AI Drafter 
TaxTMI 
TaxTMI 
2018 (4) TMI 1803
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.... "On the facts and in the circumstances of 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 p....
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....s no major change in such investment. c) In reaching to the conclusion and confirming such addition the Id. C1T(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, 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 la....
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....ithout jurisdiction and bad in law as the jurisdiction u/s. 153A is vitiated; and (ii) the additions made by the AC arc beyond the scope of provisions of section 153A. 2.a) 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 ^ 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....
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....r of CIT(A). Subsequently, the CIT(A)-7, Mumbai, vide order u/s 263 dated 24-03-2010 set aside the assessment order passed u/s 143(3) dated 24-12-2007. On appeal before the ITAT, the ITAT, vide order dated 03-072015 in ITA No.3374/Mum/2010 set aside the order passed by the CIT(A) and restored the assessment order passed by the AO u/s 143(3). 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 t....
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....ing the year in which search took place. The power to re-assess is very obviously and not based on seized materials. If a harmonised interpretation is given to the provisions which will follow that the power to re-assess would mean subjecting a completed assessment to another fresh assessment. There is no express or implied requirement u/s 153A 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 co....
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.... V/s. Mathai Verghese 4 SCO 746 (P.749) where is has been observed that the courts cannot reframe the legislation for the very good reasons that it has no power to legislate. 6.5 In view of the above I hold that the assessment u/s. 143(3) r.w.s.!53A is within jurisdiction arid valid. This ground of appeal is accordingly dismissed." 8. Aggrieved by 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 th....
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....ons of section 153A of the Act shall be applicable upon initiation of search proceedings u/s 132 of the Act, in which case, the concluded assessments will be reopened as per the provisions of section 153A of the Act, and such reopening is not dependent upon existence or otherwise of any undisclosed income. The Ld.Senior Counsel further submitted that u/s 153A of the 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....
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....ion 153, in the case of a person where a search is initiated under section 132or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year 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 ....
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....r under section 148 can still be issued and assessment under section 147 can be carried out. This is so because merely because a search is carried out the independent right of assessment/reassessment under section 147 does not abate unless the assessment/reassessment (not treated as pending ) itself abates. This would in turn mean that simultaneously there could be two assessments under section 153A and section 147 possible. The scope of assessment/reassessment under section 147(since in case of unabated 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 i....
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....s may or may not have taken place." 12. We have heard both the parties, perused material available on record and gone through the orders of authorities below. In this case, search & seizure action u/s 132 of the Act was conducted on 13-102010. The facts borne out from the record reveals that the AO has made various additions for AY 2005-06 to 2007-08 without reference to any incriminating material is found as a result of search. This fact is not disputed by the Ld.Senior Counsel appearing for the revenue. According to the AO, once proceedings are initiated u/s 153A, 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 fo....
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....uring search. The ITAT, Mumbai Special Bench in the case of All Cargo Global Logistics td vs DCIT (supra) has taken a similar view wherein it was categorically held that the AO is not empowered to make any addition in the absence of any incriminating material in respect of assessments that have been unabated / concluded as on the date of search. The coordinate bench of ITAT in the case of Lakamashi J Gala vs DCIT in ITA Nos. 2402 to 2406/Mum/2015 & ITA Nos. 2534 to 2537/Mum/2015 dated 19-01-2018 had considered similar issue in the light of the decision of Hon'ble Bombay 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....
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.... Court, in the case of Continental Warehousing Corporation (Nava Sheva) Ltd. (supra) has held that in the absence of any seized material found during the search no addition can be made in respect of unabated assessments which have become final as on the date of search. This legal proposition is further supported by the decision of the Division Bench of the Hon'ble Bombay High Court, in the case of Murli Agro Products Ltd. (supra) wherein it was held that no additions can be made in respect of unabated assessments which have become final, if no incriminating material is found during the search. The ITAT, Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. vs. ACIT (supra) has taken similar view wherein it was categorically observed that the AO is not empowered to make any addition in the absence of any seized material in respect of assessments that have unabated/concluded as on the d ate of search. In this case, the search took place on 20th April, 2010. Admittedly, as on the date of search the assessment for A.Y. 2004-05 to A.Y. 2008-09 have been unabated. The time limit for issue of notice under Section 143(2) has also expired as on the date of search. Therefor....