TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1592
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....by AO is bad in law and required to be quashed as same has been barred by limitation as same has been passed beyond time- period mention as per provision of section 153B as stood by Finance Act, 2016 made applicable from 01.06.2016, Tax Effect: N.A. being a technical ground. 2. The order passed by AO is bad in law and required to be quashed as it was passed even beyond time limit prescribed by Section 153B(3) and accordingly order passed by authorities required to be quashed. Tax Effect: N.A. being a technical ground. 3. The order passed by AO is required to be quashed as same has been passed beyond statutory time limit prescribed under section 153B of the Act applicable for relevant period. Tax Effect: N.A. being a technical ground. 4. Ld. CIT (A) erred in law and on facts in dismissing additional ground raised before him by observing that no explanation was submitted to take additional ground at appellate stage ignoring fact that as per various judgments of Hon'ble Supreme Court legal ground can be taken at any stage of proceedings and accordingly Ld. CIT (A) ought to have admitted the same and ought to have adjudicate the same. Tax Effect: N.A. being a technical gro....
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.... been made for exchange of information from foreign jurisdictions by competent authority. In view of explanation to Section 153B, the reply to last of such references had not been received by o/o Pr.CIT (Central), Ahmedabad within the one year limit defined in explanation to u/s. 153B & hence, the time barring date was extended by one year i.e. 31/12/2017. 5. On appeal before the ld. CIT-A, the assessee submitted that prior to the amendment by the Finance Act 2016 under the provisions of section 153B of the Act, the time limit for passing the assessment order was 2 years from the end of the financial year in which last of the authorization for search under section 132 of the Act was executed. However, after the amendment by the Finance Act 2016, such time limit was reduced to 21 months from the end of the financial year in which last of the authorization for search under section 132 of the Act was executed. Thus, as per the assessee the assessment should have been framed by the AO by the end of 31 December 2016 as the last of the authorization was executed on 3rd February 2015 and the assessment order under section 153A r.w.s. 143(3) of the Act was made after 1-6-2016. The assess....
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....eriod of one year, whichever is less; or shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (o) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly: The legislature never wanted to keep the matter pending even though vital information is received after 1 year from foreign countries covered by DTAA. This is explained as below: (1) Period of limitation available as per section 153B(l)(a) (2) Period excluded as per explanation ix to section 153B (maximum) (3) Balance period available (4) Minimum period required as per proviso to section to explanation to section 1538 21 months 12 months 09 months 02 months (60 days) Period available (3) above 9 months is greater than 2 months and hence no benefit of time is available to AO. Hence, last date for completion of assessment is 31.12.2016 The AO has passed order on 29.12.2107 ....
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.... 29-12-2017. Thus, all the assessments were framed within the stipulated time. 8.1 The assessee in rejoinder vide letter dated 02-01-2020 reiterated the earlier submissions made before the ld. CIT-A. 9. However, the ld. CIT-A rejected the admission of technical ground raised by the assessee by observing as under: 5.7 Having considered the facts and the additional grounds raised it is noticed that the assessee has not made any formal and legal request to admit the additional grounds of appeal in the aforesaid letter or subsequently in the present appellate proceedings taking note of the material available on record. Neither any reasons of taking the additional grounds at this stage has been explained so as to justify why the same have not been taken in the original grounds of appeal at the time of filing of the appeal. Thus, the appellant has not satisfied that the grounds raised was bonafide and same could not have been raised earlier for good and sufficient reasons. Even the appellant has not demonstrated that all the facts related to the additional ground were already on record. Thus, the appellant has not fulfilled the requirements for admission of additional ground. Therefo....
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....m time to be excluded i.e. one year expires 7-10-2016 but yet the time was available for framing the assessment for 85 days which is more than 60 days as provided in the proviso to explanation under section 153B of the Act. However, according to the learned AR even the date of 1st reference as mentioned by the revenue is taken reference, then also the assessment has been framed by the AO beyond the stipulated time provided under the provisions of section 153B of the Act. The Ld. AR of the assessee further contended that if the one year from the 08-10-2015 to 07-10-2016 is excluded from the time limit, still 85 days remain to pass the order before 31-12-2016. Therefore, no time limit could be extended as per the provision of section 153B of the Act beyond 7-10-2016 whereas the assessment has been framed dated 31-12-2016. Thus, the AO has no jurisdiction to pass the order after 31-12-2016. Therefore, the order passes by the AO is time barred. 12. On the other hand, the Ld. DR contented that the last reply of the FT& TR reference has not received till the completion of assessment and in that scenario then the additional time limit available for the assessment is one year and not 60 d....
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....missioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. 13.1 From the above, it is transpired that the view that the Tribunal is confined only to those issues arising out of the appeal before Commissioner (Appeals) is too narrow a view to describe the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which were on record during the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Since, the claim of the assessee is purely legal claim and entire facts are available on record. Thus, it is not justified in not admitting the purely legal ground raised by the assessee for the first time. 13.2 It is the admitted fact that the learned CIT-A on the ....
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.... months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (3) The provisions of this section, as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment or reassessment made before the 1st day of June, 2016: 1[Provided that where a notice under section 153A or section 153C has been issued prior to the 1st day of June, 2016 and the assessment has not been completed by such date due to exclusion of time referred to in the Explanation, such assessment shall be completed in accordance with the provisions of this section as it stood immediately before its substitution by the Finance Act, 2016 (28 of 2016).] 13.4 Admittedly, in the case on hand the assessment was framed dated 29 December 2017 meaning thereby the amended provisions for completing the assessment i.e. 21 months from the end of the financial year in which last of the authorization was executed will be applicable. Thus, in the given case, the time limit for passing the assessm....
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....o the explanation under section 153B of the Act. Thus, in the given case, the assessee will not get the benefit of the proviso attached to the explanation under section 153B of the Act as the AO has 85 days for framing the assessment in his hands. 13.7 We are conscious to the fact that the legislature has used the word exclude and not to extend the time while calculating the period of making the assessment in a situation where the reference to the competent authority has been made. But the legislature has given the minimum period of 60 days by extending the period of the assessment in a situation where the time available with the AO was less than 60 days after obtaining the reply from the competent authority. Thus, if we see the object behind the period to be excluded provided under the provisions of the Act, the purpose of the same is not defeated. In simple words, as a result of search, various documents are seized by the Income Tax Authorities which are duly documented by the search team by preparing the Panchanama. Thereafter, the search team hands over the documents along with the appraisal report to the AO having jurisdiction over the assessee. The AO based on seized documen....
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....of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning irrespective of consequences. It is said that the words themselves best declare the intention of the Law give. The Courts have adhered to the principle that effort should be made to give meaning to each and every word used by the Legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surplus if they can have a proper application in circumstances conceivable within the contemplation of the Statute." 13.10 Though there are various judgments upholding the above principle but we may only mention that Constitution Bench of the Hon'ble Supreme Court in the case of CIT v. Anjum M.H. Ghaswala [2001]....
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..... On the facts and in the circumstances of the case and in law, the Id. 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. 2.2. On the facts and in the circumstances of the case and in law, the Id. CIT (A) has erred by not considering the decision of Hon'ble Jurisdiction High Court in its proper perspective in the case of Pr.CIT Vs. Saumya Construction P. Ltd. 387 ITR 529 (Guj), as this judgment lays the principle that assessment should be connected with something found during the search or requisition, viz. incriminating material which reveals undisclosed income. This decision nowhere states that addition u/s 153A can only be made if incriminating material is found during search from the premises of the concerned assessee. 2.3. On the facts and in the circumstances of the case and in law, the Id. 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 falli....
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.... be arbitrary. This decision also nowhere states that addition u/s 153A can only be made if incriminating material is found during search from the premises of the concerned assessee. 3.1. On the facts and circumstances of the case and in taw, the Ld.CIT (A) has erred in not appreciating the decisions of Hon'ble Delhi High court in the case of GIT Vs Anil Kumar Bhatia [211 Taxman 453, 352 ITR (493)] & Kerala High Court in the case of E.N. Gopakumar vs. Commissioner of Income-tax (Central) [2016] 75 Taxmann.com 215 (ker.) wherein Courts held that assessments in a search case can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132. 4. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 10,32,25,000/- made u/s 68 considering receipt of unsecured loans as unexplained cash credit, on legal grounds, without going into the merits of the issue, despite the assessee had failed to prove the genuineness of the transaction and creditworthiness of the persons/entities from whom loans were obtained, nor th....
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....s of the issue, despite the assessee had failed to reconcile the difference in valuation of closing stock in the return filed u/s 139(1) viz-a-viz 153A, nor the assessee raised any such legal ground during the course of assessment proceedings before the Assessing Officer. 9. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,81,833/-, made on account of deemed income from house property earned on the properties, which have remained unaccounted. 10. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 22,76,160/- made on account of undisclosed income, which was not offered in the original return u/s 139. 11. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in allowing setoff of current year loss against other heads of income. 12. 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. 13. 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. 15. The first effective iss....
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....erial seized in other cases without following the procedure prescribed under the provisions of section 153C and issuing notice under the said section is in violation of law and such addition cannot be sustained and has to be deleted. Now, the only issue that remains to be considered is whether law permits the AO to make addition without any evidence seized during searches in the case of the assessee concerned. On this issue, all the Hon'ble High Courts are unanimous on the point that assessment under section 153A is to be framed on the basis of material found during the course of-search or requisitioned under section 132A of the Act. Any other material or information gathered during the search and survey carried out on third persons, cannot be used for the purpose of section 153A. In case, he decided to use the material seized from third parties in the assessments of the assessee, the only course open to him is invoking provisions of section 153C of the Act which was not done by the AO in the case of appellant. Thus there is non compliance of provisions of section 153C of IT Act and the additions have been made U/s. 153A of IT Act which is not in accordance with the judicial pr....
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....ing in this assessment year. Therefore, the proceedings were not abated in the case as mentioned in the second proviso to section 153A (1) of the Act. It seems that the AO lost sight of the fact that he was not making an assessment under section 153A (1) of the Act read with its second proviso. As discussed hereinabove, there is no indication in the contents of the assessment order that the addition was made on the basis of any incriminating material found and seized in search at the place of appellant. 4.22 In view of the aforesaid findings and respectfully following the judgments/decisions of Jurisdictional High Court, Jurisdictional Tribunal and other Courts, wherein it has been held that in absence of incriminating material / evidences found at the place of appellant, addition / disallowance cannot be sustained within the pale of section 153A of the Act. In my considered opinion, the action of the AO for making addition not justified. 4.23 In view of the above discussion, it has been noticed that the additions made by the AO in respect of cash credits u/s. 68, interest paid on the aforesaid cash credits u/s. 69C, addition made on account of change in valuation of closing ....
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.... found during the search proceedings whereas the assessment/ reassessment can be made with respect to abated assessment years. The word 'assess' in section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. The Hon'ble Gujarat High Court in the case of Saumya Construction reported in 81 taxmann.com 292 has held that there cannot be any addition of regular items shown in the books of accounts until and unless, certain materials of incriminating nature were found during the course of search. The word incriminating has not been defined under the Act but it refers to those materials/ documents/ information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee. Now coming to the case, we note that there was no incriminating document relating to the additions made by the AO with reference to the year under consideration has been found during the search which would have made basis for the addition in the assessment. 23.3 At the ti....
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....shall also be applied for the assessment years 2010-11 to 2015-16. Hence, the grounds of appeals filed by the assessee are hereby partly allowed. 25. Coming to ITA No. 199/AHD/2021, an appeal by the Assessee for A.Y. 2014-15 25.1 The issue raised by the assessee is that the Ld. PCIT erred in holding the order of the AO as erroneous in so far prejudicial to the interest of revenue u/s 263 of the Act. 26. At the outset, we find that there is a delay in filing the appeal by the assessee for 79 days. At this juncture, it is important to note that there was a lock down in the country due to outbreak of covid-19 and the Hon'ble Supreme Court condoned the delay vide order dated 15-03-2020 in the case of Cognizance for Extension of Limitation, reported in 125 taxmann.com 151 for certain period of time. As such, the period of 79 days falls during the covid-19 period. Thus, we condone the delay and proceed to adjudicate the issue on merit. 27. In the present case, the Assessment Order was framed by the AO u/s 143(3) of the Act, r.w.s 153A of the Act, dated 29/12/2017 which has been made subject to the revision under the provisions of section 263 of the Act by the Ld. PCIT. Undeniab....