TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1422
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to as ld. AO). Common issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. 2. The assessee has raised the following grounds of appeal before us:- 1. That on the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) (hereinafter referred to as the CIT(A)) erred in holding that the proceedings u/s 153C r.w.s. 153A of the Income Tax Act 1961 (hereinafter referred to as the Act) has been validly initiated by the Assessing Officer (hereinafter referred to as AO). 2. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in dismissing appellant's claim that re-examination of issues/genuine claims, which had obtained finality as per Order u/s 143(3) of the Act, are beyond the scope of assessment u/s 153C of the Act. 3. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not considering and dismissing the appellant's main Ground of Appeal No. 2 {before the CIT(A)} which was a question of law as to whether AO can re-examine the claims which had obtained finality as per Order u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the assessee before us wherein the assessee had challenged the validity of assessment framed u/s.153C of the Act for A.Y.2009-10 by making certain disallowances and additions without the existence of incriminating material for the year under consideration received from the Assessing Officer of the searched person. 3.1. We find that assessee company is engaged in the business of raising Iron ore, manufacturing of Nitrogen Gas, Ferro Alloys, Trading of Iron Ore and Ferro Alloys, generation of electricity (Windmill) and Railway Siding for captive use. The original return of income was filed by the assessee company for the A.Y.2009-10 on 30/09/2009 declaring total income of Rs.1345,80,61,460/-. This return was revised by the assessee on 31/03/2011. The assessment was completed u/s.143(3) of the Act on 30/12/2011 determining total income at Rs.1374,99,31,150/-. This assessment was framed on the assessee company by the Assessing Officer in Kolkata as the registered office of the assessee company was situated in 10, Camac Street, Kolkata - 700 017 at that point in time. Later the case of the assessee was transferred from Kolkata to Mumbai jurisdiction vide order u/s.127(2) of the Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s.153C of the Act was issued on the assessee company on 26/11/2014 to file the returns for A.Yrs. 2008-09 to 2013-14. In response to this notice, the assessee filed a fresh return of income on 31/12/2014 declaring total income of Rs.1348,00,75,711/- which was same as the returned income filed in the revised return on 31/03/2011. The assessment was completed u/s.153C r.w.s. 143(3) of the Act by the ld. AO on 29/03/2016 for the A.Y.2009-10 by determining the total income at Rs.1513,83,22,160/- under normal provisions of the Act and book profits of Rs.1446,88,86,081/- u/s.115JB of the Act. Under normal provisions of the Act, the following disallowances / additions were made:- i) Disallowance u/s.14A of the Act - Rs.23,26,88,361/- ii) Disallowance of prior period expenses -Rs. 89,78,073/- iii) Disallowance of Penalty expenses - Rs 9,36,000/- iv) Carbon Credit treated as revenue income - Rs 7,94,64,467/- v) Addition made on account of illegal Unaccounted provision(illegal mining) -Rs.20,04,07,521/- vi) Denial of deduction u/s.80IA of the Act -Rs.112,12,25,027/- vii) Expenses related to exempt income u/s 80IA and 10B having impact in their Respective computations -Rs 2,6....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be any reliance that could be placed on any search material for framing this addition. E. Addition made on account of illegal unaccounted provision Rs.20,04,07,521/- We find that the ld. AO in page 19 para 14.1 had addressed this issue wherein he had made this addition by placing reliance on Justice M.B.Shah Commission report submitted before the Hon'ble Supreme Court pointing out discrepancy in production data of the assessee. It is pertinent to note that Justice M B Shah Commission was setup on illegal mining of Iron Ore and Manganese Ore in the states of Orissa, Jharkhand and Goa. The ld. AO had observed in para 14.3 of his order that as per the said report, the assessee was found to be involved in illegal mining activity of Iron ore. After calculating discrepancy in the production data, the ld. AO worked out the addition on account of suppressed production of Rs.20,04,07,521/- (490522 MTS x Rs.408.56 per MT) and made an addition for the same in the search assessment concluded u/s.153C of the Act. From the aforesaid narration of facts and the manner in which this addition has been made by the ld. AO, it could be safely concluded that the ld. AO had not relied upon any sea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntly argued that there was yet another notice u/s.148 of the Act which was issued by the Kolkata Assessing Officer dated 13/10/2014. The date of issuance of notice u/s.153C of the Act was 26/11/2014. Hence, as on the date of the assumption of jurisdiction by the ld. AO u/s.153C of the Act, proceedings u/s.148 of the Act dated 13/10/2014 was pending which gets abated pursuant to search assessment to be framed in the hands of the assessee u/s.153C of the Act. Hence, he argued that there is no need for the existence of any search material for making any disallowance or additions in the assessment framed u/s.153C of the Act in the hands of the assessee. We have already stated supra that the jurisdiction of the assessee has been changed from Kolkata to Mumbai vide order u/s.127(2) of the Act dated 30/09/2014 by the Administrative Commissioner of Income Tax. When the jurisdiction of the case has already been shifted from Kolkata to Mumbai on 30/09/2014, we are unable to understand as to how the Kolkata Assessing Officer could have issued notice u/s. 148 of the Act on 13/10/2014 for A.Y.2009-10. Hence, we hold that the said notice is without jurisdiction and accordingly null and void. Whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned authority has in consequence of information in his possession, has reason to believe that - (a) where a person fails to produce the books of accounts and other documents in response to notice u/s 142(1) or summons issued u/s 131(1) of the Act ; or (b) where a person fails to comply with the requirements of summons issued u/s 131(1) of the Act ; or (c) where a person is in possession of any money, bullion, jewellery or other valuable article or thing and such assets represents either wholly or partly income or property which has not been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. 3.8. The ld. DR vehemently argued that the provisions of section 153A of the Act use the expression 'assess or reassess total income' and hence the search assessment could be framed u/s ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the statute. That's why the legislature had duly drawn a distinction between the completed and abated assessments. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience :- "[Assessment in case of search or requisition 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the course of search with respect to relevant assessment years ; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year." 3.11. We find that the provisions of section 132 of the Act relied upon by the revenue would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct as well as in the computation of book profits u/s 115JB of the Act. We categorically hold that no additions / disallowance could be made in the search assessment u/s.153C of the Act for A.Y.2009-10 in view of the aforesaid detailed reasons. Accordingly, the ground Nos.3 & 3.1 raised by the assessee are allowed. 4. In view of the aforesaid direction, the adjudication of other grounds raised by the assessee in its original grounds; additional grounds raised by the assessee and grounds raised by the Revenue need not be gone into as they would become academic in nature. No opinion is given thereon by us and they are left open. 5. In the result, appeal of the assessee is allowed in ITA No. 1023/Mum/2018 for A.Y. 2009-10 and appeal of the Revenue in ITA No. 1554/Mum/2018 for A.Y. 2009-10 is dismissed. ITA No. 1021/Mum/2018 - Assessee Appeal - Asst Year 2010-11 ITA No. 1551/Mum/2018 - Revenue Appeal - Asst Year 2010-11 6. These cross appeals in ITA Nos.1021/Mum/2018 & 1551/Mum/2018 for A.Y.2010-11 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-47, Mumbai in appeal No.CIT(A)-47/10115/16-17 dated 27/04/2016 (ld. CIT(A) in short) against the order of assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at 4th Floor, UCO Bank building, Parliament Street, New Delhi, the CBI team had found huge cash at the said premises of M/s. Aditya Birla Management Corporation Pvt. Ltd., (ABMCPL in short). On the basis of this, a survey u/s.133A of the Act was conducted in the said premises in the case of ABMCPL on 15/10/2013 which was converted into search and seizure operation by issuance of search warrant u/s.132 of the Act in the name of ABMCPL and in the case of its group Executive President Shri Shubhendu Amitabh at his residential premises on 16/10/2013. The search and seizure action resulted into seizure of unaccounted cash of Rs.25,13,41,000/-; jewellery and billion worth of Rs.44,82,394/- besides incriminating documents from the office of the ABMCPL and from the residence of Shri Shubhendu Amitabh. Several books of accounts, documents etc., were found seized and inventorised as Annexure-1 to Annexure-23. Also various computer hard discs and laptops were seized which were inventorised as Annexure-24 to Annexure-40. 8.3. The Annexure A-8 seized from the premises of ABMCPL which was subjected to search u/s.132 of the Act was a petty cash book of M/s. Essel Mining & Industries Ltd., i.e. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her the ld. AO had relied upon any incriminating material received from the Assessing Officer of the search person to make additions, disallowances in the assessment framed u/s.153C of the Act for A.Y.2010-11 in the hands of the assessee. Let us examine the same in respect of each disallowance / addition made in the assessment as under:- Disallowance u/s.14A of the Act - Rs.21,74,09,077/- We find that this disallowance was made already in the regular assessment framed u/s. 143(3) of the Act for the A.Y.2010-11 on 28/03/2013. Hence, there cannot be any reliance that could be placed on any search material. Disallowance of Club expenses - Rs 37,152/- We find that this disallowance was made already in the regular assessment framed u/s. 143(3) of the Act for the A.Y.2010-11 on 28/03/2013. Hence, there cannot be any reliance that could be placed on any search material. Disallowance of Penalty Charges - Rs 4,59,000/- We find that this disallowance was made already in the regular assessment order u/s.143(3) of the Act on 28/03/2013 for the A.Y.2010-11. Hence, there cannot be any reliance that could be placed on any search material. Addition made on account of illegal unaccounted p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion rendered in the case of Ultratech Cement Ltd, which cannot be construed as incriminating material found during the course of search. In any case, this decision of tribunal has been reversed and in later decisions, the Mumbai Tribunal had granted deduction u/s 80IA of the Act for the rail system itself. Hence, there cannot be any reliance that could be placed on any search material for denying this deduction u/s 80IA of the Act. Apportionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act - Rs 5,39,65,517/- We find that this is only concerned with workings for allowability of deduction u/s 80IA and u/s 10B of the Act with regard to apportionment of common expenses. It is only a computational issue. There cannot be obviously any reference to incriminating material found during search regarding this issue. Hence there cannot be any reliance that could be placed on any search material for reworking the claim of deduction u/s 80IA and u/s 10B of the Act. 8.5. The ld. DR argued that the term 'evidence' is to be used as per the Indian Evidence Act, 1872. He argued that the expressions 'incriminating material' and 'evidence' cannot be used i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or partly income or property which has not been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. 8.8. The ld. DR vehemently argued that the provisions of section 153A of the Act use the expression 'assess or reassess total income' and hence the search assessment could be framed u/s 153A of the Act irrespective of any incriminating materials. 8.9. We find that it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of 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:" 8.10. We find that the Co-ordinate Bench of Kolkata Tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL-167-ITAT-KOL had explained the aforesaid provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 8.11. We find that the provisions of section 132 of the Act relied upon by the revenue would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabat....