TaxTMI 
TaxTMI 
2020 (8) TMI 558
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....d in granting relief of Rs. 1,59,75,951/- to the assessee 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 organizat....
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....ed by the assessment order, the assessee has preferred an appeal before 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....
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....Income Tax (A)-47, Encl. as above 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, ....
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....wance made u/s 80IA(4) of the Act in the impugned assessment order. It is pertinent to note here that in this case the original assessment u/s 143(3) of the Act was already completed u/s 143(3) of the Act on 26.12.2007, before the search operation was conducted on the Appellant on 07.10.2009. Thus, this is a case of completed assessment and hence the assessment has not abated in 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....
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....ct, the Appellant had filled a writ petition with the Hon'ble Bombay High Court. The Appellant had withdrawn the said writ petition and the Hon'ble Bombay High Court has disposed of the said writ petition, vide order dated 29,04.2015. Though, the Hon'ble Bombay High Court had refrained from expressing any opinion on merits, but in Para 3 of the said order have highlighted certain contentions of the 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 ....
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....as under:- "65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under 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 elim....
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....bing the procedure for assessment or under any other Chapter of the Act with respect to the return of income filed U/s. 139 shall be applicable to the returns filed pursuant to notice issued U/s. 153A/153C of the Act. The applicability of those provisions which are inconsistent with the provisions of section 153A are restricted by the use of the phrase 'so far as may be'. 10.18 As such, for the assessments proceedings which are abated, the AO gets all the powers prescribed under the law, as if the assessment is being made for the first 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 operat....
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.... 10.21 A similar view has been taken by the Hon'ble Bombay High Court (Nagpur Bench) in case of MurliAgro Products Ltd Vs. CIT49 Taxman.com 172in ITA No 36 of 2009, wherein it has been held that on initiation of proceedings U/s. 153A, it is only the assessment proceedings that are pending on the date of conducting search U/s. 132 or making requisition U/s. 132A of the Act that stand abated and not the assessments already finalised. The relevant excerpts of the judgment are reproduced hereunder:- "9. What Section 153 A contemplates is that, notwithstanding the regular provisions for 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 ....
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.... assessment/reassessment order which has attained finality, ^>^Ti unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 13. In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing the assessment order under Section 153A read with 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 pas....
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....ering the ratio laid down in the case of CIT vs. Kabul Chawla [2016] 380 ITR 573, has held that section 153A assessment cannot be made for the assessment years in which incriminating material is not recovered even though incriminating material may be recovered for other years in the block of 6 years. 10.27 In case of MGF Automobiles Ltd, vs. ACIT (ITA No.4212/Del/2011), the Hon'ble Delhi ITAT observed as under:- "...there are three possible circumstances that emerge on the date of initiation of search u/s 132(1): (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found in the course of search indicating undisclosed income and/or assets 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 ....
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....establishes that the income computed in the finalized assessment was not in accordance with the facts unearthed during the course of search. 10.32 In view of the above legal and factual position, the Ground No. 1 to Ground No. 3 of the present appeal are allowed. 6. The Ld. DR submitted that the Ld.CIT(A) has erred in granting relief to the assessee on account of deductions claimed u/s 80IA(4) of the I.T.Act, 1961 stating that no disallowances towards deductions claimed u/s 80IA(4) of the I.T.Act, 1961 is called for in the assessment framed u/s 153A of the I.T.Act, 1961, as there are no incriminating material found during the course of search and the assessment has reached its finality and was not abated at the time of initiation of 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....