TaxTMI 
TaxTMI 
2022 (11) TMI 1422
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....al Circle 1(4), Mumbai (hereinafter referred 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....
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....tional ground vide letter dated 13/08/2021. 3. We deem it fit to address the original ground Nos. 3 and 3.1. raised 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 t....
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....rein before us and handed over the said seized documents to the Assessing Officer of the assessee before us. Later notice u/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) ....
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....ting material found during the course of search relatable to this issue and hence being a concluded assessment, the ld. AO would not be empowered to travel beyond what has been stated in the original assessment order. Hence, there cannot 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 additi....
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....annot 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. 3.5. We find that the ld. DR vehemently 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 b....
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....nducting the search is governed by the provisions of section 132 of the Act which has to be read harmoniously with section 153A of the Act. There are three conditions based on which a search action could be initiated u/s 132 of the Act on an assessee. They are :- Section 132(1) - If the concerned 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 proceedin....
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....lier decision on the very same set of facts and figures. This would make the entire scheme of the Act meaningless and the ld AO would be conferred with unfettered powers to review the earlier decisions taken either by him or by his predecessor on the very same issue , which in our considered opinion, cannot be the intention 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 ....
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..../s. 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2. The scheme of assessment proceedings contemplated u/s. 153A of the Act are totally different and distinct from the proceedings contemplated u/s. 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3. The expression 'assess or reassess' 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 ini....
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....reported in 73 taxmann.com 149 laying down the similar proposition. 3.14. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we direct the ld. AO to re-compute the total income of the assessee by accepting the income declared in the return filed in response to notice u/s.153C of the Act without making any additions or disallowances thereon, both under normal provisions of the Act 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 Re....
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....d from Kolkata to Mumbai jurisdiction vide order u/s.127(2) of the Act dated 30/09/2014 by the Administrative Commissioner of Income Tax of Kolkata. 8.2. A limited search and seizure action was conducted by the Investigation Wing, New Delhi on the basis of information passed on by the CBI on 15/10/2013. The information received from the CBI on 15/10/2013 over phone was that during a search action being carried out by CBI at the premises of Aditya Birla group 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 ....
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....eived from the Assessing Officer of ABMCPL(being the searched person u/s.132 of the Act). The ld. AR submitted that the A.Y.2010-11 was a concluded assessment as on the date of assumption of jurisdiction u/s 153C of the Act by the ld. AO and hence, no addition or disallowance could be made in the search assessments framed either u/s.153C of the Act without existence of any incriminating material relatable to such assessment year. To address this aspect of the issue, it is pertinent to get into the fact as to whether 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 t....
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....k Annexure A-8, wherein it is seen that the entries found thereon relate only to A.Y. 2011-12 for which a separate addition has been made in the sum of Rs.1.35 Crores by the ld. AO for A.Y.2011-12. This itself categorically goes to prove that no reliance has been placed by the ld. AO on the said petty cash book Annexure A-8 for making this addition for A.Y.2010-11. Denial of deduction u/s 80IA of the Act with respect to Rail System - Rs 78,43,89,265/- We find that this disallowance was made based on the Mumbai Tribunal decision 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 ....
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....y are :- Section 132(1) - If the concerned 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. 8.8. The ld. DR vehemently argued that the provisions of section 153A of the Act use the expression 'assess or reassess....
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....ery same issue , which in our considered opinion, cannot be the intention 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 u....
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....t and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3. The expression 'assess or reassess' 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." 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 pro....