TaxTMI 
TaxTMI 
2020 (8) TMI 718
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....consideration for deciding the above appeals en masse. 3. Grounds of appeal as per lead case in IT(SS)A No. 04/Ran/2019 for AY. 2012-13, are as follows: 1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,02,59,880/- on account of unexplained sundry creditors despite the fact that the assessee failed to discharge the onus placed upon him u/s 68 of the I.T. Act, 1961. 2. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in allowing relief to the assessee by admitting certain fresh evidence or materials produced by the assessee in contravention of the provisions of Rule 46A of I. T. Rules, 1962. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of expenses of Rs. 2,55,96,663/- claimed under the head, "Purchases & Payment made for plots, lands & building" despite the fact that the assessee failed to discharge the onus cast upon him u/s 37(1) of the I. T. Act, 1961. 4. Any other ground that may be raised at the time of hearing. Now we shall take these grou....
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....ch. However, the department has challenged the decision of Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd [2015]. 58 taxmann.com 78 by way of SLP and the Hon'ble Apex Court admitted the SLP as reported in [2015] 64 taxmann.com 34 (SC). Hence the question of law on this issue is still pending and sub-judice. 4.3.2 However, contrary to the decisions quoted by the appellant, infollowing decisions no such restriction is placed and held that, once a search is validly initiated the AO is duty bound to issue notice u/s. 153A for all the assessment years falling within the block period and thereafter can assess or reassess the total income of the assessee not only based on the material gathered during the search but also any other material available with the AO at the time of passing the assessment order. The Hon'ble High Court of Delhi in the case of CIT Vs. Anil Kumar Bhatia reported in [2013] 352 ITR 493 has lucidly explained the meaning, scope and legislative intention in introducing sections 153A, 153B and 153C. As stated and explained by the Hon'ble Court, Section 153A provides for 'assessment in case of search or requisiti....
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....ent made under this section; (ii) in an 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." 17. The three sections introduced w.e.f. 1.6.2003 replaced the "Post Search Block Assessment Scheme" in respect of any search under Section 132 or requisition under Section 132 A made after 31.5.2003. In Circular No.7 of 2003 dated 5.9.2003 reported in (2003) 263 ITR (St) 62, the new Scheme was explained by the CBDT in the following manner:, "65. The special procedure for assessment of search cases under Chapter XIV-B be abolished : 65.1 The existing provisions of the Chapter XIV-B provide for a single assessment of undisclosed income of a block period, which means the period comprising previous years relevant to six assessment years preceding the previous, year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. 65.2 The Finance Act, 2003, has provided that the provisions of this Chapter shall not apply where a ....
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.... of the authorizations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be completed within a period of two years; from the end of the financial year in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed. 65.8 It also provides that in computing the period of limitation for completion of such assessment or reassessment, the period during which the assessment proceeding is stayed by an order or injunction of any court; or the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, or the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee of being re-heard under the proviso to section 12....
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....e assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as 'block period'. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the se....
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....149 has alsobeen made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment yea....
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.... such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. 4.3.3 Further, the Hon'ble Kerala High Court in the case of E. N. Gopakumar Vs CIT reported in [2017] 390 ITR 131 has observed that Section153A is a provision which deals with assessment in case of search orrequisition. The activation, of a search is not something, which is regulated byany limit as to period of time. Even if returns are filed and regular assessments are concluded, search on premises could always be made; if the authority concerned is satisfied that action ought to proceed in that line. Once that is done, section 153A(1)(a) authorizes the issuance of notice calling for filing of returns. Once a return is filed in answer to such a notice, the Explanation to section 153A provides, among other things, that all provision of the Income Tax Act will apply to the assessment made under section 153A of the Act. This is themanner in which the provisions in section....
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....te clause under section 153A. Where the assessment or reassessment proceedings have already been completed and assessment orders have been- passed, which were subsisting when the search was made, the AO would be competent to reopen the assessment; proceeding already made and determine the total income of the assessee. The AO, while exercising the power under section 153A, would makeassessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under section 143(1)(a). In the light of the aforesaid, the reasons given by the Tribunal that no material was found during the search cannot be sustained, since the AO has the power under section 153A to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original Assessment. 4.3.5 The Hon'ble Kerala High court in the case of Francis Glay Décor Tiles reported in [2015] 385 ITR 624 observed that on going through section 132 of the Income Tax Act, what we find is tha....
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....r reassess the total income with respect to each assessment year following the six assessment years specified in sub-clauses (a) and (b) of section 153A. However, even if no documents are unearthed or any statement made by the assessee during the course of searchunder section 132 and no materials are received for the afore-specified periodof six years, the assessee is bound to file a return, is the scheme of the provision. Even though the second proviso to section 153A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under section 153A(1)(a). 4.3.6 The Hon'ble Kerala High court in its recent decision in the case of Dr. A.V. Sreekumar Vs. CIT, Kochi reported in [2018] 404 ITR 642 held that reliance placed by the consent letters obtained by the Department by way of a Tax Evasion Petition could be sustained as valid to initiate proceedings under section 143 read With section 153A when the said document was not one recovered in the search conducted in the premises of the....
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.... agent engaged in buying, selling and developing of the plots and properties. During the year theappellant has shown gross receipts of Rs. 1,18,51,828/-, commission income of Rs. 2,11,49,900/- closing stock in the form of plots, lands building of Rs. 4,62,83,887.44/- and gross profit of Rs. 82,75,463.45. As per the audited balance sheet, the total sundry creditors was of Rs. 3,27,96,977.50/- out of which Rs. 2,02,59,880/- were new creditors. These sundry creditors are nothing but payments received by the appellant as advance from the parties. As is evident from the records produced by the appellant, the appellant had furnished complete details of sundry creditors before the AO. However,the AO without making any further enquiry on the details submitted had simply ignored the same and cast the entire onus on the appellant just by invoking sec.68 of the Act. In other words, the AO without referring to any seized material or referring to any credible information in his possession has simply doubted the sundry creditors. Even during the search u/s.132(1) which is the final weapon of the department to unearth the undisclosed income, no adverse material in this regard appears to, have bee....
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....sued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the LD AOs as a fresh exercise. (iii) The LD AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The LD AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD 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 ....
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....s of Rule 46A of I. T. Rules, 1962." 11. We have gone through the order of the ld CIT(A) and noted that during the appellate proceedings, the assessee did not submit any additional evidences before the ld CIT(A). We note that during the appellate proceedings, the assessee submitted two additional grounds, which are as follows: "Additional grounds: 1. The appellant filed details of the payment made for purchase of land, plots and buildings which were sold during the year reflected in the profit and loss account filed by the appellant. The sale proceed against these plots has been accepted. Return filed earlier was also accepted. 2. For that interest u/s 234A and 234B should have been charged on the returned income and not on the assessed income following the decision of Hon'ble Jharkhand High Court. The ld CIT(A) has adjudicated these two additional grounds as follows: "I have carefully considered the additional grounds filed by the appellant. The appellant vide ground no.1 is trying to bring in new facts which require further investigation and if admitted shall have adverse impact on the order of assessment. Hence, additional groun....
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....he P & L account claimed Rs. 1,58,55,370.50/- on account of payments made for purchase of plot, land & building, Rs. 45,90,000/- on account of land leveling expenses and Rs. 51,51,293/- on account of Boundary Expenses. As is evident from the records produced by the appellant, the appellant had furnished complete details of expenses on these accounts before the Assessing Officer. Further it is important to note that no evidence whatsoever which can remotely cast doubts on these expenses were found during the search. However, the Assessing Officer without making any further enquiry on the details submitted had simply ignored the same and cast the entire onus on the appellant. In other words, the Assessing Officer without referring to any seized material or referring to any credible information in his possession has simply doubted the expenses claimed. In ground no.1, I have given a detailed finding with regard to the circumstances under which, the Assessing Officer can tamper with unabated assessment. In view of the same, additions made purely on guess work and surmise can't find any support and accordingly the Assessing Officer is directed to delete the addition made of Rs. 2,55,96,....