TaxTMI 
TaxTMI 
2022 (11) TMI 1565
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....ed 18/10/2016 arising out of the orders passed by the DCIT, Central-1, Bhopal under Section 153A r.w.s. 143(3), all dated 30.01.2015 (in M/s. M. Ahuja Project (India) Pvt. Ltd. for A.Y. 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14; respectively). In case of Shri Mahendra Ahuja appeals are arising out of the CIT(A)'s orders, all dated 30/09/2016 except IT(SS)A No. 7/Ind/2017 against dated 19.10.2016 arising out of assessment orders dated 30.01.2015 for A.Y. 2009-10 to 2012-13. In case of M/s. M. R. Agriculture Pvt. Ltd. appeals are arising out of the CIT(A)'s orders, all dated 30/09/2016 arising out of assessment orders, all dated 30.01.2015 for A.Ys. 2009-10 to 2011-12 and in case of Smt. Roma Ahuja challenges are against the order dated 19/10/2016 passed by the Ld.CIT(A) arising out of the assessment order dated 30.01.2015 for A.Y. 2013-14. 2. Since, the entire set of appeals are arising out of the common search, and issues are identical, these are heard analogously and are being disposed of by a common order. 3. The common grounds arising out of the appeals are as follows: - (i) Whether the approval granted by the concerned authority particularly the ACIT, ....
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....the AO and submitted their written notes of submission alongwith supporting documents. Regular books of accounts were duly produced. The assessment was finally completed upon making addition mostly under Section 68, 69B, 40(A)(3), 69C of the Act in the hands of the assessee, which were deleted by the First Appellate Authority in appeals preferred by the assessee. Hence, the appeals and cross appeals before us. 6. It is relevant to mention that basically the appeals preferred by the Revenue in all these years, mostly in respect of unabated year of assessment against the orders passed by the Ld.CIT(A) on the maintainability point itself. The Ld.CIT(A) was of the opinion that there was no incriminating material found during search leading to additions made against the assessee and therefore, deleted the additions in respective appeals. Thus, the department has filed appeals challenging the order passed by the Ld.CIT(A) in those appeals on the ground of maintainability itself and consequential deletion made by the Ld.CIT(A). In those appeals where the assessee has not filed cross objection made application under Rule 27 of the IT Rules raising this particular ground that the approva....
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.... ii. The proceeding was carried out on different dates thereafter. iii. On 22.01.2015, the Learned Representative of the assessee attended the Ld.AO and requested time for filing reply as per questionnaire dated 15.12.2014, 15.01.2015 and 20.01.2015. The said request was made by the Ld.AR at around 12:30 pm. iv. On 27.01.2015, the said representative of the assessee, namely, Rohit pathak attended the case and filed part written submission in response to the questionnaire dated 15.12.2014 and 08.01.2015 which was kept on record. However, the said representative of the assessee was requested to file remaining reply on or before 29.01.2015 at 11:30 am, in default, the order shall be passed on merit as also noted by the Ld.DCIT in the said note sheet prepared by him. v. To our utter surprise on 30.01.2015, the assessment orders under S.143(3) of the Act for A.Y. 2008-09 to 2012-13 were passed. Demand notice, accordingly, was issued along with notice under Section 271F of the Act for A.Y. 2013-14 & under Section 271(1)(c) of the Act for A.Y. 2008-09, 2009- 10, 2010-11, 2011-12, 2012-13 and under Section 271AAB for A.Y. 2013-14. It is relevant to me....
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.... (AAFCM3382K) 2008-09 3,22,77,440/- 2009-10 1,87,91,360/- 2010-11 17,07,10,740/- 2011-12 7,37,89,770/- 2012-13 7,26,89,840/- 2013-14 6,04,73,690/- You may act accordingly. A copy of the final orders passed may be sent to this office for records. Sd/- (Muneesh Kumar) Addl. Commissioner of Income-tax (Central), Bhopal" 12. From the above document, we have noted this particular fact that the same was issued from the office of the ACIT, Central, Aaykar Bhawan, Hoshangabad Road, Bhopal, M.P. at the camp office at Raipur which is 800 km. away from Bhopal fact of which has not been able to be controverted by the Ld.DR. We further note that there is no iota of evidence showing transmission of the concerned files to the ACIT, Central, Camp Office at Raipur along with the draft order u/s 153A of the Act for grant of approval u/s 153D of the Act. Under this circumstance, the approval has been challenged by way of application under Rule 27 of IT Rules, 1963 on the ground of non- application of mind of the ACIT. The ACIT has reached at a hasty conclusion; moreso, the same is an empty formality. In the absence of a valid approval as mandat....
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....ated and which year is abated and the relevance vis-à-vis seized material. Learned counsel for the assessee further invited our attention to CBDT manual of Office Procedure Volume-II (Technical) placed at pages 995 and 996 of paper book wherein the CBDT has directed that Assessing Officer should submit the draft assessment order for approval from the approving authority well in time. Such manual says that the Assessing Officer should seek approval from the approving authority at least one month before the time barring date. While going through CBDT manual placed at paper book pages 995 & 996, it was observed that this manual was printed in February 2003 and therefore, Learned counsel for the assessee was asked as to how it is applicable to the provisions of section 153D of the Act which came into existence w.e.f. 01/06/2007. Learned counsel for the assessee in this respect submitted that this manual is applicable to the provisions of section 158BG of the Act and which are para materia to the provisions of section 153D of the Act. It was further submitted that Mumbai Tribunal in the case of Shreelekha Damani, vide order dated 19/08/2015, while deciding similar issue u/s 153D,....
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....pplication of mind and without considering the material on record and hence Tribunal annulled the assessment. It was submitted that Hon'ble Bombay High Court has also dismissed the appeal of the Department filed against the above order of the Tribunal. Further reliance was placed on an order of Mumbai Bench of the Tribunal in I.T.A. No.4916 in the case of Sumer Associates wherein under similar circumstances, vide order dated 26/12/2018 the issue was decided in favour of the assessee. Reliance was also placed on the judgment of Tribunal in the case of Indra Bansal decided by Jodhpur Bench in I.T.A. No.321 to 324 vide order dated 23/02/2018. Reliance was also placed on the judgment of Cuttack Bench of Tribunal in I.T.A. No.01 and 02 in the case of Geeta Rani Poddar and Manju Simite Dash where vide order dated 05/07/2018 similar issue has been decided in favour of assessee. 7.1 In view of these facts and circumstances and judicial precedents, it was argued that the assessment orders passed in these cases are illegal and need to be quashed. 8. Learned CIT, D.R., on the other hand argued that proper approval, as required under the provisions of section 153D, has be....
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....153D of the Act were inserted by Finance Act, 2007 with effect from 01/06/2007. In our humble understanding of the said provisions, we are of the opinion that the Legislature wanted the assessment/reassessment of the search cases should be made and order should be passed with the prior approval of superior authority. The word approval has not been defined in the Income Tax Act but the general meaning of word approval can be understood from Black Law of Dictionary which defines approval as: "The Act of confirming, rectifying, sanctioning or consenting to some act or thing done by another. To approve means to be satisfied with, to confirm, rectify, sanction or 'consent to some act or thing done by another, to consent officially, to rectify, to confirm, to pronounce good, thing or Judgment of, admitting propriety or excels or to pleas with." 9.2 The Hon'ble Supreme Court of South Carolina in State vs. Duckett 133 SC 85 [SC 1925], 130 SE 340 decided on 05.11.1925 held that approval implies knowledge and, the exercise or discretion after knowledge. ........................... ........................... Coming to the facts of the case....
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....ee COs and the nineteen appeals of the assessee, as aforesaid, are allowed." 10. Similarly we find that Hon'ble Supreme Court in the case of 'Sahara India vs. CIT & Others' [2008] 216 CTR 303 (S.C.) : [2008] 7 DTR (SC) 27: [2008] 300 ITR 403 (SC) while discussing the requirement of prior approval of Chief Commissioner or Commissioner in terms of provision of section 142(2A) of the Act, opined that the requirement of previous I.T.(SS)A. Nos.639, 640, 641, 649, 642 & 651 approval of the Chief Commissioner or Commissioner in terms of said provision being an inbuilt protection against arbitrary or unjust exercise of power by the assessing officer, casts a very heavy duty on the said high- ranking authority to see it that the approval envisaged in the section is not turned into an empty ritual. The Hon'ble Apex Court held that the approval must be granted only on the basis of material available on record and the approval must reflect the application of mind to the facts of the case. 11. In view of these facts and circumstances and in view of judicial precedents relied on by Learned A. R. Ground No.5 in appeals is allowed and the assessments orders are a....
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....(ii) approval granted hurriedly in a spur involving voluminous assessments spanning over 7 assessment years and thus only a symbolic exercise to meet the requirement of law (iii) Total lack of objectivity in drawing satisfaction on objective material while giving a combined approval for 7 assessments and also without evaluating the nuances of each assessment year involved (iv) the mundane action of Addl. CIT under S. 153D in a cosmetic manner gives infallible impression of approval on dotted line and thus defeats the purpose of supervision of search assessments (iv) initialed draft assessment orders not available in office records. 11.3 As observed, Section 153D bestows a supervisory jurisdiction on the designated authority in respect of search related assessment and thus enjoins a salutary duty of statutory nature. The designated superior authority is thus expected to confirm to the statutory requirement in letter and spirit. It is evident from the communication of AO and consequent approval thereon under S. 153D that no assessment record for any assessment year in question or any seized material had traveled to the authority concerned for his objective consideration of t....
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....tion of mind and on the basis of seized materials, the superior authority is required to accord approval the respective Assessment order. Solemn object of entrusting the duty of Approval of assessment in search cases is that the Additional CIT, with his experience and maturity of understanding should at least minimally scrutinize the seized documents and any other material forming the foundation of Assessment. It is elementary that whenever any statutory obligation is cast upon any statutory authority, such authority is required to discharge its obligation not mechanically, not even formally but after due application of mind. Thus, the obligation of granting Approval acts as an inbuilt protection to the taxpayer against arbitrary or unjust exercise of discretion by the AO. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. 11.5 At the cost of repetition, it may be reiterated that in the instant case, approving autho....
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....ffirms the plea of the Assessee. 11.7 Very recently, the co-ordinate bench in Sanjay Duggal & ors (ITA 1813/Del/2019 & ors; order dated 19.01.2021 has also echoed the same view after a detailed analysis of similar facts and also expressed a discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. Hence, vindicated by the factual position as noted in preceding paras, we find considerable force in the plea raised by the Assessee against maintainability of hollow approval under S. 153D totally devoid of any application of mind. The approval so granted under the shelter of section 153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non est and a nullity and hence quashed." 15. It was further argued by the Ld.AR that admittedly, the Ld.AO had passed a single consolidated order for all years under assessment in respect of different groups of assesses rather passing separate orders for 'each year under Section....
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...., etc. The ld AR for the assessee further submits that mere perusal of contents of approval granted under section 153D, it can be inferred from the approval sought by AO, from the Ld. JCIT was without considering such reply of the assessee dated 14.12.2018. The copy of the same is placed on record before the Hon'ble bench. The ld.AR for the assessee submits that the Ld. Joint Commissioner of Income-tax (JCIT) granted approval for finalizing the assessment on the request of the assessing officer without indicating any perusal of records, replies and material gathered in the course of search. Rather JCIT categorically mentions that even with respect to orders to be passed by the assessing officer he has 'presumed' that necessary records have been perused and legal mandate had been complied. 11. The ld AR for the assessee submits that the material available on record would demonstrate that the JCIT has granted approval under section 153D in a casual and mechanical manner and without any application of mind. As evident from the communication made by A.O. to the JCIT dated 14.12.2018. The AO in the said letter neither makes any iota of reference as to what are the seized materi....
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....trate, copy of which is filed. The ld.AR for the assessee retreated that no incriminating evidence qua the share capital was found during the search. The authorised officer has not recorded even single evidence on the Panchnama about such evidence. The assessment order stands void-ab-initio for unabated assessment years in absence of incriminating evidence. The ld AR for the assessee furnished the year wise last date for issuing notice under section 143(2) for all Assessment Years in the following manner; AY Last date for issuing notice u/s 143(2) 2011-12 30.09.2012 2012-13 30.09.2013 2014-15 30.09.2015 2015-16 30.09.2016 15. The ld AR for the assessee submits that the statement under section 132(4) ( obtained in absence of Panchas) cannot be treated incriminating evidence as held by Hon'ble Delhi High Court in PCIT Vs Best Infrastructure (2017) 397 ITR 82 (Delhi) . To support his submissions the ld AR for the assessee also relied on the following decisions; * CIT Vs Kabul Chawla (Delhi High Court) (ITA Nos. 707, 709 and 713 of 2014), * M/s All Cargo Logistics Ltd. Vs DCIT (ITA 5018 to 5022 & 5059/M/10) (Special Bench), ....
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....or issuing notice under section 143(2) has already elapsed. Thus, any addition in the unabated assessment can only be made on the basis of incriminating material found during the search. The assessee right from the beginning has raised plea that no incriminating evidence qua the alleged share application or premium was found in the search on 17.01.2017. We find there is no reference in the Panchnama about incriminating evidence qua the share application money or share premium for all the impugned assessment years. We further find that the assessee while filing reply before AO on 14.12.2018, in response to the show cause notice dated 29.08.2018, clearly stated there is no incriminating evidences against the assessee for making the said additions. We find that the AO passed the assessment order on 14.12.2018 and placed the same before JCIT for his approval, thus there is no consideration of material facts by A.O. with regard to the assessee's reply dated 14.12.2018 filed before the AO in response to the show cause notice dated 29.11.2018. We further find that the assessee raised specific ground of appeal before ld CIT(A), vide ground No.4, that addition in the assessment is outside o....
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....R/153D/Goyal & Satya/2018-19 dated 14/12/2018. 2. The draft assessment orders u/s 153D and 143(3) in the following cases submitted vide above mentioned letter are hereby approved u/s 153D of the I.T. Act - S. No. Name of the assessee PAN AY 1 Arun Agrawal ACJPA4642B 2011-12 to 2017-18 2 Deepak Agrawal ACJPA4646F 2011-12 to 2017-18 3 Goyal Energy and Steel P Ltd AACCG2758E 2011-12 to 2017-18 4 Goyal Traders AACFG1974F 2011-12 to 2017-18 5 Ratanlal Agrawal ACJPA4620R 2011-12 to 2017-18 6 Goyal Enterprises AAMFG4058J 2011-12 to 2017-18 7 Satya Power and Ispat Ltd AAHCS4472N 2011-12 to 2017-18 3. Further in view of this office letter no. F. No. JCIT(C)/RPR/Draft Asst. Order/2016-17/dated 09.09.2016 it is presumed that the AO has - O Given proper opportunity of hearing has been given to the assessee O thoroughly verified the seized material and that there are no adverse findings O satisfied himself that all the issues emanating from the records have been verified and the additions wherever required have been proposed. 4. You may act accord....
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....pproval of draft assessment orders which was unsubstantiated and unsupported and consequently suffered from total non- application of mind. The relevant part of the order is extracted below: "11.5 At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/her due application of mind. We may observe that Para 2 of the above approval letter merely says that "Approval is hereby accorded u/s. 153D of the Income-tax Act, 1961 to complete assessments u/s. 143(3) r.w.s. 153A of the I.T. Act in the following case on the basis of draft assessment orders..."which clearly proves that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of contents mentioned in the draft assessment order without any application of mind and seized materials were not looked at and/or other enquiry and examination was never carried out. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft a....
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....ion of the Ld. AR that the so called approval of ACIT under Section 153D of the Act does not meet the legal requirement; the same has been granted in baffling haste. In this regard, he has drawn our attention to the memo dated 29.01.2015 which indicates that the draft orders were sent to the ACIT seeking approval thereon. No reference to the assessment records also been sent together with the draft assessment orders is found in the said memo. Under these circumstances, the approval cannot be said to be a valid one and thus liable to be quashed. He has relied upon the judgment passed by the ITAT, Ranchi Bench, in case of Rajat Minerals (P) Ltd. vs. DCIT, reported in [2020] 203 TTJ (Ranchi) 955 (Ranchi-Trib.). The Co-ordinate Bench on identical issue has been pleased to observe as follows: "14. First four legal objections raises concerns over propriety y of the assessment orders itself on the grounds of alleged predating of assessment orders in tandem with token and perfunctory approval of the draft assessment orders by superior authority without fulfillment of pre- requisites of Section 153D of the Act. The first and foremost objection of the assessee throughout is that ass....
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....self, we find considerable weight in the aforesaid plea of the assessee towards implausibility of such overzealous actions in a span of few hours. The unrealistic swiftness in the action of the AO in preparing 28 cases of such large stake and magnitude (without waiting for any time for compliance of a very short notice) and approval thereon by the superior authority in a spur of moment is totally beyond any comprehension and does not accord with normal conduct of a responsible statutory functionary. The presence of any countervailing circumstances for passing orders without providing minimum opportunity to assessee to meet the allegations is not shown by the Revenue. It is a classic example of AO acting in subterfuge and cavalier manner while conducting the whole affairs. 14.2 Pertinent here to say, the proceedings before AO are quasi-judicial proceedings and all the incidents of such proceedings was expected to be observed without laxity before the result of the proceedings were determined. The Revenue Officers must realize that statutory duties conferred on them are in the nature of a trust. They hold office as trustees of the public at large while dealing with public re....
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....atter of record, clearly shows that no reply was filed till the date of passing of the order to such questionnaire i.e. till 28.11.2016. The reply y to questionnaire was filed on 29.11.2016. If the reply has been considered as asserted by the AO then a natural presumption would arise that assessment was kept open till at least 29.11.2016 and therefore the assessment order dated 28.11.2016 is clearly y antedated; & (ii) the assessment order has been sent by speed post on 14.12.2016 which clearly shows that the assessment orders which were passed with lightning speed but was languishing thereafter and dispatched after about two weeks from the date of passing the order. 14.4 The allegation of assessee is thus based on number of facts established by evidence and circumstances. Hence, whether the allegation made is sound or not must be determined by attaching weight to all facts cumulatively and by applying the test of preponderance of probabilities. The assessee is not expected to prove its case of antedating the order with mathematical precision where it is otherwise evident to a demonstrable degree. All that is required in such cases is the establishment of such a degree of ....
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....cial precedents in similar circumstances including Pr.CIT vs. Shreelekha Damani (2019) 307 ITR 218 (Bom), Geetarani Panda (supra), Rishabhbhai Buildwell P. Ltd. (supra), AAA Paper Marketing Ltd. (supra) and Indira Bansal (supra), we find no hesitation to hold that the action of the JCIT under s.153D of the Act is to be regarded as perfunctory and mechanical in subversion of the spirit of Section 153D of the Act. Such symbolic approval is unfounded in law. As a corollary, in the absence of any valid approval under s.153D of the Act, the respective assessment orders giving cause of action in the form of captioned appeals requires to be quashed on this score also." 17. Apart from that the judgment dated 17.1.2020 passed by the Jabalpur Bench in case of Shri Tarachand Khatri vs. ACIT in ITA No.21/JAB/2019 for A.Y. 2016-17 whereby and whereunder, the approval granted under Section 153D of the Act in the identical facts and circumstances of the case has been found to be invalid and consequently, the entire assessment order found to be vitiated and thus quashed while allowing the appeal preferred by the assessee has been relied upon. The Ld. Bench has been pleased to observe as follows....
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.... only and sought approval from the JCIT and the Office of the A.O. is situated at Jabalpur. The JCIT is having his Office at Bhopal. Nothing is brought on record if any material relating to the case or assessment record have been sent by the A.O. for appraisal of the JCIT before granting approval under section 153D of the I.T. Act. The JCIT also in his approval Dated 22.12.2017 (supra) has merely mentioned that A.O. has verified the facts of examining the material. Thus, it is clear that JCIT has not gone through the record or the material before granting approval under section 153D of the I.T. Act. The JCIT merely believed the certificate given by the A.O. The JCIT received letter of the A.O. Dated --.12.2017 [PB Pg.97] on 22.12.2017 and on the same day he passed the approval under section 153D of the I.T. Act. The Hon'ble Supreme Court in the case of Sahara India (Firm) vs., Commissioner of Income Tax & Another (supra) held as under : "Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the AO, casts a very heavy du....
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....handigarh and vice-versa by Addl. CIT, Chandigarh to Assessing Officer at Faridabad on the very next day would lead to suspicion, in explanation of A.O. if any, valid draft order was transmitted to the Addl. CIT within the time or if the Addl. CIT has communicated the approval under section 153D to the Assessing Officer at Faridabad on 31st January 2014. These facts would clearly show that the action of the Addl. CIT, Chandigarh granting approval in this case was, thus, a mere mechanical exercise, accepting the draft order as it is, without any independent application of mind on his part. Nothing has been clarified during the course of hearing to the effect that if Addl. CIT has gone through the assessment record, before accepting the draft assessment order. Thus, there was no application of mind on the part of the Addl. CIT before granting approval. The Addl. CIT, Chandigarh has merely gone through the draft assessment order as per PB-47. Therefore, the contention of Learned Counsel for the Assessee is justified that the approval was granted in a most mechanical manner without application of mind and such approval was intimated to assessing officer only on 5th February 2014, after....
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....tral), Bhopal, sitting at the camp office at Raipur was in hasty manner without going through the records which was lying at Bhopal, 800 kms. away from the said Raipur Camp office. The entire exercise of granting approval was done within a day. Since, the materials and/or relevant documents were not before the Ld. ACIT at his camp office at Raipur, there was no scope of applying his mind prior to such grant of approval in the draft order sent by the DCIT. It is a settled principle of law that the power to grant approval is not to be exercised casually or in routine manner rather the concerned authority should examine the entire materials before approving the assessment order. In this particular case, the statutory obligation cast upon the concerned authority has not been discharged in its true sense. The Revenue has also failed to place any cogent evidence justifying the fact of granting approval of the draft assessment order exercising adequate time and upon examining the material needs to be considered as per law in support of the approval. Thus, there is no proper application of mind but the ACIT (Central), Bhopal has rather carried out exercise in utmost haste and in a mechanic....
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.... consider the additional evidences submitted at the stage of appellate proceedings are not acceptable as the assessee has been given sufficient opportunities during the course of assessment proceedings to produce the evidences before the A.O. The opportunities given by the A.O. during the assessment proceedings have been discussed in detail in the assessment order at the relevant issues. After the search proceedings, the seized documents have been provided to the assessee. Further, notices u/s 153A were issued on 30.06.2014 and served on the assessee to file the corrected returns of income for the year under consideration. Further, detailed questionnaire were issued on 07/08/2014. Again assessee has been given opportunity to furnish the written submission vide notice dated 15122014. Thereafter, the assessee vide show cause notice dated 07/01/2015 has once again to submit the required details. The final opportunity was granted to the assessee vide note entry dated 22/01/2015. Thus, the assessee has been given opportunity vide questionnaire dated 07/08/2014, 15/12/2014, 07/01/2015 and note sheet entry dated 22/01/2015 to furnish its submission before the A.O. Thus, Inspite of various....
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.... -do- 71,90,000/- Thus it is clear and admitted fact that various incriminating documents are found and seized from die premises of the assessee. Therefore the assessee's contention that no incriminating documents are found during the course of search is not correct. The assessee stated that no incriminating document related to the additions made, under consideration, is found during the course of search action and therefore the additions made only on the basis of balance sheets are not permissible as per law as held by various cited decisions. This claim of the assessee is also not acceptable. In the various decisions cited by the assessee it is mentioned that no additions can be made in respect of assessments concluded on the date of search unless some incriminating material is found during the course of search indicating some income and / or assets not disclosed in return of income. Here in the assessee's case, the incriminating material as per LPI-1, pages 1 to 48 are found and seized and on that basis additions are made as per para 10 to 19 of the assessment order on various heads like unexplained expenditure, disallowance u/s 40A(3) etc. It is ....
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....r as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in -which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection 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. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in subsection (1) 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 effec....
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....d during the search and seizure operation were required to be assessed and the regular assessment proceedings were preserved. The introduction of Section 153A of the Act provides a departure from tills proceeding. Under Section 153A of the Act, the Assessing Officer has been given the power to assess or reassess the total income of the assessment years in question in separate assessment orders. Consequently, even though an assessment order has been passed under Section 143(1) (a) or under Section 143(3) of the Act, the Assessing Officer would be required to reopen these proceedings and reassess the total income taking notice of undisclosed income even found during the search and seizure operation. The fetter imposed upon the Assessing Officer under Sections 147 and 148 of the Act have been removed by the non obstante clause under Section 153Aof the Act. Section 139 binds the assessee to discharge his statutory liability while filing his ITR, It is statutory liability to follow provisions of chapter XVII B, 40A(3), 14 A rule 6D, 40(A)(2)(b) etc. Violation of above provisions is subject to disallowances and addition to the income. This is not a part of regular and routine ad....
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....but the return filed u/s 153 A requires that the return filed is a return as if it is filed u/s 139 of the IT Act. During the assessment proceedings, the Act has empowered the Assessing Officer to conduct enquiry though Inspectors, by calling information under section 133(6) and by cross examine through issuing summons and commission. During the course of assessment proceedings under section 153A, if any enquiry conducted and material fact reveals contradictory to the facts detected in assessment proceedings under section 143(3) of the Act, it is statutory liability of the Assessing Officer to confront the facts and accordingly, addition or disallowances can be made which may be contrary to order passed under section 143(3) of the Act, Any enquiry based addition or disallowances made under the proceedings under section 153A of the Act, contrary to the order passed under section 143(3) previously, is legal and valid and does not require of being based on incriminating seized material. Enquiry based addition is legal and valid and does not falls under the case law quoted by the assessee. Similarly, even if no incriminating documents have been found/seized during the....
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....once Section 15BA of the Act is applicable. Section 153A(1) postulates one assessment, computing the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition -was made. Total income is assessed or reassessed in the order under Section 153A of the Act and the Section applies notwithstanding Sections 139, 147, 148, 149, 151 and 153 of the Act. In the case of Commissioner of Income Tax Vs Raj Kumar Arora High Court of Allahabad, it is held that: u/s 153A AO had been given power to assess or reassess total income of assessment years in question in separate assessment orders-Consequently, even though assessment order had been passed u/s 143(1) (a) or u/s 143(3), AO would be required to reopen those proceedings and reassess total income taking notice of undisclosed income found during search and seizure operation- Where assessment or reassessment proceedings had already been completed and assessment orders passed, then AO would be competent to reopen assessment proceeding already made-Reasons given by ITAT that no material was found during search could not be sustained-Addit....
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....t. Ltd. Rs. 25,00,000/- A.Y. 2013-14 xii. Shri Moolchand Kukreja Rs. 1,50,000/- A.Y. 2013-14 xiii. Smt. Sadhana Ahuja Rs. 39,10,000/- A.Y. 2013-14 xiv. Smt. Simran Kaur Bhatia Rs. 7,88,000/- A.Y. 2013-14 .................................................................................... .................................................................................... In the appellate proceedings the assessee stated that the above loan is not a fresh loan received in A.Y. 2013-14 and therefore requested to delete the addition made for A.Y. 2013-14. On erification, it is seen that the above unsecured loan was received by the assessee in F.Y. 2011-12 relevant to A.Y. 2012-13 through cheque from the above person. In respect of above unsecured loan the assessee has submitted only confirmation letter and failed to prove the creditworthiness and genuineness of the loan transaction by submitting copy of ITR, Balancesheet, bank statement etc. of the said person. Therefore the said unsecured loan may be treated as unexplained credit in the books of the assessee. 4.2 Share application money: In the asse....
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.... Unexplained investment in land u/s 69B In the assessment order, the following additions are made on account of unexplained investment in land u/s 69B of the IT. Act for the A.Y. 2008-09 to 2011- 12. These additions are made on account of difference between actual purchase price and fare market value fixed by 'Stamp Valuation Authority in respect of the properties purchased by the assessee during the relevant period. The details of the properties purchased, stamp duty valuation, actual price and addition made by A.O. are as under: x S. No. Land purchased from Date of purchase, location of land, area of land Stamp duty value fixed by the 'SVA' Actual price paid for purchase of the land Addition made by the AO A.Y. 1 Shri Darshan Lal Nihal 31-03-08 Agriculture Land 0.66 Acre 22,69,500 9,00,000 13,69,500 2008-09 2 Goverdhan S/o Anand Ram 31-07-08 Agriculture Land 0.88 Acre 64,00,500 30,17,500 33,83,000 2009-10 3 Bisoha S/o Lt. Birju and others 03-06-08 Land at Vill: Tara 69,000 20,600 48,400 2009-10 4 Ballumal, Vinod, Rakesh, Jyoti, Anil, Smt Haridevi, Telibandha, Ra....
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....e assessment order, submissions of the appellant, the remand report and the rejoinder. The appellant has taken multiple grounds of appeal on facts as well as law. Additional grounds of appeal number 2(a), 2(b) and 3 (a) raised by the appellant in the appeal goes to the very root of the matter and hence it is taken up first. The appellant has also raised the issue with respect to the legal requirement of limiting the scope of assessments under section 153 A of the Act to the extent of incriminating material found and seized during the course of search and for this purpose he has relied upon several case laws also. 9. The issue, therefore, which really arises here is the scope of the assessment u/s 153 A. Scope of the assessment means after the assumption of jurisdiction u/s 153 A on account of search u/s 132 of the Act whether the AO is competent to make a de novo assessment covering any and every aspect of the assessabilty or the assessment has to remain restricted in scope to just the incriminating material found and seized during the course of search. One of the most comprehensive authority dealing with this controversy is Hon'ble Delhi High Court judgment in the cas....
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....search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 11. Several cases have been decided by Tribunals and Courts around the country similarly or following the aforesaid judgment of the Hon'ble Delhi High Court upholding the proposition of law as laid down by aforesaid judgment. There is hardly any case subsequent to Kabul Chawla in which contrary view on the scope of assessment has been taken subsequent to the Kabul Chawla ru....
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....f income in this case for A.Y. 2009-10 was originally filed on 30,09,2009, for A.Y. 2010-11 on 05.01.2011 and for A.Y. 2011-12 on 23.03.2012. The search u/s 132 of the Act was conducted on 30th November 2012. leading to the assessment being final and unabated for these three assessment years in respect of those issues for which no incriminating material was found/seized during the course of search. It has also been repeatedly held by various courts/tribunals that if no notice under section 143(2) is issued within the permissible time for issue of the same, then for that particular assessment year the assessment is to be considered as complete and would not abate for the purposes of section 153 A of the Act. 18. From the remand report it can be seen that the A.O has specifically identified seized evidences wherever they were available and tabulated the same. All the additions made by the A.O for the unabated years will be examined in the aforesaid factual backdrop to ascertain whether those could be made as per the scope of assessment for assessments u/s 153A." 24. The main contention of the assessee is this that during the course of search no incriminating material was ....
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....nder this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 27. Hon'ble Court has specifically observed for the purpose of S....
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....he intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass ass....
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....filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs. 11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions ca....
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.... an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under s. 132 incriminating material justifying the reopening of the assessments for six previous years is found that the invocation of s. 153A qua each of the assessment years would be justified. If no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under ss. 153A and 153C.-CITvs. Kabul Chawla (2015) 281 CTR (Del) 45 : (2015) 126 DTR (Del) 130: (2016) 380ITR 573 (Del) followed. (Paras 56 & 60) There is no statement In the present case which can be said to constitute an admission by the assessee of a failure to record any transaction in the accounts of the assessee for the assessment years in question. On the contrary, the assessee herein stated that, she is regularly maintaining the books of accounts. The disclosure made in the sum of Rs. 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maint....
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....2) was ever issued to the assessee till the date of search. The time limit for issuance of such notice had already expired on 30/09/2012 i.e. within 6 months from the end of relevant assessment year. Thus, AY 2011-12 was a non-abated year. In such a case, the additions which could be made has necessarily to be on the basis of incriminating material found by the department during the course of search operations as held by Hon'ble Bombay High Court in CIT V/s Continental Warehousing Corporation [2015 374 ITR 645]. In other words, unless any incriminating material was unearthed, no additions could be sustained in the hands of the assessee. So far as the arguments of revenue that intimation u/s 143(1) would not constitute an assessment, is concerned, we find that the factual matrix in decision rendered by Hon'ble Bombay High Court in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) was similar wherein the original return was processed u/s 143(1) and the time limit for issuing notice u/s 143(2) had already expired. The Hon'ble Court chose to follow its own decision rendered in CIT Vs. Continental Warehousing Corporation [2015 374 ITR 645]. Therefore this argument ....
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....n 156, that did not per se preclude the Assessing Officer to proceed under Section 143(2). The right preserved was not taken away. The Hon'ble Supreme Court referred to the period between April 1, 1989 and March 31, 1998, and the second proviso to Sub-section (1) Clause (a) of Section 143 and its substitution with effect from 1st April, 1998. The sending of intimation between 1st April, 1998 and 31st May, 1999 under Section 143(1)(a) was mandatory. That requirement continued until the second proviso was substituted by the Finance Act, 1997, which was operative till 1st June, 1999. 25. The Hon'ble Supreme Court therefore, relied upon these amendments and, tracing their history, held that the intimation under Section 143(1)(a) cannot be treated to be an order of assessment. That is how it referred to the Division Bench Judgment of the High Court at Delhi and explained the legal position. There was thus no assessment under Section 143(1)(a) and therefore, the question of change of opinion did not arise. A reference to Section 147 therefore, was made in the context of the Assessing Officer being authorized and permitted to assess or re- assess income chargeable to tax ....
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.... made by the assessee, the addition would become unsustainable in the eyes of law. The additions made merely on the basis of retracted statement without there being any corroborative evidence / material, in our considered opinion, is not sustainable in law since the same run contrary to CBDT Circular F. No.286/2/2003-IT(Inv.), dated 10/03/2003 which has clearly stated that no attempt should be made to obtain confession / surrender as to the undisclosed income during search. Such confession, if not based on credible evidence, when retracted, would not serve useful purpose and an therefore, the authorities should focus on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax department. Further, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income and the addition should be made only on the basis of material gathered during search operations. Any action on the contrary has to be viewed adversely. The subsequent Circular F.NO.286/98/2013-IT (INV.II)] dated 18/12/2014 emphasizes upon need to focus....
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....ny connection / nexus between the assessee and the group entities of Shri Shirish C. Shah. 11. We also find that this legal issue stood covered in assessee's favor by the decision of SMC bench of Tribunal rendered in the case of another assessee of the group i.e. Smt. Reena A. Ajmera V/s DCIT (ITA No.982/Mum/2020 dated 09/02/2021). The relevant observations were as under: - **** ***** **** 13. The Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla (supra) held that - "completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment. Pursuant to search carried out in case of the assessee, a notice under section 153A(1) was issued. In course of assessment, Assessing Officer made addition to assessee's income in respect of deemed dividend. It was undisputed that assessment for assessment years in question had already been completed on date of search. Since no incriminating material was unearthed during the search, no add....
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....ate from the same. 12. Finally, on the given facts and circumstances, we concur with the submissions of Ld. AR that in the absence of any incriminating material, the additions could not be made in the hands of the assessee as per settled legal proposition. Accordingly, the impugned additions stand deleted. We order so. Since legal grounds raised by the assessee have been allowed, the adjudication on merits have been rendered merely academic in nature. The legal ground raised by the assessee stand allowed. The appeal stand allowed. 13. Facts as well as issues are quite identical in all the other appeals. The assessment orders as well as appellate orders are on similar lines. Aggrieved, the assessee is in further appeal before us with similar grounds of appeal. Facts being pari-materia, the same, our adjudication as above shall mutatis-mutandis apply to all these appeals. Accordingly, the legal grounds raised in all these appeals stand allowed and the impugned additions as made therein stand deleted. All these appeals stand allowed. Considering the ratio laid down in the judgments cited above and the fact of the case, we find substance in the case made out by the....