TaxTMI 
TaxTMI 
2025 (5) TMI 434
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....hmedabad Versus Smt. Harshaben B. Popat, Smt. Harshaben B. Popat And Smt. Harshaben Bharatbhai Popat KSD & Associates, Chartered Accountsnts Versus Deputy Commissioner of Income Tax, Central Circle-1(3), Ahmedabad And Assistant Commissioner of Income Tax, Central Cricle-1(3), Ahmedabad Versus Smt. Harshaben B. Popat Shri Siddhartha Nautiyal, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member For the Assessee : Shri Tushar Hemani, Sr. Advocate And Shri Parimalsinh B. Parmar, A.R. For the Revenue : Adjournment Application filed ORDER PER BENCH: These 14 appeals were originally heard by the Division Bench consisting of Hon'ble Judicial Member and Hon'ble Accountant Member. On account of a difference of opinion between the Hon'ble Members on certain issues arising in these appeals, the following point(s) of difference were framed and referred to the Hon'ble President of the Tribunal under Section 255(4) of the Income Tax Act, 1961: "1. Whether in the facts and circumstances of the case, the assessment u/s 153A of the Act in the case of unabated / completed year(s) is to be completed only on the basis of incriminating material fo....
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....and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153Bl specifically states that the provisions of Chapter-XIV-B, under which sec.158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erre....
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....arious additions made by the Assessing Officer. 6. We shall deal with each of the additions made by the Assessing Officer and thereafter we shall discuss the observations / relief granted by Ld. CIT(A) with respect to each of the additions. Addition of Rs. 1,49,39,000/- being unexplained cash deposits in the bank accounts 7. The brief facts of the case in relation to this ground of appeal are that the assessee company is engaged in the business of building supply material, TMT bar, steel etc. A search and seizure action was carried out in the case of Shri Mahendra Shantilal Patel (in short "MSP") and his group concerns on 06.02.2017, and his statement was also recorded under Section 132(4) of the Act. The search action resulted in collection of evidences which brought to the knowledge of the Department that MSP through a web a various concerns was engaged in providing bogus accommodation entries and bogus bills to various parties. This was also admitted by him in his statement under Section 132(4) of the Act. The Department observed that MSP was holding five PAN numbers in which four different dates of birth had been mentioned. However, MSP had not filed it's return of inc....
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....ee, the Department observed that Shri Bharat Popat, key person in the assessee company had given a sum of Rs. 10 lakhs in cash for providing accommodation entry to MSP. Further, the Department also impounded letter heads and bills books of MSPs various bogus concerns from the premises of M/s. Tile Touch Ceramics (associated concern of the assessee) in the search carried out at 4, Baba Ramdev Complex. The assessee also filed letter dated 22.08.2018 during the course of assessment proceedings and stated that assessee has neither carried out any business nor provided any services and he was only engaged in providing accommodation bills / accommodation entries to the interested parties in exchange for a commission ranging from 0.50% to 2%. Further, on 17.04.2017 MSP filed an affidavit to the effect that he had provided accommodation entries of bogus bills for commission. The pre-search investigation carried out by the Department revealed that significant part of unaccounted cash received in bank accounts of MSP group was finally landing in the bank accounts of Benefit Tradelink and associated group companies namely Benefit Tradelinks Ltd. and Ellegance Reality Ltd. The Benefit group is....
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....eration. In response to notice under Section 153A of the Act dated 14.08.2017, the assessee filed return of income on 27.09.2018 for A.Y. 2011-12 declaring total income of Rs. 3,01,780/-. Thereafter, notice under Section 142(1) of the Act was issued to the assessee and as many as 13 dates of hearing during the period 27.09.2017 to 18.12.2018, were given and the assessee sought adjournments on most of the occasions and only filed partial / irrelevant submissions. Finally, the Department issued show-cause notice dated 17.12.2018, in which the entire modus operandi was confronted to the assessee, wherein it was pointed out that on the basis of incriminating documents seized during the course of search at office cum residence of Shri Bharat Popat, (document dated 07.12.2016), it was found that substantial cash was first deposited in the bank account of Vishal Pandya and thereafter the funds was immidiately transferred to Benefit Tradelink Ltd. Further, substantial cash was also deposited in the firms belong to MSP group from which substantial amount was also transferred to the bank account of Benefit Tradelink. The Department, on analysis of the bank account of SVP Corporation (proprie....
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....017-18 or booked losses which did not support the substantial cash deposits in the bank accounts of the assessee. Accordingly, the Assessing Officer prepared the following chart for various for various assessment years under consideration and asked the assessee to furnish the detail explanation alongwith documentary evidences for cash deposits: A.Y. Cash Credit Total Credit Debit 2011-12 14939000 95157488 91677873 2012-13 11872000 144652441 144667967 2013-14 1183782 32105865 32110031 2015-16 6760500 220044456 233133364 2016-17 3923000 261518917 297065200 2017-18 172953000 289350452 261806814 Total 211631282 1042829619 1060461249 12. However, despite issuance of notices to the assessee, the assessee did not furnish any explanation regarding the sources of cash deposits in his bank account. Accordingly, in absence of any explanation from the assessee, the Ld. Assessing Officer held that the cash deposits of Rs. 1,49,39,000/- remained unexplained and accordingly, the same were added to the income of the assessee. 13. In appeal, Ld. CIT(A) allowed the appeal of the assessee on this gro....
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....that since the transactions related to all the additions made by the AO are already recorded in the books of accounts and duly reflected in original return filed on 02/01/2012. The additions are not made on the basis of any incriminating material found during the course of search. The additions are made on the basis of ITS DATA, verification of Profit and Loss account and Balance sheet filed along with return of income. 5.2 I have duly considered the assessment order, written submission and relevant provisions and case laws relied upon. The appellant has filed original return on 02/01/2012 and therefore considering the provision of section 153A of the IT. Act, assessment proceedings for the year under consideration were unabated. The principles which are being laid down by the Jurisdictional High court outlines the ambit and scope of powers conferred by section 153A. On plain reading of section 153A it becomes clear that on initiation of the proceedings under section 153A, in respect of the six assessment years is only for the assessments which are pending on the date of search under section 132 or making requisition under section 132A, stand abated and not the assessments....
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.... I. Commissioner of Income Tax (Centra)-III V. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) II. Principal Commissioner of lncome-Tax, Ahmedabad V. Dipak Jashvantlal Panchal [2017]88 taxmann.com 611(Gujarat), III. Principal Commissioner of Income Tax V. Desai Construction (P.) Ltd. [2017] 81 taxmann.com 271(Gujarat) IV. In the case of Principal Commissioner of Income Tax-1 V. Devangi [2017] 88 taxmann.com 610 (Gujarat) V. Principal Commissioner of Income-tax V. Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com 1 (Gujarat) VI. Commissioner of lncome-tax-1 V, Jayaben Ratilal Sorathia [2013] 40 taxmann.com 436(Gujarat) VII. Pr.CIT v. Meeta Gutgutia [2018] 96 taxmann.com 468/257 Taxman 441(SC) VIII. PC1T v. Kurele Paper Mills P. Ltd. (2016) 380 ITR 571 (Delhi)(HC) IX. Commissioner of Income tax-II, Thane V. Continental Warehousing Corporation (Nava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bombay) X. Commissioner of Income-tax, Central - I V. Manish Build Well (P.) Ltd. [2C11]16 127 (Delhi XI. Principal Commissioner of Income-tax - 18 V. Ms. tata Jam [2O17181 taxmann.com 83(Delhi) XII. Pr....
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....l documentary evidences which were found, it was clearly established that the assessee was engaged in providing bogus accommodation entries in lieu of commission. From the material unearthed during the course of search and survey action, the Department had discovered the entire bogus accommodation entry operations which were being carried out by the assessee with the help of his associates. During the course of search action, the Department found a number of excel sheets, took on oath statements of various concerned persons and on the basis thereof it was found that a complex web of fraudulent and bogus operations of providing accommodation entries / accommodation bills was being carried out by the assessee for earning commission income. On the basis of data unearthed during the course of search operations, the Department has found that substantial cash was first deposited in the bank account of MSP and his group concerns and thereafter, this cash had subsequently flown to the bank account of either the assessee or his associates, who on sworn have admitted that the bank accounts in their names were in fact being operated by Shri Bharat Popat, who is the key person running various ....
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....uring the course of search. The Ld. D.R. submitted that there is no discussion whatsoever in the order of Ld. CIT(A) as to why the details and information which were unearthed during the course of search operations and which formed the basis of this addition does not qualify as "incriminating material". Accordingly, the Ld. D.R. submitted that the Ld. CIT(A) has erred in facts and in law in allowing the appeal of the assessee on this issue. 15. In response, the Counsel for the assessee filed written submissions and submitted that the document which was found during the course of search operations cannot be categorized as incriminating material. He further submitted that the details of cash deposited in November 2016 is pertaining to A.Y. 2017-18 and the years under consideration is A.Y. 2011-12 to A.Y. 2015-16 and therefore, information regarding cash deposited relevant for the year under consideration. Accordingly, the Counsel for the assessee none of the additions are made on the basis of incriminating material found during the course of search operations. Further, the Counsel for the assessee submitted that the modus operandi highlighted in the assessment order does not const....
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.... filed affidavit giving details of providing accommodation entries / bogus bills involving the assessee and his firms. Therefore, we observe that the assessee has never challenged the contents of the assessment order and the affidavits on the basis of which additions have been made in the assessment order. Thirdly, we observe that substantial material was found during the course of search operations at the premises of the assessee in which it has been clearly found that assessee has been using several bank accounts for the purpose of providing accommodation bills / entries to various parties in lieu of commission. On the basis of search carried out at the premises of the assessee, and other concerns, it has been found that money was first deposited in the bank accounts of MSP and his group concerns and thereafter, such money was transferred to the bank accounts operated by the assessee and associated concerns. The assessee has not been able to give any plausible explanation whatsoever regarding the substantial cash deposits which were made in his bank account and further, the return of income filed by the assessee for the impugned years under consideration also do not lend any supp....
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.... assessee was not able to provide any plausible explanation whatsoever. Therefore, it was in light of the continuous bogus operation carried out by the assessee for various years including the impugned year under consideration, that the Assessing Officer held that the addition are liable to be added in the hands of the assessee on the basis of incriminating material found during the course of search. Further, as observed by us earlier, the assessee has neither challenged the contents of the material discovered during the course of extensive search operation carried out by the Department and neither has Ld. CIT(A), on merit ever examined any material which was found during the course of search operation. As noted by us earlier the Ld. CIT(A) has not given any finding whether "any incriminating material" was found during the course of search and the Ld. CIT(A) in his order has never examined or commented upon why the substantial material found during the course of search operations does not qualify as "incriminating material". Another important point which we have observed is that for A.Y. 2015-16, the Ld. CIT(A) has relied upon the material i.e. the excel sheet working found during ....
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.... of appeal is dismissed and the addition of Rs. 15,00,000/- is confirmed." 18. Therefore, we observe that on similar set of facts as contained in the assessment order, while the CIT(A) has held that the additions have not been based on any "incriminating material" found during the course of search for A.Y. 2011-12, whereas for A.Y. 2015-16 on the similar material / data found during search, the Ld. CIT(A) has confirmed the addition in the hands of the assessee. Therefore, clearly in our considered view, Ld. CIT(A) has been taken contradictory views on the same set of facts and information available with the file of the Assessing Officer. 19. Accordingly, looking into the facts of the instant case the material found during the course of search operations carried out by the Department, the affidavits of various concerned parties and the entire modus opearndi of the assessee, we are of the considered view that Ld. CIT(A) has erred in facts and in law in deleting the addition with respect to this ground of appeal. This is particularly in light of the fact that there is no discussion in the appellate order as to why the information / material found during the course of search does....
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....ound during the course of search and therefore, no additions can be made u/s 153A of the I.T. Act without any reference to any incriminating documents, hence the additions made by the AO are not sustainable in law, thus, these are deleted. These grounds of appeal are allowed." 24. With respect to the aforesaid additions, we find no infirmity in the order of the Ld. CIT(A), wherein the Ld. CIT(A) has correctly observed that where assessment are not abated, additions under Section 153A of the Act r.w.s. 143(3) of the Act can be made only on the basis of loose materials in terms of incriminating documents found during the course of search. The following decisions have consistently laid down the above proposition, which have been reproduce below: (i) Saumya Construction 81 taxmann.com 292 (Gujarat - HC) (ii) Kabul Chawla 61 taxmann.com 412 (Delhi) 25. Accordingly, we find no infirmity in the order of Ld. CIT(A) in deleting the disallowances / additions made by the Assessing Officer. Since the aforesaid additions were not made on the basis of any incriminating material found during the course of search. Additions of Rs. 88,00,000/- on account of amount received from Benef....
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.... light of the above judicial precedents, we are of the considered view that in this case since the aforesaid addition of Rs. 88 lakhs on account of amount received from Benefit Information Ltd. was made on basis of Investigation Report which was received by the Ld. Assessing Officer after the date of search and such addition was not on the basis of any incriminating material found during the course of search, there is no infirmity in the order of Ld. CIT(A) in giving relief to the assessee on this issue, so as to call for any interference. 32. In the result, Department's appeal with respect to addition of Rs. 88,00,000/- is hereby dismissed. Benefit Tradelink Ltd. (IT(SS)A No. 506/Ahd/2019 A.Y. 2012-13) (Department's Appeal) 33. The Department has raised the following Grounds of Appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the ca....
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....f unexplained cash deposits in bank accounts and unexplained credits. 7. On the facts and circumstances of the case and in law, the Ld. ClT(A) has erred in not considering the material facts and evidences brought on record by the AO for making addition of Rs. 1,18,72,000/- being unexplained cash deposits in bank accounts Rs. 2,00,55,981/- being unexplained credits and Rs. 88,33,599/- being disallowance u/s 40(a)(ia) of the Act. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent." 34. Ground Nos. 1 to 4 of the Department's appeal are general in nature and do not require any specific adjudication. 35. The addition amounting to Rs. 1,18,72,000/- under Section 68 of the Act is on identical set of facts as for A.Y. 2011-12 (where we have held that addition of Rs. 1,49,39,000/- is liable to be sustained since the same was on the basis of incriminating material found during the course of search), we are of the considered view that this addition is liable to be u....
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.... the ld. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the ld. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that addition of Rs. 11,83,782/- being unexplained cash deposits in bank accounts Rs. 10,21,41,570/- being unexplained credit entries u/s. 68 of the Act and disallowance of Rs. Rs. 44,10,353/- on non-deduction of TDS u/s 40(a)(ia) of the Act are beyond the scope of section 153A of the Act and thus deleting the said additions/disallowances. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made o....
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....rred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec.153BI sp....
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....n the basis of any incriminating material found during the course of search and therefore, Ld. CIT(A) has not erred in facts and in law in allowing relief to the assessee with respect to this addition. 46. In the result, the Department's appeal with respect to these additions is hereby dismissed. M/s. Benefit Tradelink Ltd. (IT(SS)A No. 565/Ahd/2019 A.Y. 2015-16) (Department's Appeal) 47. The Department has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-a....
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.... of the Act is beyond the scope of section 153A of the Act and thus deleting the said disallowance. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that disallowance of Rs 1,38,78,273/- made on account of non-deduction of TDS u/s 40(a)(ia) of the Act is beyond the scope of section 153A of the Act and thus deleting the said disallowance. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no incriminating documents were found relating to additions made overlooking the facts that the AO has taken into cognizance seized material for making additions on the issue of unexplained credits. 11. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO for making addition of Rs. 55,35,489/- made on account of unexplained entries contained in seized material Rs. 67,60,500/- on account of unexplained cash deposits in bank accounts Rs. 6,24,95,734/- on account of unexplained credit entry u/s 68 of the Act and disallowance of Rs. 9,35,652/- on account of disallowance u/s 14A ....
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....al found during the course of search. 51. In appeal, while the Ld. CIT(A) allowed the appeal of the assessee on the ground that the additions were not made on the basis of incriminating material found during the course of search, whereas with respect to addition of Rs. 15,00,000/-, CIT(A) allowed the appeal of the assessee on the ground that since this addition has been made by the Assessing Officer on the basis of excel sheet found during the course of search, for which the assessee has not been able to give any explanation and was not able to prove the genuineness of the transaction in terms of identity, creditworthiness and genuineness of the transaction, Ld. CIT(A) has sustained the additions made by the Assessing Officer. We shall first deal with the aforesaid two additions 52. First of all it needs to be pointed out that this is an "abated" assessment year. In this case, notice under Section 143(2) of the Act was issued dated 19.09.2016, however, the assessment proceedings were abated as per the provisions of the Act as the search was conducted in this case vide Warrant No. 6252 on 06.02.2017. Therefore, this is a case where the assessment proceedings had "abated" an....
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....,500/- has been deleted. In the preceding paragraph, we have given a detailed finding as to how this addition was directly emanating from the extensive search conducted by the Department and on the basis of incriminating materials found during the course of search. Accordingly, in our considered view both the additions amounting to Rs. 67,60,500/- and Rs. 15 lakhs made by the Assessing Officer are liable to be confirmed in the hands of the assessee and Ld. CIT(A), in our considered view has erred in facts and in law deleting the addition of Rs. 67,60,500/- by holding that the same is not on the basis of any "incriminating material" found during the course of search. 56. Further, as noted by us, the impugned Assessment Year 2015-16 being an abated assessment year, the Assessing Officer was not under the legal restriction to make addition only on the basis of incriminating materials found during the course of search but was at liberty to conduct necessary enquiries and thereafter make appropriate additions, in case the assessee could not give any explanation with regards to enquiries made during the course of assessment proceedings, in accordance with law. 57. With regards to a....
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....Y. 2011-12, 2012-13 and 2015-16 61. The additions made of this entity for the relevant assessment years are in relation to similar search conducted on the MSP group and M/s. Benefit Tradelink Ltd. and certain additions were made on the basis of search conducted on 06.02.2017. 62. Since the facts in the case of M/s. Benefit Tradelink Ltd. are similar to the facts in the case of M/s. Elegance Realty Ltd., we shall not be discussing the facts in details and our observations in the case of M/s. Benefit Tradelink Ltd. would apply to M/s. Elegance Realty Ltd. as well. We shall first deal with Department's appeal in the case of M/s. Elegance Realty Ltd. for the A.Y. 2011-12 in IT(SS)A No. 501/Ahd/2019 63. The Department has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A....
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.... that not considering the material facts and evidences brought on record by the AO in the assessment order and thus wrongly concluded that the additions are not based on seized materials. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 8. It is, therefore, prayed that, the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent" 64. The brief facts of the case are that on the basis of search carried out in the case of MSP group and also in the case of the assessee on 06.02.2017, the Assessing Officer observed that the assessee is engaged in the business of providing bogus accommodation entries / bills. After discussing in detail regarding the modus operandi of the MSP group and of M/s. Elegance Realty Ltd., the Assessing Officer made an addition of Rs. 1,00,000/- under Section 68 of the Act, on the basis of incriminating documents found during the course of search. 65. In the preceding paragraphs of our order, in case of search action in the case of M/s. Benefit Tradelink Ltd., we have discussed in detail as to why the material on the basis of which a....
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....inating materials found during the course of search then in that case the entire assessment proceedings are subject to scrutiny and the Assessing Officer would be at liberty to make appropriate additions even on the basis of material not found during the course of search. 72. However, in our considered view, we are unable to agree with the contention of the Ld. D.R. that in case of unabated (completed) assessment year, the Hon'ble Supreme Court in the case of Abhisar Buildwell has suggested that once jurisdiction under Section 153A of the Act is assumed by the Assessing Officer on the basis of certain incriminating material found during the course of search, then the entire assessment is open to scrutiny and the Assessing Officer can assess income of the assessee taking into consideration material which was not found during the course of search, i.e. the Assessing Officer would be at liberty to conduct assessment afresh, taking into consideration even the material which was not found during the course of search action. 73. It would be useful to produce the relevant extract of the decision of Abhisar Buildwell, which have dealt with this issue: "12. If the submission ....
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....fettered powers to the Tax Authorities to re-compute / re-assess the entire total income of the assessee and conduct fresh assessment on the assessee, in cases of concluded assessments, by using all possible material, whether found during the course of search or not. 75. In the result, the Department's appeal with respect to the aforesaid four additions are dismissed. M/s. Elegance Realty Ltd. (A.Y. 2013-14) (IT(SS)A No. 502/Ahd/2019) (Department's Appeal) 76. The Department has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income....
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....e, prayed that the order of Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent." 77. In view of the foregoing discussion for A.Y. 2011-12 we are hereby allowing the Department's appeal with respect to addition of Rs. 23,31,000/- since, the same is on the basis of incriminating materials and detailed modus operandi of providing accommodation entry / accommodation bogus bills by the assessee and it's associated group concerns during the course of search. Accordingly, we are of the considered view that Ld. CIT(A) has erred in facts and in law in holding that the addition of Rs. 23,31,000/- is not on the basis of any incriminating material found during the course of search. The Ld. CIT(A) has not given any finding with regards to the various incriminating documents which find mention in the assessment order and without discussing any of the materials on the basis of which the additions were made and without giving any findings with regard to the detailed modus operandi of the assessee for providing accommodation entries / accommodation bills mentioned in the body of the assessment order, the Ld. CIT(A) has simply allowed the appeal of the assessee with resp....
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....rtment has raised the following grounds of appeal: IT(SS)A No. 564/Ahd/2019 (A.Y. 2015-16) "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed incom....
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....ar to earlier assessment year wherein certain additions were made on the basis of search action carried out in the case of the assessee on 06.02.2017. In this case, assessment proceedings under Section 143(2) of the Act were not initiated by the Assessing Officer and the time limit for initiating assessment proceedings had expired on 30.09.2016. Therefore, since there was no existing assessment proceedings as on the date of search, assessment year 2015-16 is an "unabated" assessment year as well. Accordingly, in view of our detailed observations in the preceding paragraphs, we find no infirmity in the order of Ld. CIT(A), wherein he has sustained addition of Rs. 91,00,000/- on account of working in excel file in the name of HETVI group, by observing that this addition has been made on the basis of incriminating material found during the course of search. The Ld. CIT(A) while passing the order has made the following observations at para 6 of the order: "6. The AO has made another additions of Rs. 91,00,000/- on account of working in excel file in the name of HETVI group. The said addition has been dealt with by the appellant in Ground no. 4 of the paper book. The excel shee....
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....during the course of search. Accordingly, in our considered view Ld. CIT(A) has correctly held that since the aforesaid additions were not made on the basis of any incriminating documents found during the course of search and assessment year 2015- 16 in the case of M/s. Elegance Realty Ltd. was a unabated assessment year, the aforesaid additions were liable to be deleted. 89. In the result, the Department's appeal with respect to the aforesaid two additions for A.Y. 2015-16 is hereby dismissed. Now we shall discuss with the appeals of the assessee and Department file in the case of Smt. Harshaben B. Popat for A.Y. 2012- 13, 2013-14 and 2015-16 Smt. Harshaben B. Popat (A.Y. 2012-13 in IT(SS)A No. 503/Ahd/2019) (Department's Appeal) 90. The Department has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the Incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances ....
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....t term capital gain' and disallowance of business expenditure of Rs. 74,75,267/- are beyond the scope of section 153A of the Act and thus deleting the said additions/disallowances. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that not considering the material facts and evidences brought on record by the AO in the assessment order and thus wrongly concluded that the additions are not based on seized materials. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 8. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent." 91. The facts for the case are similar to those of other group cases which we have discussed in the preceding paragraphs. In this case, the additions were made pursuant to search action conducted on MSP and other group concerns, wherein the Assessing Officer after a detailed discussion in the assessment order has given a detailed finding on the basis of various material unearthed during the course of search, that the assessee and various other part....
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....terials found during the course of search, however, this issue is restored to the file of the Ld. CIT(A) for the limited purposes of ascertaining whether similar additions have also been made in the hands of the husband of the assessee, Shri Bharatbhai Popat. If similar additions have also been made in the hands of the assessee's husband as well, then appropriate relief may be granted to the assessee, after carrying out due verification. 98. In the result, the Department's appeal with respect to the addition of Rs. 51,44,000/- is allowed for statistical purposes. 99. With regards to the balance additions made by the Assessing Officer during the course of assessment proceedings, we are of the considered view that the same were not on the basis of any incriminating materials found during the course of search, but were on the basis of information coming from the books of accounts, return of income, the computation of income etc. filed by the assessee or verification of ITS data etc. 100. Accordingly, with respect to the balance additions we are of the considered view that Ld. CIT(A) has correctly deleted the addition on the ground that the same is not on the basis of any incr....
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....e may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153A proceedings, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that additions of Rs12,80,100/-, on account of unexplained cash deposits in bank accounts, addition of Rs. 2,99,00,000/- on account of unexplained source of purchase of properties, addition of Rs. 81,50,000/- on account of unaccounted sale proceed of properties, addition of Rs. 7,25,348/- on account of disallowance of interest expenses, addition of Rs. 84,50,596/- on account of undisclosed receipts based on 6AS, addition of Rs. 1,20,901/- on account of disallowance under Chapter VIA, addition of Rs. 40,68,740/- on account of disallowance of purchase cost of properties under the head 'short term capital gain' and addition of Rs. 1,01,09,935/- on account of disallowance of business expenditure are beyond the sc....
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....08. In the result, the Department's appeal is partly allowed for statistical purposes. Smt. Harshaben Bharatbhai Popat (IT(SS)A No. 20/Ahd/2020 (A.Y. 2015-16) (Assessee's Appeal) 109. The assessee has raised the following grounds of appeal: "1. That, the Ld. CIT(A) has wrongly confirmed the addition amounting to Rs. 5,00,000/- on account of working found in excel file. 2. That, the findings of the Ld. CIT(A) are not justified and are bad-in-law. 3. That, the appellant craves to add, amend, alter or delete any of the above grounds of appeals." 110. The brief facts in relation to this ground of appeal are that the Assessing Officer, after detailed analysis of modus operandi of providing bogus entries / bogus accommodation bills to various parties made an addition of Rs. 50,00,000/- in the hands of the assessee on the basis of incriminating materials found during the course of search. 111. In appeal, Ld. CIT(A) dismissed the appeal of the assessee by holding that the additions have been made on the basis of incriminating materials found during the course of search and the assessee could not prove the genuineness of such transaction. While dismiss....
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....n holding that any addition during the assessment u/s. 153A has to be confined to the Incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec.153A of the Act. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec.153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec. 153BI specifi....
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.... during the course of search, we are of the considered view that Ld. CIT(A) has erred in facts and in law in holding that the additions have not been made on the basis of incriminating material, and accordingly, the Department's appeal with respect to this addition succeeds. 116. However, with respect to balance additions made by the Assessing Officer, we are of the considered view that the additions have not been made on the basis of any incriminating material found during the course of search and accordingly, Ld. CIT(A) has not erred in facts and in law holding that no addition can be sustained in the hands of the assessee in case of unabated assessment years which are not on the basis of incriminating material found during the course of search. 117. In the result, with respect to the balance additions which have been deleted by Ld. CIT(A) we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. 118. In the combined result, the Department's appeal is partly allowed for statistical purposes and the assessee's appeal is also partly allowed. Order of the Hon'ble Accountant Member: Per Shri N.P. Sinha: 1. Article 141 of the Constitutio....
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.... the case of Abhisar Buildwell (supra) has taken note of all these decisions and while agreeing with the decision of Delhi High Court in Kabul Chawla (supra) and with Gujarat High Court in Saumya Contruction (supra) held, in no uncertain terms, that no addition can be made in respect of completed assessments in the absence of any incriminating material. However, the Court has nowhere mandated that the addition in the completed assessments has to be only on the basis of incriminating material found during the search. The Hon'ble Apex Court has gone through the erstwhile scheme of block assessment under Section 158BA of the Act, analyzed the object and purpose of introduction of Section 153A of the Act pertaining to block assessment and taken note of the difference of opinion in the judicial pronouncements of different High Courts. The conclusion as recorded by the Apex Court in Para 14 of the order in the case of Abhisar Buildwell (supra) is found to be as under: 14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block asse....
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..../ unabated assessments. In such an eventuality, the only option available with the AO would be to initiate proceeding under Section 147/148 of the Act, subject to fulfillment of conditions as envisaged therein. 7. It is thus evident from the above analysis that the Hon'ble Apex Court has categorically held that the 'other materials' can also be utilized along with the incriminating materials found during the search to complete the assessment of unabated/completed year under the provisions of Section 153A of the Act. In para 11 of the order also, the Hon'ble Apex Court held as under: Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income...(emphasis supplied) The essence of the judg....
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....ision of section 153A of the Act, and is, thus, ratio decidendi. 10. The principle as laid down by the Hon'ble Supreme Court is binding on all the sub-ordinate Courts and the Tribunals. Once the Supreme Court pronounces a judgment on a legal issue, it becomes the law of the land and must be followed by all courts, including lower courts, tribunals, and even High Courts. The lower courts are bound not only by the specific rulings of the Supreme Court but also by the legal principles and doctrines established in those judgments. Any contrary course of action of suo moto disregarding the view of the Supreme Court destroys the fabric of judicial discipline. After the declaration of law on the issue by the Hon'ble Apex Court, reference and reliance on various other decisions of different High Courts, will be otiose. The doctrine of precedence is absolute for the lower courts and only the Hon'ble Supreme Court itself, has the power to depart from its previous judgments. 11. On an overview of the legal position emanating from the judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell (supra) and the above discussions, I am of the considered opinion that the AO was empowe....
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....ed to VP(AZ) as Third Member by the Hon'ble President, ITAT for consideration and disposal under Section 255(4) of the Income Tax Act, 1961, vide order dated 26.08.2024. Accordingly, notices have been issued for hearing on 28.11.2024 to both the parties. The case has been adjourned on 16.12.2024, 16.01.2025, 14.02.2025 & 13.03.2025 and was finally heard on 20.03.2025. Shri Tushar Hemani, Sr. Advocate and Shri Parimalsinh B. Parmar, represented the assessee(s) and the Revenue has been represented by Shri H. Phani Raju, CIT(DR) in all the cases. 3. The following question was framed by both the Members which is required to be resolved by Third Member after hearing the arguments of the appellants and the respondents: "Whether in the facts and circumstances of the case, the assessment u/s 153A of the Act in the case of unabated / completed year(s) is to be completed only on the basis of incriminating material found during the search, or, once some incriminating materials are found during the course of search, the Assessing Officer is empowered to also take into account any "other material" which may be available with the Assessing Officer and/or information as available from....
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....he premises of M/s. Tile Touch Ceramics, 4, Baba Ramdev Complex, Opp. Sajan Party Plot, Near Parshwanath Jain Temple BRTS, Sola Road, Ahmedabad, one diary was found containing details of accommodation entries and commission income earned by the assessee. On the basis of diary impounded from the premises of the assessee, the Department observed that Shri Bharat Popat, key person in the assessee company had given a sum of Rs. 10 lakhs in cash for providing accommodation entry to MS Patel. Further, the Department also impounded letter heads and bills books of MS Patel's various bogus concerns from the premises of M/s. Tile Touch Ceramics in the search carried out at 4, Baba Ramdev Complex. The assessee also filed letter dated 22.08.2018 during the course of assessment proceedings and stated that assessee has neither carried out any business nor provided any services and he was only engaged in providing accommodation bills / accommodation entries to the interested parties in exchange for a commission ranging from 0.50% to 2%. Further, on 17.04.2017, MS Patel filed an affidavit to the effect that he had provided accommodation entries of bogus bills for commission. 5. The pre-search i....
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....ire modus operandi was confronted to the assessee, wherein it was pointed out that on the basis of incriminating documents seized during the course of search at office cum residence of Shri Bharat Popat, it was found that substantial cash was first deposited in the bank account of Vishal Pandya and thereafter the funds were transferred among Benefit Tradelink Ltd., MS Patel, Shri Vishal Pandya. Mr. Pandya had also filed affidavit that his bank account has been utilized by Mr. Bharat Popat for providing accommodation entries. In his affidavit Shri Vishal Pandya has stated that Bharat Popat has taken signed cheque books of his Current Account and Mr. Bharat Popat has full rights and access to his bank account online. Mr. Pandya further submitted that his current accounts in Bank of Maharashtra and Punjab National Bank are used by Shri Bharat Popat and his concerns and that Shri Bharat Popat is misusing his bank accounts as well as issuing sales bills and taking purchase bills in the name of SVP Corporation without taking any actual delivery of goods. During the action, the Revenue found an MS Excel file name "Daily Cash Book" from the laptop of Shri Bharat Popat and another Ms. Excel....
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....r Section 153A of the Act, there has to be "incriminating material" recovered during the course of search qua the assessee for the purpose of making additions. Accordingly, following the decision of Hon'ble Gujarat High Court in the case Saumya Construction, 81 taxmann.com 292, and other decision of various High Courts, the principle which has been laid down is that since no incriminating evidences have been found during the course of search and therefore, no addition can be made under Section 153A of the Act. The Ld. CIT(A) has also relied on 20 case-laws. To mention a few, I. Commissioner of Income Tax (Centra)-III V. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) II. Principal Commissioner of Income-Tax, Ahmedabad V. Dipak Jashvantlal Panchal [2017]88 taxmann.com 611(Gujarat), III. Principal Commissioner of Income Tax V. Desai Construction (P.) Ltd. [2017] 81 taxmann.com 271(Gujarat) IV. In the case of Principal Commissioner of Income Tax-1 V. Devangi [2017] 88 taxmann.com 610 (Gujarat) V. Principal Commissioner of Income-tax V. Sunrise Finlease (P.) Ltd. 9. Aggrieved, the Revenue filed appeal before the Tribunal and argued that th....
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...."other material" has to be considered to determine the "total income". The Hon'ble JM held that there is a fundamental difference between the determination of "undisclosed income" and the "total income" and the words "assess", "reassess" and "other materials" have to be interpreted rightly in the backdrop of the judgment of the Hon'ble Apex Court in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd., 149 taxmann.com 399 (SC). Hence the question "Whether in the facts and circumstances of the case, the assessment u/s 153A of the Act in the case of unabated / completed year(s) is to be completed only on the basis of incriminating material found during the search, or, once some incriminating materials are found during the course of search, the Assessing Officer is empowered to also take into account any "other material" which may be available with the Assessing Officer and/or information as available from the return of income as well; keeping in view the ratio of decision of Hon'ble Supreme Court in the case of PCIT v. Abhishar Buildwell (P.) Ltd., reported in [2023] 149 taxmann.com 399 (SC)?" 12. During the hearing held on 20.03.2025, Shri Tushar Hemani, Sr. Advocate argued that the ....
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....as to be framed strictly on the basis of incriminating material found during the course of search. The Ld. Sr. Counsel relied on the following judgments to buttress his arguments :- * PCIT v Saumya Construction - 387 ITR 529; * CIT v Kabul Chawla - 380 ITR 573; 14. The Ld. Sr. Counsel argued that the above judgments have been upheld by the Hon'ble Apex Court in the case of PCIT v Abhisar Buildwell P. Ltd. (supra). For the sake of ready reference, the relevant portions of the judgment of Abhisar Buildwell P. Ltd. and the remarks of the Ld. Sr. Counsel as submitted are as under:- 'Para' of 'Abhisar Buildwell P. Ltd.' Assessee's remarks Para Text Para 2 The core issue involved in the present batch of appeals is the scope of assessment under section 153A of the Income-tax Act, 1961 (hereinafter referred to as the Act, 196T). According to the Revenue, the Assessing Officer (hereinafter referred to as the AO') is competent to consider all the material that is available on record, including that found during the search, and make an assessment of 'total income'. Some of the High Courts have agreed with the said proposition. Howev....
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....ion of AO to make assessment is 'confined' to 'incriminating material' found during the course of search under section 132 or requisition under section 132A or not i.e. whether 'any addition' can be made by the AO in 'absence' of any 'incriminating material' found during the course of search under S.132 or requisition under S.132A of the Act, 1961 or not. Para 8 For the reasons stated hereinbelow, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. * Hon'ble Court, in crystal clear terms, held that it is in complete agreement with the view taken by the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction wherein the following view has been taken: 'No addition' can be made in respect of 'completed assessment' in 'absence' of any 'incriminating material' Para 11 As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO get....
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....cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. * Hon'ble Apex Court has categorically held as follows: The intention does not seem to be to re-open the 'completed / unabated' assessments, unless any 'incriminating material' is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of 'unabated/completed assessment', AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration 'incriminating material' collected during search and 'other material' which would include 'income declared in the returns', if any, furnished by the assessee as well as the 'undisclosed income' (mean....
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....behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law * Hon'ble Apex Court has held that as per 2nd proviso to S.153A of the Act, only 'pending assessment / reassessment' shall stand 'abated'. * It does not provide that all 'completed / unabated assessments shall 'abate'. * Legislature has consciously provided for 'revival' of only 'abated assessment' i.e. the Legislature has consciously not provided for 'revival' of 'completed / unabated assessment'. This further shows that the intention of the Legislature is that insofar as 'completed / unabated assessment' is concerned, the same can be disturbed only if any incriminating material is found during the course of search. Para 13 For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessmen....
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....osition as per the Revenue. 16. With regard to the jurisdiction to assess / reassess under section 153A of the Act, the Ld. DR argued that the provisions of section 153A of the Act were brought into the Act primarily to make assessment in the cases where the Department had initiated search action u/s 132 of the Act or books of account, other documents or assets are requisitioned u/s 132A of the Act. Therefore, jurisdiction to make assessment / re-assessment under the Act is the existence of incriminating material/showing undisclosed income detected as a result of search. The said meaning is evident from the decision of Hon'ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (Supra) and the relevant part of the judgment as quoted by the Ld. DR is as under: "9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under: Section 158BA of the Act, 1961. The erstwhile Scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under secti....
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.... the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years. Relying on the provisions of Section 153A(1)(b) of the Act, the Ld. DR argued that it is the mandate of the Assessing Officer to assess the "total income" of the relevant assessment year. Referring to section 2(45) of the Act, the Ld. DR submitted that as per section 2 of the Act, the "total income" means the total amount of income referred to in section 5 of the Act and computed in the manner laid down in the Act. Taking further the provision 5 of the Act, the Ld. DR submitted that the total income of any previous year of a person who is a resident includes all income from whatever source derived. Therefore, he argued that as per the provisions of section 5 of the Act, the scope of "total income" includes all income from whatever source derived by the resident and for non-resident it includes all income from whatever source derived which is received or accrued in India. Hence, the meaning of "total income" is clearly defined under the Income Tax Act and the same includes all incomes including undisclosed income unearthed during ....
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....a result, howsoever attractive it may be. Thus, where there are two possible interpretations, one invalidating the law and the other upholding, the latter should be adopted. For this, the courts have been endeavoring, sometimes to give restrictive or expansive meaning keeping in view the nature of legislation, may be beneficial, penal or fiscal etc. cumulatively, it is to sub-serve the object of the legislation. Old golden rule is of respecting the wisdom of legislature, that they are aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet, in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. These interpretations spring out because of concern of the courts to salvage a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the....
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....here were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute where the tax rate is same. The Ld. DR argued that the legislative intention for bringing the provisions of Section 153A of the Act is to ensure that there are no parallel proceedings for any assessment years by way of proviso to Section 153A(1). As per this section, there shall be no parallel proceedings for any assessment year in the case of search assessments u/s 153A which is different from the earlier scheme of block assessment u/s 158BA of the Act. 21. Submitting his arguments in writing, the Ld. DR submitted that the Hon'ble Supreme Court had clearly an....
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....an assessment of 'total income'. Seme of the High Courts have agreed with the said proposition. However, according to the respective assessee's end as per some of the High Courts' decisions, if no assessment proceeding is pending on the date of initiation of the search, the AO may consider only the incriminating material found during the search and is precluded from considering any other material derived from any other source." [Emphasis Supplied] c) Hon'ble Supreme Court, after completely examining the scope of assessment u/s 153A of the Act, it had summarized the scope of assessment in para 14 of the order and the same is as under: "14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AC1 would assume the jurisdiction to assess or reassess the 'total income' taking into consideration....
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.... the assessments made under section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee - M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs." [Emphasis Supplied] f) Therefore, in view of the detailed discussion made by Hon'ble Supreme Court in its decision, as above, r....
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....een examined wherein Hon'ble High Court held that no question of law much less any substantial question of law arises from the impugned order of the Tribunal. In the case of Sun Engineering Works Pvt Ltd, 64 taxman 442, the Hon'ble Supreme Court at para 37 directed that an interpretation should be in the context of questions arose for decision in that case. The Hon'ble Apex Court held that it is neither desirable nor permissible to pick a word or a sentence from a judgment of the Court divorced from the context of question under consideration and treat it to be complete law declared by the Court. The judgement must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Court takes its colour from the question involved in the case in which it is rendered and while applying the decision to the latter case, one must carefully try to ascertain the true principle laid down by the decision of the Court and not to pick out words or sentences from the judgments divorced from the context of the questions under consideration [para 37]. 24. The Judgment of the Hon'ble Allahabad High Court ....
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.... income'. Some of the High Courts have agreed with the said proposition. However, according to the respective assessee's and as per some of the High Courts' decisions, if no assessment proceeding is pending on the date of initiation of the search, the AO may consider only the incriminating material found during the search and is precluded from considering any other material derived from any other source." 27. The Ld. Sr. Counsel (vide submission at page No.6) argued that the Hon'ble Apex Court has clearly held as to what would constitute the 'other material' i.e. it has been held that the other material would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. The argument to this extent is acceptable but it is very clear that the 'other material' would invariably mean and include the material other than the 'income declared' in the return. As succinctly argued by the Ld. Sr. Counsel that the Legislature has consciously provided for 'revival' of only 'abated assessment' i.e. the Legislature has consciously not provided for 'revival' of 'completed / unabated assessment'. This further shows that the intention of the Legislat....
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....an be brought or considered for completion of assessment u/s 153A of the Act. Such action of the Assessing Officer is against the scheme of the Act and against the series of judgments pronounced and each addition has to be made based on the incriminating material unearthed during the search which the Revenue refuted. 29. The assumption of jurisdiction u/s 153A of the Act being automatic consequent to search and seizure action u/s 132 of the Act, the assessments are completed based on the entire material before the Assessing Officer in the case of abated assessment. The moment action u/s 132 takes place, all the assessments pending as on the date shall abate. Section 153A reads as under:- 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 but on or before the 31st day of March, 2021, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may b....
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....not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,- (A) the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commission....
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....issioner or] Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that no....
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.... Explanation.-For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1). (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books....
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....efrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [P....
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....e does not intend to have two parallel proceedings in case of one assessee for same year as held by the Hon'ble Apex Court. In the case of a completed assessment or where no assessment is pending, there is an automatic provision of assumption of jurisdiction u/s 153A of the Act. When no assessment is pending, the question of abatement does not arise. When the proceedings u/s 153A are initiated, can there be re-opening of any assessment so that there are two proceedings being undertaken parallel for the same assessee for the same assessment years. If the Assessing Officer is allowed to reopen an issue for the same year where proceedings u/s 153A are being undertaken, does not it amount to having parallel proceedings for the same year which is against the intend of the Legislature wherein the pending assessments were made to abate. This leads to a situation of approbate and reprobate which is based on the maxim "allegans contraria non est audiendus". At one side, the Legislature intends one assessment for one year and on the other hand, the assessee is exhorting for multiple assessments which cannot be accepted. Taking further, what was the intention of the Legislature when there was....
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....h or seizure would abate, which led to the conclusion that completed assessments do not abate and hence stand as it is. A harmonious construction of the entire provision would lead to the conclusion that the word 'assess' has been used in the context of abated proceedings and 'reassess' has been used for completed assessment proceedings. I am in agreement with the argument that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. The purpose of second proviso is to prevent multiplicity of proceedings and to ensure that there are no two conflicting authorities on the same point. The first and second proviso have to read with in tandem. The words 'assess' and 'reassess' used in the provision signify two different connotations. The word 'assessment' is used in context of proceedings, which shall abate because of second proviso, and 'reassessment' has been used in context of the completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition. The Ld. DR has also referred to the decision of the ....
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.... of section 153A of the Act have substituted the erstwhile scheme of block assessment under section 158BA of the Act primarily to do away with scheme of parallel assessments for the same assessment year as under the provisions of section 158BA of the Act only "undisclosed income" could be assessed and for any other income to be assessed the proceedings u/s 143 or u/s 147 were to be invoked. The purpose of introduction of the provisions of section 153A of the Act has been explained by of Hon'ble Supreme Court and the relevant part of the said decision is as under: "9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under section 158BA of the Act, 1961. The erstwhile scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclo....
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....rse of search proceedings can assessed, then the Assessing Officer will have to invoke the provisions of section 147 of the Act to assess the unexplained cash deposits in the undisclosed Bank account of the Assessee u/s 69A of the Act. vi) Such an action of the Assessing Officer would clearly lead to parallel assessment proceedings for the same assessment year 2017-18." 35. Hence, it can be held that as per the scheme of provisions of section 153A of the Act, parallel assessments proceedings are not permissible and therefore, provisions of section 153A of the Act cannot be interpreted to mean that only undisclosed income can be assessed in the case of unabated assessment years. In the case of Nilofer Hameed vs. ITO reported in 235 ITR 161 (Kerala) the Hon'ble Kerala High Court after referring to a number of judgments of other Hon'ble High Courts held, "if an assessment is pending either by way of original assessment or by way of re-assessment proceedings, the assessing officer cannot issue a notice u/s 148 but if no proceedings are pending either by way of original assessment or by way of re-assessment, he can issue a notice u/s 148 within the time mentioned." T....
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....city of proceedings under various assessments for the same year. 39. To conclude, the judgement of the Hon'ble Apex Court in the case of Abhisar Buildwell Pvt Ltd (supra) is again being referred to. 1. Para 4.1 - The submissions on behalf of the assessee's in a tabulated form are as under: Sr. No. Particulars Assessment u/s 143(3) pending and abated Reassessment u/s 147 pending and abated Unabated assessments iv Incriminating material found during search only on issue "A" other information / material available or found from any external sources (not in search) in respect of issue "B" Assessing Officer entitled to assess entire income including Issue A and / or Issue B Scope of assessment u/s 153A must be restricted to (a) Grounds on which proceedings reopened; and (b) Issue A detected during search; and (c) Issue B for which information available. Assessing Officer not entitled to reopen entire assessment and undertake roving/fishing enquiries. Assessment u/s 153A could only be done in respect of issue A relating to which incriminating material is found during search. On conclusion of assessment u/s 153A, Revenue may, basis other informatio....
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....isdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years 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. As per sub-section (2) of Section 153A, 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 sub-section (1) or section 153, 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. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total ....
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....e the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law. Finding 4 :- 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consi....
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.... Ahmedabad; Dated 07/04/2025" 6. Final Disposal of the Appeal: In accordance with the majority opinion, comprising the opinion of the Hon'ble Accountant Member and the Hon'ble Third Member, the appeals are decided as under: Hon'ble AM: "All the additions which were based on incriminating material as well as on the basis of other materials as available with the AO are required to be set-aside to the file of Ld. CIT(A) to examine the matter on their merit". Hon'ble Vice President (Third Member): "I agree with the Hon'ble AM that there is no legal impediment in making an addition, the basis of 'other material' found during search, in an assessment u/s 153A for a year whose assessment was not pending on the date of search." For assessment years, where some incriminating materials have been found to exist as per the findings of ITAT, the matter is hereby being restored to the file of Ld. CIT(A) for deciding the grounds taken by the assessee on merits. 7. Conclusion: In the combined result, all the appeals filed by the Department and assessee are partly allowed for statistical purposes. Order pronounced in the Open Court on 25th April, 2025 at Ahmedabad.....