TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1257
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....sed income being unearthed during such search. This objection is rejected. 3. Second technical objection raised by the assessee is this that in the absence of any addition on the basis of incriminating material having been found in course of search, no other addition can be made in the assessment order passed u/s 153A of I T Act. On this issue, he placed reliance on the tribunal order rendered in the case of ACIT Vs. Cornerstone Properties Pvt. Ltd., ITA No.1714 to 1717/Bang/2013 dated 08.09.2017, copy available on pages 259 to 285 of the Paper Book and on the decision of the Special Bench of the Tribunal rendered in the case of All Cargo Global Logistics Ltd., Vs. DCIT (2012) 18 ITR 106 (Trib.) copy available on pages 160 to 194 of the Paper Book and also on two judgments of Hon'ble Karnataka High Court rendered in the case of CIT Vs. IBC Knowledge Park Pvt Ltd., 385 ITR 346 (Kar.) copy available on pages 369 to 392 of the Paper Book and in the case of CIT vs. Lancy Constructions, 295 CTR 454. He also placed reliance on the judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. Kabul Chawala, 380 ITR 573, of Hon'ble Gujrat High Court rendered in the case of PCIT vs.....
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....f search. Regarding Assessment Year 2007-08, he submitted that the return of income for this year was filed by the assessee on 07.02.2008 and although time limit for issuing notice under section 143(2) did not expire on the date of search which was conducted on 17.06.2008 but still it cannot be said that the assessment for this year was pending at the time of search as was held by the Tribunal in the case of ACIT Vs. Prathiba Industries Ltd., (supra). He submitted that in the facts of the present case, for these 5 Assessment Years i.e., 2003-04 to 2007-08, the assessment was not pending on the date of search and therefore, in the absence of any incriminating material found in the course of search, no addition can be made in the Assessment Orders passed by the AO under 153A of the IT Act, 1961 and in support of this contention, reliance was placed on the decision of the Special Bench of the Tribunal rendered in the case of All Cargo Global Logistics Ltd., Vs. DCIT (2012) 18 ITR 106 (Trib.), copy available on pages 160 to 194 of the Paper Book. 4. In reply, learned DR of the revenue placed reliance on the judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housin....
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....resent case. In this regard, we feel that we should first take note of the facts of that case and the question raised before Hon'ble Karnataka High Court in that case. Regarding facts of that case, we find that in Para 2 of that judgment, facts are noted and it is noted in this para that in course of search, incriminating material leading to undisclosed income was seized. The question before Hon'ble Karnataka High Court in that case was as under:- "When once the proceedings under Section 153A of the Act is initiated, whether the Commissioner of Income Tax can invoke the power under Section 263 of the Act to review the order of assessment passed by the Assessing Authority?" 6. From the question raised in that case before Hon'ble Karnataka High Court, it comes out that in that case, Hon'ble Karnataka High Court was deciding this issue as to whether section 263 can be invoked against the original assessment order passed by the AO before search if section 153A is invoked later before invocation of section 263 by CIT. Hence, we find that this was not an issue before Hon'ble Karnataka High Court in that case as to whether in the absence of any addition on the basis of incriminating m....
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....material leading to undisclosed income was seized then also any other addition can be made in addition to income originally declared by the assessee in the return of income or addition made in original assessment. In our humble understanding, this is not the Ratio Decidendi of this judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Company vs CIT (Supra) because neither the facts of that case nor the dispute in that case supports this. In that case, the tribunal followed the decision of the Special Bench of the Tribunal rendered in the case of All Cargo Global Logistics Ltd., Vs. DCIT (Supra) and held that CIT can invoke his revisionary powers u/s 263 against the original assessment order because the tribunal was of the view that as per this decision of the Special Bench of the Tribunal rendered in the case of All Cargo Global Logistics Ltd. Vs. DCIT (Supra) in the proceedings u/s 153A, the AO can make addition only in respect of incriminating material leading to undisclosed income was seized and Hon'ble Karnataka High Court did not approve this view of the tribunal and in our humble understanding, since no incriminating material leading to ....
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....een contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present ....
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....section 263 of the Act on the ground that the order dated 31st December, 2010 in relation to the return of income for assessment year 2008-09 and holding that the same is erroneous and prejudicial to the interest of the Revenue came to be passed. The assessee filed his objection but the Commissioner maintained his action under section 263. That is how the aggrieved assessee carried the matter in appeal to the Tribunal and before the Tribunal it was contended that once section 263 of the Act has been invoked during the pendency of proceedings under section 153A of the Act, then, that was impermissible. That was impermissible for the assessments including for the assessment year 2008-09 stand reopened. Once they are reopened, then, there is no order of assessment in force and in regard to which any action under section 263 of the IT Act can be initiated. It is in dealing with this argument and which was negatived by the Tribunal that all the observations of the High Court of Karnataka have been made. In paragraphs 5 and 6, the arguments have been noted and thereafter the provision has been reproduced. In paragraph 9, extensive reference has been made to the judgment in Anil Kumar Bha....
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....eopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the "total income" of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He 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. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Reopened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess the total....
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....he matter the reasoning given by the Tribunal is not justified. The Commissioner did not have jurisdiction to initiate any proceedings under Section 263 of the Act." 37. We do not see as to how while allowing the appeal of the assessee and setting aside the order of the Commissioner under section 263 could the judgment be said to be laying down a proposition and as canvassed by Mr. Pinto. True it is that the assessment which has to be made in pursuance of the notice is in relation to the six years. An order will have to be made in that regard. While making the order the income or the return of income filed for all these assessment years is to be taken into account. A reference will have to be made to the income disclosed therein. However, the scope of enquiry, though not confined as held by the High Court of Karnataka, it essentially revolves around the search or the requisition under section 132A as the case may be. We do not find anything in these observations and reproduced above which would enable us to conclude that the Division Bench judgment of this Court in the case of Murli Agro requires reconsideration or does not lay down a correct principle of law. We cannot, therefor....
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.... to A. Ys. 2000 - 01 to 2003 - 04 and SLP was dismissed by Hon'ble Apex Court. Hence, in our considered opinion, the judgment of Hon'ble Delhi High Court rendered in the case of PCIT vs. Meeta Gutgutia (Supra) stands approved by Hon'ble apex court and impliedly, various other judgments followed by Hon'ble Delhi High Court in this case also stand approved by Hon'ble Apex Court and therefore, in preference to this judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Company vs CIT (Supra) where the facts and the issue in dispute are different as noted above, this judgment in the case of PCIT vs. Meeta Gutgutia (Supra) duly approved by Hon'ble apex court should be followed because in this case, the facts and issue in dispute are similar to the present case and this is approved by Hon'ble apex court. 14. Now, we summarize the facts in the case of judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Company vs CIT (Supra) and also summarize the issue in dispute in that case and the Ratio Decidendi of that case as per our humble understanding. Two most important relevant facts of that case are (1) that in cour....
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....al leading to undisclosed income is seized then also addition can be made in respect of any other issue which comes before the AO in those proceedings in addition to income declared by the assessee in the original return and additions originally made by the AO. As per the assessee, in such a case, addition has to be confined to income declared by the assessee in the original return and additions originally made by the AO and no addition can be made in such a case on account of any other issue which comes before the AO in those proceedings. 17. In respect of this controversy, in our considered and humble opinion, this judgment of Hon'ble Karnataka High Court does not throw any light specifically because in that case, incriminating material was seized in course of search and therefore, there was no occasion to examine and decide about such an eventuality where there is no seizure of incriminating material. We find that Para 11 of that judgment is relevant and hence, we reproduce it for ready reference"- "11. The Tribunal has proceeded on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be confined only....
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....essment proceedings. We are expressing this also as a plausible view and leave it at that because in the present case, the facts are different and no argument was advanced by any side on this aspect. 19. This view of us finds support from various judicial pronouncements in connection with reassessment proceedings u/s 147. In those proceedings, this was the dispute that if no addition is made in respect of those aspects which was the basis of the AO to form an opinion that there is escarpment of income, whether the AO can make addition in respect of those items which comes to his notice subsequently in course of proceedings u/s 147. It was held in those cases that if no addition is made in respect of even any one of the reasons recorded for reopening, then no other addition can be made. One of such judgments is of Hon'ble Bombay High Court rendered in the case of CIT vs. Jet Airways (I) Ltd., 331 ITR 236. The following para of this judgment is relevant and therefore, reproduced for ready reference:- "21. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of ....
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....tion made by the AO in original assessment and also any other item of income which comes to the notice of the AO in course of these proceedings but if no incriminating material found in search then the very basis of reassessment is not there and in line with this judgment of Hon'ble Bombay High Court, it is not open to the AO to independently assess some other income. 21. We therefore hold that in the facts of the present case and in the light of above discussion, we have to see that whether any incriminating material was found in search for any of the years under consideration. We find that in A. Y. 2003 - 04, two additions are made by the AO. One addition is of Rs. 28,750/- and it is on this basis that remuneration income is short declared by the assessee in the return of income and there is no allegation that this addition is on the basis of any incriminating material found in course of search. The second addition is of Rs. 178,76,750/- on this basis that part of loan on which interest is claimed is not used for acquisition of property from which rental income is offered to tax it is also not on the basis of incriminating material found in course of search. Similarly, in A....