TaxTMI 
TaxTMI 
2022 (5) TMI 1155
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....ision Bench of Allahabad-tribunal, in open Court hearings through Physical Hearing Mode. 2. The grounds of appeal raised by assessee in ITA No. 141/Alld./2017, in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench , Allahabad(hereinafter called " the tribunal") , reads as under:- "1. That in any view of the matter the assessment made on an income of Rs. 78,82,390/- vide order dated 30.03.2013 passed u/s 153A r.w.s. 143(3) of the IT Act as against the returned income of Rs. 30,24,550/- is bad both on the facts and in law. 2.That in any view of the matter the entire amount added vide Sec. 132 of the Act and subsequent notice u/s 153A of the Act is also illegal as during the course of search no incriminating material was found but instead the disclosed figure in Balance Sheet were added which is out of the purview of Sec 153A of the Act, therefore, the entire action is bad in law. 3. That in any view of the matter the addition of Rs. 6,26,650/- as per para 2.3 of the assessment order as made by the Assessing officer and confirmed by the Ld. CIT(A) is highly unjustified when the said income has already been added in original assessmen....
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..... Counsel for the assessee on earlier occassions , and the assessee duly deposited short appeal fee of Rs. 8500/- with government treasury on 10.11.2021 vide challan no. 30669(BSR Code 6360218) which was deposited by assessee with Axis Bank. Both the challans , aggregating to Rs. 10000/- are placed on record in file. Coming back , on 11th May, 2022, the Division Bench rejected the adjournment application moved by the assessee's counsel , and passed the following interim order/order sheet entry, which is reproduced as hereunder; "Dated: 11.5.2022 ITA No. 141/ALLD/2017 Assessment Year: 2008-09 None appeared on behalf of the assessee when this appeal was called for hearing. An application on behalf of the assessee is filed for seeking adjournments of the hearing on the ground that the Director of the company is out of station at Haldwani, Nainital and also not keeping well. This appeal is pending for last more than five years and the assessee has been seeking adjournments right from the beginning. During the Covid period, the hearings of the appeals were conducted through video conference and no adjournments were denied by the Bench. Even after the phy....
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.... the provisions of second proviso to Section 153A(1) . The AO while making search assessment for impugned assessment year, vide assessment order dated 30.03.2013 passed u/s 153A read with Section 143(3) , reiterated the additions of Rs. 6,26,650/- made by the AO in the original assessment order dated 21.12.2010 passed u/s 143(3) of the 1961 Act. The aforesaid additions of Rs. 6,26,650/- were made mostly by disallowing the business expenses claimed by the assessee under various heads, and details are as under : a) Disallowance of loader running expenses Rs. 1,50,000/- b) Disallowance of Plant Maintenance Rs. 1,50,000/- c) Disallowance on account of donation paid Rs. 51,000/- d) Disallowance u/s 40(a)(ia) for non deduction of TDS Rs.1,19,950/- e) Disallowance of Proportionate Expenses Rs.1,55,700/- Total Rs. 6,26,650/- Hence, an addition of Rs. 6,26,650/- was made by the AO to the income of the assessee on the aforestated heads vide assessment originally made by the AO , vide assessment order dated 21.12.2010 passed u/s 143(3) of the 1961 Act. These addition of Rs. 6,26,650/- was reiterated by the AO while passing the as....
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....hat he was involved or interest in his personal capacity in the outcome of the assessment or the procedure for assessment, no doubt, it would be a good ground for setting aside the assessment order but to hold, as the High Court has that bias is established only because the authorized officer under section 132 and the Assessing Officer are the same person is, in our view, on incorrect approach. 8. The appellant apart from alleging motive has not been able to substantially prove that the AO who was the authorized officer in case of search in the case of assessee acted mala-fides and was personally in any way interested in the outcome of assessment. The contention of the appellant carries no force. 9. The appellant has also contended that no addition could have been made in absence of any incriminating material having been found as a result of the search. In this connection a reference may be made to the decision of Hon'ble Karnataka High Court in the case of M/s. Canara Housing Development Company Vs. DCIT Central Circle-I, Bangalore in ITA No. 38/2014 dated 25.07.2014 wherein the Hon'ble Court held that the assessing authority shall determine the total income of t....
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....heads were made by the AO to the income of the assessee while framing original assessment order dated 21.12.2010 passed by AO u/s 143(3) of the 1961 Act , and it was submitted by assessee before ld. CIT(A) that said assessment made u/s 143(3) wherein addition of Rs. 6,26,650/- was made by the AO to the income of the assesssee, was accepted by the assessee and no appeal was filed against the said assessment order, and hence the same has attained finality. The assessee submitted that the aforesaid addition of Rs. 6,26,650/- now made by the AO while framing assessment u/s 153A read with Section 143(3), is a double addition and hence is not sustainable in the eye of law. It was submitted by assessee before ld. CIT(A) that assessment framed by the AO u/s 143(3) , dated 21.12.2010 was a concluded assessment which was not pending on the date of search viz. 03rd February, 2011. It was also submitted by assessee before ld. CIT(A), that no incriminating material was found during the course of search conducted by Revenue u/s 132(1) , and hence this addition of Rs. 6,26,650/- could not have been made in the search assessment u/s 153A read with Section 143(3) of the 1961 Act. The Ld. CIT(A) was....
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....r classes of case in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. (2) if any proceeding initiated or any order of assessment or reassessment made under Sub-Section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in subsection (1) of Section 153A, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the commissioner. 15. On examining the 1st Proviso to section 153A it is clearly evident that the AO has to assess or reassess the total income in respect of each assessment year falling within such six assessment year and the assessment is to be made as per the provisions of section 153A(1)(b). A reference is also made to Board's circular N. 7 of 2003 dated 5 Sept. 2003 in which it has been stated...... (d) In Board Circula....
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....al for almost five years. The Division Bench dismissed the adjournment application on 11.05.2022 moved by ld. Counsel for the assessee, which is recorded in para 3 of this order. Thus, we proceed to decide this appeal after hearing ld. CIT-DR and perusing the material on record. 8. Ld. CIT-DR submitted that ground Nos. 1 and 2 raised by the assessee is with respect to challenge on legal ground as to the additions made by the AO without incriminating material, which was dismissed by ld. CIT(A) . It was submitted by ld. CITDR that the addition of Rs. 6,26,650/- was made by the AO while passing assessment order u/s 153A read with Section 143(3) , wherein it is the reiteration of the additions made by the AO in the assessment order originally framed u/s 143(3) of the 1961 Act. Our attention was drawn by ld. CIT(A) to the provision of Section 153A of the 1961 Act. 9. We have heard ld. CIT-DR in open court proceedings and perused the material on record. We have observed that in pursuance to warrants of authorization issued by Director of Income Tax (Investigation), Kanpur, under Section 132 of the Income Tax Act, 1961, a search and seizure operations were carried out by Revenue on ....
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....nder : "7.1. Now, I take up the second question as to whether the learned CIT(A) was justified in holding that no addition, based otherwise than on an incriminating document or material etc. found during the course of search, can be made in the assessment relating to any assessment year falling within the period of six assessment years as prescribed u/s 153A of the Act which is not pending on the date of initiation of the search. 7.2. Tersely stated, the return for the assessment year 2011-12 was originally filed by the assessee on 30.09.2011. Though no scrutiny assessment was made u/s 143(3), but the return was processed u/s 143(1) and the time for issuing notice u/s 143(2) expired on 30.09.2012. As against that, the search and seizure action was taken up on 05.12.2013 i.e. after the lapse of period for issuing notice u/s 143(2). No incriminating material connected with the addition of Rs.2.50 crore was found during the course of search. The assessee contended before the ld. CIT(A) that the AO was debarred from making the addition in such circumstances. The ld. CIT(A) accepted the assessee's contention. When the matter travelled to the Tribunal, the ld. AM relied....
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....eserved, there is only one assessment of total disclosed or undisclosed income in respect of each of the six assessment years under section 153A. Once again, this issue came to be decided similarly by the Hon'ble Allahabad jurisdictional High Court in CIT & Ors. vs. Kesarwani Zarda Bhandar Sahson & Ors. (2016) 97 CCH 0377 (All HC). The Hon'ble Kerala High Court in E.N. Gopakumar vs. CIT (2016) 390 ITR 131 (Ker) was confronted with the similar issue in which the assessee relied on the judgments favouring it including Kabul Chawla (supra) and Continental Warehousing Corporation (supra). The Hon'ble High Court preferred to go with the view against the assessee. 7.5. On going through the above position, it is lucid that there are two schools of thought on this issue. Por una parte, the view of the Hon'ble jurisdictional High Court and some other Hon'ble High Courts in favaour of the Revenue is that the scope of the unabated (already completed) assessments u/s 153A of the Act is not confined only to the incriminating material found during the course of search but also to the already declared particulars; por otra parte some other High Courts including the Hon'ble Delhi High Cou....
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....ed by all the authorities acting under its jurisdiction. In that view of the matter, I am bound to go with the view taken by the Hon'ble jurisdictional High Court. 7.8. The ld. AR contended that the judgment in Rajesh Kumar Arora (supra) need not be followed for two reasons viz., first, the ratio of the decision is not applicable to the facts of the case and second, the Hon'ble Supreme Court has overruled it by upholding the contrary view of the Hon'ble Delhi High Court in the case of Meeta Gutgutia (supra). 7.9. The first raison d'etre was elaborated by stating that the proposition laid down in Rajesh Kumar Arora (supra) is that the AO has power to reassess the return of income of assessee not only for the undisclosed income which was found during the course of search but also the income with regard to the material that was already available on record. Relying on the judgment of Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom), the ld. AR contended that the existence of some undisclosed income emanating from the incriminating material is a pre-requisite for assessing further income w.r.t. the material already avai....
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....orce. 7.11. Now I turn to the judgment in Rajesh Kumar Arora (supra) for finding out its ratio. During the course of assessment proceedings u/s 153A in that case, the AO found that a gift was received by the minor children from various persons which was a sham transaction and the assessee failed to prove the genuineness of this gift. That was the only reason with the AO to make the addition while completing assessment u/s 153A. The assessee contended before the higher authorities that the transaction of gift was duly recorded. The Tribunal deleted the addition on the ground that the subject matter of the addition was a gift received by the assessee and no incriminating material in relation to such gift was found during the course of search. The Revenue raised the following substantial questions of law as arising from the Tribunal order: "1. Whether ITAT has erred in law in dismissing the appeal of the department and holding that no addition can be made for gift in assessment completed under section 153A unless some incriminating material was found during the course of search, thus ignoring the provisions of law as contained in section 153A which required the Asses....
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....er para about the block assessment under Chapter XIV-B which talks of assessing the undisclosed income only vis-à-vis the assessment u/s 153A providing for making assessment for both the disclosed as well as undisclosed income. I, therefore, hold the argument advanced by ld. AR on this score as sans merit. 7.13. The second contention put forth by the ld. AR was that the decision of the Hon'ble jurisdictional High Court on the point stands overruled by the judgment of Hon'ble Supreme Court in Pr.CIT vs. Meeta Gutgutia (2018) 257 Taxman 441 (SC). I find it relevant to mention that the Hon'ble Delhi High Court in Meeta Gutgutia (supra) followed the view taken in Kabul Chawla (supra). The Revenue preferred Special Leave Petition before the Hon'ble Supreme Court, which came to be dismissed. 7.14. Article 136 of the Constitution of India with the marginal note "Special leave to appeal by the Hon'ble Supreme Court" provides that: `(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any co....
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....ide judgment dated 04.08.2011, the Hon'ble Supreme Court has taken a similar view as in Kunhayanned & Ors. (supra) by specifically holding that the expression `Dismissed on merits' used while dismissing the SLP is equivalent of dismissal of SLP by a non-speaking order. More recently, a Larger Bench of the Hon'ble Supreme Court in Khoday Distilleries Ltd. and Ors. Vs. Sri Mahadeshwara SSK Ltd. (Civil Appeal No.2432/2019 arising out of SLP No.490/2012) has reiterated similar view vide its judgment dated 01.03.2019. On an overview of the legal position emanating from the above judgments, it becomes sparklingly clear that the dismissal of a SLP with remarks, such as, "Special Leave Petition is dismissed on merits" or "Dismissed on merits" does neither amount of any declaration of law by the Hon'ble Supreme Court magnetizing Article 141 of the Constitution nor lead to the merger of the judgment impugned in the special leave petition. 7.15. I advert to the decision in Meeta Gutgutia (supra), which is the trump card of the ld. AR for bolstering the proposition that the view of the Hon'ble jurisdictional High Court in Rajesh Kumar Arora (supra) has been overruled by th....
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....vour of Revenue. We order accordingly. 9.5 Vide ground number 3 and 4 , the assessee has challenged on merits, the addition of Rs. 6,26,650/- made by the AO vide assessment order dated 30.03.2013 passed u/s 153A read with Section 143(3) of the 1961 Act, on the grounds that similar addition was made by the AO while passing original assessment order dated 21.12.2010 u/s 143(3) of the 1961 Act, which addition has been accepted by the assessee and had attained finality. It is claimed that this is the double addition. It is also claimed that assessment framed by the AO u/s 143(3), dated 21.12.2010 was an unabated assessment, as it was framed by the AO prior to initiation of search and seizure operations conducted by Revenue against the assessee u/s 132(1), on 03.02.2011. We have observed that Section 153A mandates to assess or reassess the total income of the assessee of six assessment year immediately preceding the assessment year relevant to the previous year in which search is conducted. Thus, pursuant to searc , it is incumbent on the AO to frame assessment for all the six assessment year immediately preceding the assessment year relevant to the previous year in which search was ....