TaxTMI 
TaxTMI 
2018 (4) TMI 1803
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.... the case and in law, the Ld.CIT(A) erred in deleting the disallowance made U/S.14A without appreciating that Rule 8D is squarely applicable." ii. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition on account of unexplained cash credit without appreciating that the assessee has not provided any documentary evidences to prove the genuineness of the transaction." iii. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 90,53,404/- on account of professional fees u/s.40(a)(ia) r.w.s.37(l) of the IT Act ignoring the fact that no TDS was deducted on this." iv. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 27,67,423/- on account of depreciation on fixed assets in respect of professional fees capitalized in fixed assets/' v. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 34,28,891/- by way of disallowing of depreciation u/s.40(a)(ia) in respect of pre-operative expenses capitalized in fixed assets." vi. "On the facts and i....
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....ctors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the addition to the extent of ? 1,00,000/-made by the AO to the book profit of the Appellant by way of adding back disallowance made U/S.14A and thereby erred in enhancing the book profit artificially. The Id. CIT(A) erred in holding that levy of interest u/s. 234D of the Income Tax Act, 1961 is consequential. The Appellant denies its liability for such interest. 5 . The Id. CIT(A) erred in holding that ground raised disputing initiation of the penalty proceedings u/s.271(l}(c) of the Income Tax Act, 1961 is premature. The Appellant denies its liability for such penalty. Assessee - ITA 5372/Mum/2015 (M/s Welspun Corp Ltd) The ground or grounds of appeal are without prejudice to one another. 1.a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in not appreciating that:-(i) the order passed u/s. 143(3) r.w.s.!53A by the AO is without jurisdiction and bad in law as the jurisdiction u/s. 153A is vitiat....
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....on to the extent of ^ 50,000/- made by the AO to the income of the Appellant by way of disallowing certain expenditure claimed to have been incurred relating to exempt income invoking the provisions of section 14A. b) The Id. C1T(A) failed to appreciate that:- (i) having regard to the accounts there is no reason and basis in reaching to dis-satisfaction with the correctness of the claim of the Appellant that no expenditure was incurred in relation to dividend income which does not form part of the total income; and (ii) the investment in shares was made out of business strategy and there was no major change in such investment. c) In reaching to the conclusion and confirming such addition the Id. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 3. On the facts and in the circumstances of the case and in law, (he Id. CIT(A) erred in confirming the addition to the extent of Rs. 50,000/ - made by the AO to the book profit of the Appellant by way of adding back disallowance made u/s.14A and thereby erred in enhancing the book profit artificially. ....
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..... 5. Consequent upon the search on 13-10-2010, the AO issued notice u/s 153A for six assessment years immediately preceding the year in which search took place and called upon the assessee to furnish true and correct return in respect of six assessment years. In response, assessee filed its returns of income on 09-09-2011 declaring total income at Nil under the normal provisions and book profit of Rs. 31,33,31,530 u/s 115JB of the Income-tax Act, 1961. The case has been selected for scrutiny and notices u/s 143(2) and 142(1) along with detailed questionnaire were issued and duly served on the assessee. In response to the said notice, the authorized representative of the assessee appeared from time to time and furnished the details as called for. The assessment has been completed u/s 143(3) r.w.s. 153A of the Act on 26-03-2013 determining the total income at Rs. 9,02,60,260 by disallowing expenses incurred in relation to exempt income u/s 14A of the Income-tax Act, 1961. 6. Aggrieved by the assessment order, assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has taken a legal ground questioning the validity of assessments framed u/s 143(3) r.w.s. 153A ....
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.... for any addition to be confined to incriminating material found in the search. The requirement of any incriminating material before an addition is made u/s 153A cannot be assumed when unambiguously it is not there and such an attempt would amount to reforming the legislation. Insofar as the assessee's reliance on the Special Bench decision in the case of All Cargo Global Logistics Ltd vs DCIT (supra), the Ld.CIT(A) observed that although the Hon'ble High Court has approved the Special Bench decision, it is seen that the said decision has not been accepted by the department and preferred appeal against the order before the Supreme Court, therefore not followed. With these observations, the CIT(A) rejected the legal ground raised by the assessee. The relevant portion of the order of CIT(A) is extracted below:- "6.4 I have carefully considered the findings of the AO contained in the assessment order as well as contentions of the appellant. I have perused the copy of the Warrant Authorisation and the Panchnama. It is undisputed fact that the Warrant of Authorisation contains the name of the appellant. It is also undisputed fact that the Warrant of Authorisation was served upon the a....
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....the order of the CIT(A), assessee is in appeal before us. 9. The first issue that came up for our consideration from assessee's appeal in grounds 1(a)(i) and 1(a)(ii) is with regard to the validity of additions made by the AO in the assessments framed u/s 143(3) r.w.s. 153A of the Act. The Ld.AR for the assessee submitted that the assessment order passed u/s 143(3) r.w.s. 153A by the AO is without jurisdiction and bad in law as the AO has made various additions without reference to any seized material found as a result of search. Therefore, the additions made by the AO is bad in law and liable to be quashed. The Ld.AR further submitted that the additions made by the AO are beyond the scope of provisions of section 153A as the provisions are very clear in respect of search assessments where the AO can assessee / re-assess the total income in respect of six assessment years, if the department has found incriminating material during the course of search. The Ld.AR further submitted that the assessments for AY 2005-06 to 2007-08 have been unabated / concluded as on the date of search and no proceedings were pending. In case of unabated assessments, the AO has no jurisdiction to make a....
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....he Act, the AO has been given the power to assessee / re-assess total income of six assessment years in a separate assessment order. The AO is empowered to reopen those proceedings and re-assess total income taking note of undisclosed income, if any, unearthed during search. Once the proceedings are initiated u/s 153A of the Act, the legal effect is that even in the case where the assessment order is passed, it stands reopened and in the eyes of law there is no order of assessments. The Ld.Senior Counsel further submitted that once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return any undisclosed income found during the course of search and also any other income which is not disclosed in the earlier return or which is not unearthed during search in order to find out total income of each year and then pass assessment order. Therefore, there is no merit in the contention of the assessee that the AO is having no jurisdiction to make addition in the concluded assessments. 11. The Ld.Senior Counsel, further referring to the decision cited by the assessee in the case of CIT vs Continental Warehousing Corporation (Nava Sheva) ....
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....ear falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other 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 assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years.: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding any....
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....ted assessment/reassessment the scope of section 153 A has been held to be limited to additions on the basis of material)being wider an absurdity is created of two simultaneous assessments dealing with the same income for the same Assessment Year. Also since 147 assessments are to be completed within a period of nine months from end of the Financial Year in which the notice under section 147 is issued and since 153A assessments can be completed within 2 years/ now 21 months from the end of Financial Year in which the search takes place another absurdity may be created since 147 reassessments also have to take into account the income taxable under section 153A( which itself may not have been completed) There are a cantena of decisions which hold that an absurd construction should be avoided and the provisions have to be interpreted in a workable manner. For example see CIT VS Hindustan Bulk Carriers 259 ITR 449(SC) The provisions of one section of the statute cannot be used to defeat those of another unless it is impossible to effect reconciliation between them. Thus a construction that reduces one of the provisions to a "useless lumber" or "dead letter" is not a harmonised ....
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....A, he is empowered to assess / re-assess total income of six assessment years immediately preceding the year in which search took place whether or not any incriminating material found as a result of search. The AO further observed that the provisions of section 153A is very clear and there is no ambiguity, as such, once search is taken place, the assessments of six assessment years get reopened whether those assessments have been completed u/s 143(3) or 143(1) of the Act. It is irrelevant whether there is any incriminating material found as a result of search. It is the contention of the assessee that the assessments for AY 2005-06 to 2007-08 are unabated as on the date of search which is evident from the fact that as on the date of search, i.e. 13-10-2010, the assessments have been completed either u/s 143(3) or u/s 143(1) and also the time limit for issue of notice u/s 143(2) has been expired. The assessee further contended that as per the provisions of section 153A, the assessments or re-assessments, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search u/s 132 or maki....
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....y High Court in the case of CIT vs Continental Warehousing Corporation (Nava Sheva) Ltd (supra) and held that the AO is precluded from making any addition in case of unabated assessments in absence of any incriminating material found during the course of search. The relevant portion of the order is extracted below:- 10. We have heard both the parties, perused the material available on record and gone through the orders of the Authorities below. In this case the search and seizure action under Section 132 of the Act, was conducted on 20th April, 2010. The facts born out from the record reveals that during the course of search incriminating material relating to the assessee was found and seized. The AO has passed ex-parte assessment order under Section 144 r.w.s. 153A of the Act and made various additions towards cessation of liability under Section 41(1)(a), unexplained cash credit under Section 68 towards unsecured loans, disallowance of interest expenses, disallowance of consultancy expenses, disallowance of 80C/80D deductions, addition towards unexplained credit card expenditure and addition on account of undisclosed jewellery and unexplained purchase of Appeal Ipod. The AO furt....