AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1487
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....d in sustaining the additions made to the income which already stood assessed u/s 143(1)(a) of the income Tax Act, 1961 and the time limit to issue notice u/s 143(2) stood expired. Thus, the order passed without referring to a single paper/ incriminating material seized during the course of search, when no assessment proceedings were pending as on the date of survey, deserves to be held bad in law and the consequently additions deserves to be deleted." 2. The assessee is a private limited company. A search and seizure operation u/s 132 of the Act was carried out in case of MRS group on 17.07.2013, and the assessee is part of the said group. Thereafter the AO issued notice u/s 153A of the I.T. Act and in response the assessee filed its return of income u/s 153A of the Act declaring the same income as declared in the original return. The assessment for these 3 years were completed u/s 143(3) r.w.s. 153A of the Income Tax Act whereby the Assessing Officer has made disallowances u/s 40(a)(ia) and 36(1)(va) of the Act. The assessee challenged the action of the AO before the ld. CIT(A) and objected the disallowance made by the AO without referring to any incriminating material found an....
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....search. 4. On the other hand, ld DR has relied upon the authorities below and submitted that once a search u/s 132 is carried out, it is incumbent upon the AO to assess or reassess the income of the assessee in respect of 6 assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The AO had no discretion but to assess or reassess the total income of the assessee as per the provisions of Section 153A of the Act. 5. We have considered the rival submissions as well as relevant material on record. A search and seizure action was carried out in case of the assessee's group on 17.07.2013. The original return of income for this 3 assessment years were filed u/s 139(1) and the last day of issuing notice section 143(2) was expired before the date of search i.e. 17.07.2013. The details of the returns filed u/s 139 and the last date of issuing notice are as under:- A.Y. U/s 139(1) Date of filing return of income Last date of issuance of 143(2) 2009-10 30.09.2009 30.09.2010 2010-11 30.09.2010 30.09.2011 2011-12 30.09.2011 30.09.2012 Thus, it is clear that the last date of issuing....
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....of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and 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 witho....
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....considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- "19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessm....
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....n 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which ....
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....essment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reas....