to the date of search. How that can be the basis of search assessment under section 153A of the Act? The learned Counsel for the assessee stated that the show cause notice issued by Income Tax Thane dated 31.08.2009 and show cause notice issued by Central Excise Department Vapi Commissionerate do not constitute any incriminating material to make assessment under section 153A of the Act read with section 143(3) of the Act particularly when all the details were filed in the original return of income under section 139(1) on 31.10.2006 for the AY 2005-06 and no proceedings were pending as on the date of search. The learned Counsel for the assessee stated that at the time of search on 10.03.2010 by the Income Tax Department, the assessment proceedings for none of the above assessment years is in question is pending. The learned Counsel for the assessee stated that the AO's assumption of jurisdiction to issue notice under section 153A of the Act and to frame the assessment under section 143(3) read with section 153A of the Act, the AO can assume jurisd....
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....ich states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absurd or unjust results as section 153A (i)(b) and....
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....oks of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word "incriminating document". Clauses (a) and (b) of section 132(1) employ the words "books of account or other documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumer....
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....ence 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. 4. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He was specifically questioned about the jurisdiction of the AO to make original assessment along with assessment u/s 153A, merging into one. However he took an evasive view submitt....