TaxTMI 
TaxTMI 
2019 (6) TMI 890
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....rder at pages page 3 to 12. 2.3 That the Tribunal while passing the order, did not adjudicate the above mentioned ground, nor did the Tribunal consider the submission along with the judicial pronouncements, including the order of coordinate Bench of ITAT, Jaipur while passing the order. 2.4 That, non adjudication of any ground of appeal, including non consideration of the judicial pronouncements cited by the Appellant, during the course of hearing, is a mistake apparent on record. 2.5 Thus the Tribunal is humbly prayed to recall its order dated 01.12.2017, for reconsideration and to pass order after considering the facts and also the submissions made. 3. After hearing both the parties and perusal of the records, it is noted that the aforesaid additional ground so raised by the assessee was not adjudicated by the Coordinate Bench while pronouncing its decision dated 01.12.2017, the same being apparent from record, we hereby recall the order passed by the Coordinate Bench in ITA No. 483/JP/2016 dated 01.12.2017 for the limited purpose of adjudication of the additional ground so raised by the assessee. 4. The Regist....
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....arch. Similarly the statement recorded U/s 131 during the assessment proceedings also do not constitute incriminating material to indicate undisclosed income of the assessee. Hence, the ld. AR of the assessee has submitted that no addition can be made U/s 153A of the Act in respect of concluded assessment where no incriminating material was found during the course of search to indicate any undisclosed income of the assessee. In support of his contention, he has relied upon the following decisions:_ * Chetan Das Lachman Das (2012) 211 Taxman 61 (Del-HC). * Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bombay-HC). * Pr. CIT vs. Meeta Gutgutia 395 ITR 526 (Del. -HC). * Pr. CIT vs. Meeta Gutgutia 257 Taxman 441 (SC). * Jai Steel India vs. ACIT 259 CTR 281 (Raj. HC). Thus, the ld. AR has submitted that in view of the binding precedent and decision of Hon'ble High Court in case of Pr. CIT vs. Meeta Gutgutia (supra) upheld by the Hon'ble Supreme Court the addition made by the AO U/s 69 of the Act without any incriminating material found or seized during the course of search is not sustainable and liable to be del....
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....e on account of on money payment by the assessee. The question arises whether the statements recorded by the ACB U/s 161 of Cr.P.C. after a gap of around two years from the date of search as well as statement recorded by the Assessing Officer U/s 131 of the Act in the month of December, 2011 would constitute incriminating material for the purpose of addition of undisclosed income U/s 153A of the Act in respect of concluded assessment. The Hon'ble Delhi High Court in case of Chetan Das Lachman Das (supra) while considering an identical issue has held that the assessment U/s 153A of the Act can be made only on the basis of the seized material or the material which have nexus with the seized material. The Hon'ble Delhi High Court in case of Pr. CIT vs. Meeta Gutgutia (supra) while considering an issue of assessment framed U/s 153A without incriminating material has held in para 56 to 69 as under:- "56. Section 153A of the Act is titled "Assessment in case of search or requisition". It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power whic....
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....unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said two . decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT(A), affirmed by the ITAT, deleting the addition, was not interfered with." 59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj). The said part of the decision in Kabul Chawla (supra) in paras 33 and 34 reads as under:....
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....eassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents." 60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of t....
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....course of original assessment." 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Principal Commissioner of Income Tax v. Saumya Construction Pvt. Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of Rs. 14.5 crores against declared income of Rs. 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 200607. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: "15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once ....
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....6. Section 153A bears the heading "Assessment in case of search or requisition". It is "well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of subsection (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the ....
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....tion 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year." 62. Subsequently, in Principal Commissioner of Income Tax- 1 v. Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. (supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. (supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in CIT-2 v. Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In CIT v. Gurinder Singh Bawa (supra), the Bombay High Court held that: "6...once an assessment has attained finality for a parti....
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....ther, in answer to Question No. 11, the Assessee in Dayawanti Gupta (supra) was confronted with certain documents seized during the search. The answer was categorical and reads thus: "Ans:- I hereby admit that these papers also contend details of various transactions include purchase/ sales/ manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s Asom Trading and M/s. Balaji Perfumes." 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of Rs. 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of manipulation of the accounts. In Da....
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....he income already financed the assessment framed U/s 143(3) of the Act is not permissible U/s 153A of the Act. In the absence of incriminating material disclosing undisclosed income and to substantiate the additions made by the AO. The said decision of Hon'ble Delhi High court was challenged by the Revenue before the Hon'ble Supreme Court however, the SLP filed by the Revenue was dismissed by the Hon'ble Supreme Court reported 257 Taxman 441. The Hon'ble Jurisdictional High Court in case of Jai Steel India vs. ACIT (supra) has also taken a similar view in para 21 as under:- "21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 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....
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....reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made." (emphasis supplied) The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment 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. ....
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..... 20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271 (1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty." (emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. Income Tax Officer : (1981) 131 ITR 597 that "it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." The argument of the counsel for the appella....