TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1155
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....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 assessment proceedings. 4.That in any view of the matter the assessment f....
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....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 physical hearing started the assessee sought adjournments on several occasions. Thus, it transpires from the record t....
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....sessment 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 assessment order dated 30.03.2013 passed u/s 153A read with Section 143(3) of the 1961 Act . There was further addition of Rs. 42,31,186/- made by the AO to the income of....
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.... 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 the assessee taking into consideration the materials which was the subject matter of earlier return and the undisclosed income unearthed during search and also any other income which comes to his notice. Th....
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....ade 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 pleased to dismiss the ground no. 6 raised by the assessee in memo of appeal, by holding as under: "14. I have examined the facts and circumstance of the case, have considered the findings of the AO in the assessment order an....
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....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 Circular No. 7 of 2003, dated 5 Sept., 2003 the AOs have been informed that they shall make assessment or reassessment of the total income of 6 years and the pending assessments on the date of initiation of search shall abate, in this connection, it is clarified that the appeals, review or rectification proceed....
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.... 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 3rd February, 2011, at the residential and business premises belonging to the Vaish group of cases. Along with the search and seizure action conducted by Revenue u/s 132(1) of the 1961 Act, certain business premises of the group were also surveyed under Section 133A of the 1961 Act. The assessee was also searched by Revenue u....
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.... 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 on certain decisions of the Hon'ble jurisdictional High Court to jettison the assessee's contention urging to limit the scope of assessment proceedings u/s 153A only to the incriminating material found during the course of search because the assessment for the year under consideration was not pending on the date of search and had abated. Au con....
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....rt 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 Court have canvassed a view in favour of the assessee by holding that the completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search. It is axiomatic as is fortified by Article 227 of the Constitution of India that the law declared by a juri....
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....;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 available on record. If no addition on account of any undisclosed income is made, the AO would be debarred from making any addition on the basis of material already on record. It was submitted that since the assessee had already declared the creditor of Rs.2.50 crore in its Balance Sheet and no addition on the basis of any incriminating material was made by the AO, there was no scope left for maki....
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....ompleting 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 Assessing Officer to assess or reassess the total income as defined in section 2(45) of the Income Tax Act, 1961. 2. Whether the order of the ITAT is perverse in as much as it has ignored the provisions of law as contained in proviso (b) of sub-sec.(1) of section 153A which required the Assessing Officer to assess or reassess the total income." 7.12. It is thus, clear that the only subject matter of addition by the....
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.... 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 court or tribunal in the territory of India.' This Article deals with the discretion of the Hon'ble Supreme Court in granting special leave to appeal from any judgment. Once a SLP is filed, the Hon'ble Supreme Court may either grant the special leave to appeal or dismiss it. In case, the special leave to file an appeal is granted, then the SLP gets converted into an appeal. On the other hand, the dismissal of a SLP can be either withou....
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.... 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 the Hon'ble Summit Court. The same has been reported as Pr.CIT vs. Meeta Gutgutia (2018) 257 Taxman 441 (SC) with its full text reading as under: "1. Delay condoned. 2. We do not find any merit in this petition. The special leave petition is, accordingly, dismissed. 3. Pending application stands disposed of." 7.16. It can be easily seen that the Hon'ble Supreme Court has simply dismissed the SLP filed by the Revenue finding no merit in th....
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....med 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 conducted, and assess or reassess the total income of the assessee which shall include both the disclosed income and undisclosed income detected due to search u/s 132(1). In case of abated assessment, the total income is to be assessed , while in case of unabated income , the total income is to be reassessed. The Section 153A starts with non obstante clause and states that notwithstanding anything contained in Section 139, Section 147, Section 151 and Section 153 , the AO has to ....