TaxTMI 
TaxTMI 
2020 (8) TMI 558
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....see on account of 80IA(4) stating that no disallowance u/s 153A of the Act, is called for as there are no incriminating materials found during the search and the assessment has reached its finality and was not abated at the initiation proceedings u/s. 132(1) of the Income Tax Act, 1961". 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, in holding that no addition can be made u/s 153A of the Act, once the assessment has reached to finality u/s 143(3) of the Act, and no incriminating documents have been found and seized in the case of the assessee during the course of search and seizure action relying upon the decision of the jurisdictional Bombay High Court decisions in the case of continental warehousing Corpn., M/s All Cargo Global Logistics and M/s Murli Agro Products without appreciating that the revenue has not accepted these decisions and has filed SLP in the Hon'ble Apex Court." 3. The brief facts of the case are that the assessee company is engaged in the business of providing equipment's and Charter Hire & Leasing of Heavy duty cranes to port and other business organizations, both in private and public sector. The assessee has claim....
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.... the Ld.CIT(A). Before the Ld.CIT(A), the assessee has filed elaborate written submissions on the issue, which has been reproduced at para 9 on pages 15 to 21 of Ld.CIT(A) order. The sum and substance of arguments of the assesse before the Ld.CIT(A) are that the deductions claimed u/s 80IA(4) of the I.T.Act, 1961, has attained the finality and the matter travelled up to the Hon'ble Supreme Court, where the Hon'ble Supreme Court has upheld the claim of the assessee regarding deductions claimed u/s 80IA(4) of the I.T.Act, 1961. Therefore, no additions could be made in respect of said issue in the assessment framed u/s 153A of the I.T.Act, 1961, without any reference to incriminating material found as a result of search. The Ld.CIT(A) after considering relevant submissions of the assesee and also, taken note of remand report issued by the Ld. AO, came to the conclusion that the additions made by the Ld. AO, towards disallowances of deductions claimed u/s 80IA(4) of the I.T.Act, 1961, has no reference to any incriminating material found as a result of search. Therefore, in absence of any incriminating material found as a result of search, no addition could be made in the assessments fr....
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....; Mumbai. Copy to: 1. The Pr. Commissioner of Income Tax (Central)-1, Mumbai - for kind information. 2. The Addl Commissioner of Income Tax, Central Range-1, Mumbai - for information and to ensure timely submission of the reply by the AO. (RAJESHWAR YADAV) Commissioner of Income Tax (A)-47 Mumbai". 10.2 In view of the above, the Addl. CIT Central Range-1, Mumbai had vide letter No. Addl. CIT.CR.l/RR/Starlog Enterprises/ 2018-19 dated 13.08.2018 forwarded the Remand Report of the A.O., which is reproduced hereunder;- "To The Commissioner of Income Tax (A)~47, Prathistha Bhavan, Mumbai. (Through Addl.C.I.T., Central Range-1, Mumbai) Sir, Sub: Furnishing of Remand Report in the case of M/s. Starlog Enterprises formerly known as M/s. AEG Infralogistics Ltd. for A.Y. 2005- 06 and 2006-0 - r....
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.... the present case. In the case of the completed assessments, the AO can make addition, only on the basis of incriminating material found during the course of the search operation in the assessment order passed u/s 153 A. In the present case at hand, admittedly there is no incriminating materials, which have been found during the course of search operation in relation to the claim of deduction u/s 80IA of the Act. 10.4 I have also taken note of the fact that in the Remand Report, the AO has mentioned that as per Annexure 6E of the Appraisal Report, the AO was asked to make enquiries in case of M/s ABG Infralogistics Ltd on the claim of deduction u/s 80-IA of the Act. This general observation of the A.O. based on the Appraisal Report can't be construed to be an incriminating document. I agree with the submission of the appellant that making further enquiries does not in any way tantamount to having incriminating evidence. In the absence of any incriminating evidence, an enquiry would only become general in nature and, as such, outside the purview of Section 153A of the Act. 10.5 I am also constrained to note that the Appellant has undergone a detailed scrutiny assessment u/s ....
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....e Appellant, which needs special reference and hence, are reproduced hereunder:- (a) The notice u/s 153A is not legal and valid as the foundation for it is not any incriminating material found during the search which is conducted and carried out. (b) That there is absolutely no connection or nexus with the party whose premises were searched and nothing incriminating in relation to the petitioner and its business was unearthed during such search. (c) The proceedings that have been commenced and vide the above notice under sub section (1) and clause (a) of Section 153A of the Income-tax Act, 1961, are only to revisit the factual as also the legal conclusions rendered in favour of the petitioner-assessee on the applicability of Section 80IA(4) of the Income-tax Act, 1961, and which conclusions have gained finality right up to the Hon'ble Supreme Court of India. 10.9 I am also constrained to note that these contentions were raised by the appellant before the A.O., but the AO has failed to address these vital issues either during the course of the assessment proceedings or during the course of the Remand proceedings. 10.10 The Section 153A(1) starts with a non-obstante cla....
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....r section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 10.13 The word 'abate' means to stop or to put an end. The objective of the above proviso is clearly to eliminate the multiplicity of assessment or reassessment proceedings, which are pending on the date of search or requisition of records, as the case may be, and which are now required to be undertaken afresh in view of section 153A / 153C of the Act. 10. 14 The word 'pending' occurring in the second proviso to Section 153A of the Act, is also significant. It is qualified by the words 'on the date of initiation of the search', which makes it clear that on initiation of the proceedings u/s. 153A o....
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....st time. Thus, if the assessment is made for the first time, all the provisions of assessment, relevant for making of an assessment u/s. 143(3) shall be applicable. In the case of re-assessment, the principles pertaining to assessment u/s 147/148 of the Act shall become applicable. As far as the assessments/reassessments, which do not abate or which have attained finality, principle of time barring rule comes into play. The assessee acquires a right as to the finality of proceedings. Quietus of the completed assessments can be disturbed, only in a case, where incriminating seized material is found, during the course of the search operation u/s 132 of the Act. Further, as observed above, the objective behind the second proviso to section 153A(1) is to eliminate multiplicity of proceedings. In such cases it is only the seized material and undisclosed income emanating out of the search proceedings, which is relevant for the purpose of assessment. 10.19 The Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation [374 ITR 645], has held that when the assessment has attained finality, then the AO while passing the independent assessment order u/s 153A o....
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....assessment/ reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is made under Section 132A on or after 31/5/2003 in the case of any person, the Assessing Officer shall issue notice to such person requiring him to furnish return of income within the time stipulated therein, in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made and thereafter assess or reassess the total income for those assessment years. The second proviso to Section 153 A provides for abatement of assessment/reassessment proceedings which are pending on the date of search/requisition. Section 153A(2) provides that ^when the assessment made under Section 153A(1) is annulled, ' the assessment or reassessment that stood abated shall stand received 10. Thus on a plain reading of Section 153A of the Inocme-tax Act, it becomes clear that on initiation of proceedings under Section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abat....
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....th Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80 HHC deduction and consequently the C.LT. could not have invoked jurisdiction under Section 263 of the Act." 10.22 In the above mentioned judgment, the Hon'ble Bombay High Court has held that no addition can be made in respect of assessments which have become final, if no incriminating material is found during the course of search. It has been held that once the original assessment has attained finality, then the Assessing Officer while passing the assessment order U/s. 153A r.w.s. 143(3) cannot disturb the assessment/ reassessment order, which has attained finality, unless the material gathered during the course of the search proceedings establishes something contrary to it. If there is nothing on record to suggest that any incriminating material was unearthed during the search, the AO, while passing order U/s. 153A r.w.s. 143(3) cannot disturb the original assessment order passed U/s. 143(3) of the Act. 10.23 On this issue the Special Bench of Hon'ble Mumbai ITAT in the case of AH Cargo Global Logistics Ltd vs DCIT(2012) 147 TTJ 0513 (SB) : (2012) 74 DTR 0089 ....
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.... and (c) proceedings are not pending and no incriminating material has been found. In circumstance (a), since the proceedings are pending, they are abated and the AO gets a free hand to make the assessment In circumstance (b), there is no question of abatement as the proceedings are not pending and the AO has to pass an assessment order u/s 153A to assess the undisclosed income. In circumstance (c), the AO has to pass an assessment order though as there is no incriminating material no income can be assessed. On facts, as the assessments were completed and there was no incriminating material found during the search, the AO was not entitled to make any addition." 10.28 In the case of Guruinder Singh Bawa v DCIT, (2012) (28 taxmann.com 328), the Hon'ble Mumbai ITAT has held that where in search assessment under section 153A, all assessments pertaining to six immediately preceding assessment years were complete, the AO can't make any addition there-under, unless there is any incriminating material recovered during search. 10.29 Further, in the case of CIT Vs Kabul Chawla 380 ITR 573 (Delhi HC), the Hon'ble Delhi High Court has clearly mentioned as follows:- "Completed....
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.... proceedings u/s 132(1) of the I.T.Act, 1961. The Ld. DR, further submitted that the ld.CIT(A) has failed to appreciate the fact that although, the issue is squarely covered in favour of the assesee by the decision of Hon'ble Bombay High Court, in the case of Continental Warehousing Corporation (Nhava Seva) Ltd. vs CIT (374 ITR 645), but, fact remains that the department has not accepted the decision of the Hon'ble Bombay High court and a SLP has been filed before the Supreme Court, which is pending for disposal. 7. None appeared for the assessee. We have heard the Ld. DR, perused the material available on record and gone through orders of the authorities below, along with case laws considered by the Ld.CIT(A). We find that the issue involved in present appeal is squarely covered in favour of the assessee by the decision of Hon'ble Bombay High Court, in the case of CIT vs Continental Warehousing Corporation (Nhava Seva) Ltd (supra), where the Hon'ble High court categorically held that when, the assessment has attained finality and was not abated as on the date of search, no additions could be made in assessments framed u/s 153A of the I.T.Act, 1961, in absence of any incriminating....