TaxTMI 
TaxTMI 
2018 (7) TMI 2042
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....sessee and other relatives, no incriminating material or other documents evidencing any payment over and above the purchase price of said society plot No. B-148 was found; (j) That the said plot of society was sold after conversion for Rs. 3,75,000/- on 10.10.2016 (DLC rate Rs. 3,18,825/-) whereas the said society plot was purchased in 1997 which is out of block period. (k) That without prejudice to above sub-ground ld. CIT(A) was not justified in not allowing benefit under section 48 of IT Act for cost inflation." 2. Briefly stated, the facts of case are that a search and seizure operation under section 132(1) of the IT Act was carried out on 30.10.2014 at the various business and residential premises of NIMS Group and the assessee is part of the said group. Thereafter, the AO issued notice under section 153A of the Act and in response the assessee filed her return of income under section 153A declaring total income of Rs. 26,26,510/- as against total income of Rs. 24,73,160/- declared earlier in her original return of income filed under section 139(1) of the Act on 23.01.2014. The assessment was completed under section 143(3) r.w.s. 153A wherein the Assessing....
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.... conversion of urban plot of land. After payment of regularization and other sums, it was re-allotted through registration in office of Sub-registrar by JDA in name of the assessee for which price fixed was Rs. 6,86,686/- on which stamp duty of Rs. 9,928/- was paid. (4) The price fixed for re-allotment of same plot of land through the office of Sub-registrar was of March 2014 whereas addition was in hands of assessee in A.Y. 2013-14. 3.3 The ld AR has further contended that when no incriminating material was found indicating any undisclosed income pertaining to the years under consideration then, the Assessing Officer cannot make addition in the return of income declared by the assessee. In support of his contention, he has relied upon the decision of Hon'ble Rajasthan High Court in case of Jai Steel India vs ACIT 259 CTR 281 as well as decision of Hon'ble Delhi High Court in case of CIT v. Kabul Chawla 380 ITR 573 and submitted that the Hon'ble High Court has held that in case where nothing incriminating material is found, though section 153A would be triggered an assessment or reassessment to ascertain total income is required to be done, the same would not result in ....
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.....09.2014 before the date of search i.e. 30.10.2014. Thus, it is clear assessment proceedings were not pending on 30.10.2014 i.e. the date of search. As per section 153A of the Act, once a search and seizure action is carried out, the AO has to assess or reassess the total income of the assessee in respect of 6 years immediately preceding the assessment year relevant to the previous year in which a search is conducted or requisition is made. In case the assessment is pending on the date of search the same shall be abated as per proviso to section 153A(1) of the Act and the AO is free to assess the income of the assessee as regular assessment. However, in case of completed assessment and not abated due to initiation of search u/s 132 or making of requisition u/s 132A the AO has to reassess the total income of the assessee and therefore, the assessment already completed can be tinkered with or distrusted until and unless incriminating material is found and seized during the course of search or requisition as case may be indicating undisclosed income of the assessee. Therefore, the scope and jurisdiction of the AO to reassess the total income of the assessee u/s 153A is limited only to....
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....her 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 without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search ....
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....isition 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 assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20. 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)(a) 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, the Assessing Officer is empowered to reopen those proceed....
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....e 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 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 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 case 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 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 wi....
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....e 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 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess 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. 27. The Allahabad High Court in Smt. Shaila Agarwal's (supra) has held as under:- "19. The second proviso to Section 153A of the Act, refers to abatement of the pending assessment or re-assessment proceedings. The word 'pending'....