TaxTMI 
TaxTMI 
2022 (5) TMI 38
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.... to the assessee. In response, the assessee filed its return of income under protest on 14.12.2007 for all the assessment years presently under consideration. The orders u/s 143(3) r.w.s. 153A of the I.T.Act was completed by the AO for all the assessment years on 31.12.2009. 3. Aggrieved, the assessee filed appeals before the first appellate authority. The said appeals were earlier allowed by the first appellate authority on technical issue raised that the warrant of action u/s 132 of the I.T.Act had been issued in the joint name and not in the name of the assessee only. However, subsequently, in view of insertion of section 292CC of the I.T.Act by Finance Act, 2012 with retrospective effect from 01.04.1976, an individual assessment in the case of assessee though in pursuant to a warrant issued in the joint name was held to be valid under law. Accordingly, the earlier appellate order dated 23.02.2012 was rectified u/s 154 of the I.T.Act after giving due opportunity to the assessee and the appeals were readmitted for adjudication on all the issues raised in the appeals. Before the CIT(A), the assessee had raised several legal grounds as well as grounds on merits. The CIT(A) rejec....
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.... (Delhi). 5.3 The learned Standing Counsel, on the other hand, submitted that even the material / information found in the case of other searched person is entitled to be utilized u/s 153A of the I.T.Act. In this context, the learned Standing Counsel relied on the judgment of the Hon'ble jurisdictional High Court in the case of Canara Housing Development v. DCIT reported in 274 CTR 122. It was submitted by the learned Standing Counsel that the order of the Bangalore Bench of the Tribunal in the case of Sri.Anil H.Lad v. DCIT (supra) is per incuriam, since the same has not considered the judgment of the Hon'ble jurisdictional High Court in the case of Canara Housing Development v. DCIT (supra). 5.4 As regards the issue whether the assessment order is time barred, the learned Standing Counsel submitted that the last of the panchnama was drawn on 10.04.2007 and on that date there was a seizure as per Annexure-A/D/SCPL (refer page 66 of PB Vol.1). Consequently, reckoning the search proceedings to be completed on 10.04.2007, the assessment completed on 31.12.2009 is well within the time limited prescribed u/s 153B of the I.T.Act. 6. We have heard rival submissions and perused t....
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....tal income for such AYs will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The 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. 153 A 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 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 the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'a....
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....r that in the case of persons searched, the assessment for those years where the assessments are concluded as on the date of search, cannot be disturbed unless incriminating material pertaining to such assessment year is not found and seized during the course of search. Therefore, as regards the deduction u/s 80IA(4)(iii) of the I.T.Act is concerned, for assessment years 2001-2002 to 2005-2006, it is undisputed fact that there is no incriminating material being found and seized in the search conducted in the premises of the assessee for each of those assessment years. 6.3 Further, the A.O. had made other additions (other than the claim of deduction u/s 80IA(4) of the I.T.Act) relying upon the materials marked as A/VSM/5,7,8,9,12,15,17 and a pen drive marked as A/VSM/16. It is an undisputed fact that those materials which were all found and seized was during the course of search carried out in the premises of one Sri.V.Shambamoorthy pursuant to a separate warrant of search. The A.O. is certainly entitled to use these materials to make addition in the hands of the assessee, provided, he had initiated proceedings u/s 153C of the I.T.Act and assessed the income u/s 153C r.w.s. 143(3....
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....order of the Co-ordinate Bench of this Tribunal in the case of Sri.Anil H Lad v. DCIT (supra). The Co-ordinate Bench held that when during the course of assessment proceedings u/s 153A of the I.T.Act, material belonging to the assessee was found in another search is received, then the correct and proper procedure is to be initiated proceedings u/s 153C of the I.T.Act and by such initiation, the proceedings already commenced u/s 153A of the I.T.Act would abate and the A.O. can proceed to take cognizance of the material found and seized in another search and use it in assessment proceedings now initiated u/s 153C of the I.T.Act. The Bangalore Bench of the Tribunal had categorically held that material found in another search cannot be used without initiating proceedings u/s 153C of the I.T.Act. The relevant finding of the Co-ordinate Bench of the Tribunal in the case of Sri.Anil H Lad v. DCIT (supra), reads as follows:- "12.6.1 We have carefully considered the legal arguments / contentions put forth by both parties. The facts not in dispute are that the substantive and protective additions were made in the case on hand on the basis of material found and seized from the premis....
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....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 assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate 12.6.3 On the other hand, for Assessment Years 2006-07 and 2007-08, the provisions of Section 153C of the Act enjoins upon the AO of the person searched; that on being satisfied that books of account seized or requisitioned belongs to or pertain to some other persons, to handover the books of account to the AO having jurisdiction over such other person. Thereafter, the second AO, on being satisfied that the books of account and documents received have a bearing on the determination of the total income of the other person, should assume jurisdi....
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.... Whereas, jurisdiction to make assessment under section 153C of the Act arises when satisfaction is reached that the materials found in the course of search of some other person have a bearing on the determination of the income of the assessee. Further, in the first proviso to section 153C of the Act, it is provided that the reference to the date of search in the second proviso to section 153A of the Act; dealing with abatement of pending proceedings on the date of search; shall for the purpose of the persons proceeded under section 153C of the Act be construed as the date on which the seized materials are received by the AO. 12.6.5 In the case on hand, we find that there was a search under section 132 of the Act in the case of the assessee on 26.10.2007. After the search, notices under section 153A of the Act were issued, assessments were framed thereunder by the AO. During the pendency thereof; the AO received material / information from the AO of Shri. Manoj Kumar Jain. As per the second proviso to section 153C of the Act, the assessment proceedings pending under section 153A of the Act in the case of the assessee before the AO would abate on the date the AO received th....
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....oes to prove that the presumption derived is a rebuttable presumption. Then in such a scenario, the person on whom presumption is drawn , has got every right to state that the said documents does not belong to him / them . The Id AO if he is satisfied with such explanation , has got recourse to proceed on such other person (i.e the person to whom the said documents actually belong to) in terms of section 153C of the Act by recording satisfaction to that effect by way of transfer of those materials to the AO assessing the such other person. This is the mandate provided in section 153C of the Act. In the instant case, if at all, the seized documents referred to in CG/1 to 11 and CG/HD/1 is stated to be belonging to assessee herein, then the only legal recourse available to the department is to proceed on the assessee herein in terms of section 153C of the Act. In this regard, we would like to place reliance on the recent decision of the Hon'ble Delhi High Court in the case of CIT v. Pinaki Misra & Sangeeta Misra [(2017) 148 DTR 219 (Delhi)] = [TS-5161-HC-2017(DELHI)-0] wherein it was held that, no addition could be made on the basis of evidence gathered from extraneous source and....
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....wanted to take cognizance of the seized materials, he ought to have invoked the provisions section 153C of the Act after recording his satisfaction based on material sent by the AO of Shri. Manoj Kumar Jain. This jurisdictional pre-condition laid down by the Legislature of recording of satisfaction for taking action under section 153C of the Act cannot be side-stepped / brushed aside and additions be made in proceedings pending under section 153A of the Act as the scope of assessments framed under sections 153A and 153C of the Act are quite different. In that view of the matter, we hold that the protective additions made by the AO in the impugned orders of assessment for Assessment Years 2006-07 and 2007-08 dated 31.12.2009, are contrary to the provisions of the Act and are therefore to be deleted. Hence, the addition sustained by the CIT(A) of Rs. 3,49,50,000/- on substantive basis as profit from trading in iron-ore based on the material found and seized in the search conducted in the case of Shri. Manoj Kumar Jain for Assessment Year 2007-08 is also hereby deleted. It is accordingly ordered. Consequently, the additional grounds raised by the assessee are allowed. " 6.5 Further....
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....case of Canara Housing Development Co. (supra) which was rendered in the context of revisionary proceedings u/s 263 of the I.T.Act was considered, clarified and explained by the Hon'ble jurisdictional High Court rendered subsequently in the case of IBC Knowledge Park (supra) and once again considered and clarified in another recent decision rendered by it in the case of Pr.CIT v. Delhi International Airport Pvt. Ltd. (supra). Thus, the argument canvassed by the learned Standing Counsel, questioning the correctness of the decision of the Co-ordinate Bench in the case of Sri.Anil H Lad (supra) is not legally tenable. The learned Standing Counel had also made one more argument that on the date of search conducted on Sri.V.Shambamoorthy, there was no proceeding pending u/s 153A of the I.T.Act in the case of the assessee and hence the material found in the search of Sri.V.Sambamoorthy ought to be considered as "any other material which comes to the knowledge of the AO" and can be used in the assessment proceedings u/s 153A of the I.T.Act, without invoking the provisions of section 153C of the I.T.Act. This argument of the learned Standing Counsel suffers from the basic flaw inasmuch as ....