TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1565
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....assed 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, Central, Bhopal from the Camp at Raipur is in terms ....
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....pporting 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 approval granted by the Addl.CIT, Central, Bhopal under Section 153D of the ....
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....2.01.2015, 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 mention that said order passed by the Ld.DCIT (Central)-1, Bhopal contains 101 pages. 9. We have further carefu....
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....y 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 mandated by law under the provision of Section 153D of the Act as per 153B(1)(a) assessment under Section 153A r.w.s. 143(3) would be invalid, nonest in the eye of law was, thus, liable to be quashed. 13. In support of the case on the ....
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....ok 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, has relied on the case laws relied for deciding the issue of approval u/s 158BG of the Act and therefore this manual is applicable to provisions of Section 153D also. Learned counsel for the assessee further placed reliance on Circular No. ....
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....f 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 been obtained by the Assessing Officer. It was submitted that the approval was taken well within the time before limitation and the higher authority has fully applied his mind to grant approval. It was submitted that though the Jt. CIT has not written in so....
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.... 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, it is apparent from the documents on record that the approval was given by the Joint Commissioner in hasty manner without even going through the records as the records were in Jodhpur while the Joint Commissioner was camping at Udaipur. The entire exercise of seeking and granting of approval in all the 2 cas....
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.... 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 annulled. Rest of the grounds were not argued by Learned A. R. therefore, rest of the grounds are dismissed as not pressed. 12. In nutshell, the appeals filed by the assessee are partly allowed." 14. Further that the approval accorded under Section 153 is without any occasion to refer the assessment records and seized mat....
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.... 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 the same qua the draft assessment orders. No reference in this regard is made in the approval note either which may discard such allegation as untrue. No other material or order sheet in assessment proceedings etc. were placed before us either to establish otherwise. Except these two documents namely, a solitary communication from AO to the Addl. ....
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....d 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 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 ....
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....nce, 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 153A of the Act" . In fact, the memo seeking approval of draft order seeks major groups of assesses which has been placed in a single notesheet whereupon instead of passing different approval in respect of each and every matter. Ld.ACIT granted approval in a mechanical manner without referring to the reply and/or rejoinder preferred by the assessee, abated, unabated assessme....
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....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 materials nor furnishes any assurance with respect to approval and appraisal of all evidences and corresponding reply filed by the assessee. The JCIT rather than confirming such lacunae at the part of the assessing officer, goes on to act in oblivion by "presuming" that the necessary opportunity has been given to the assessee and all the records, evidences and materials have been thoroughly verified. T....
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....nder 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), * R.R. Energy (ITA No. 225/RPR/2015 and * Sanjay Duggal vs. ACIT, ITA 1813/Del/2019 dated 19.01.2021 16. On the other hand the ld. CIT-DR for the revenue supported the order of the lower authorities. The ld. CIT-DR for the revenue submits that in the search matters the draft assessment order is always prepared under the guidance of Joint Commissioner of Income- tax (JCIT). The assessee was provided full opportunity during the assessment. The assessment proceedings are also sup....
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....s. 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 of search assessment as no incriminating material was seized in search. However, the ld CIT(A) has not discussed the ground of appeal raised by the assessee. 19. The Hon'ble Delhi High Court in PCIT Vs Best Infrastructure (India) Pvt. Ltd (supra) held that statement recorded under section 132(4) does not itself constitute incriminating material. Thus, the statement of Deepak Aggarwal cannot be treated as incriminating evidence for making basis for addition of share premium under section 68 of the Act. 20. Fur....
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....atya 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 accordingly. The copy of the final order may be submitted for record purpose in this office Encl: case records Sd/- (R.M. Mujumdar) Joint Commissioner of Income tax, Range- Central, Raipur. 22. On careful perusal of the approval order of JCIT, we find that the JCIT while granting approval on 22.12.2018 recorded that " it is presumed that the AO has - given proper opportunity of hearing to the assessee, thoroughly verified the seized material and that there is no adverse finding, satisfy himself that all issues emanating from the record have been verified and additions wherever required have been proposed." 23. Before us, the ld AR for the assessee vehemently argued t....
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....ly 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 assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination / investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Add....
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....cal 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 assessment orders were not really made on 28.11.2016 when it was ostensibly made but it was made on a later date. The respective assessment orders were thus challenged as void on the ground of such orders being antedated. It is the case of the assessee that a questionnaire raising substantial points was issued to the assessee in the course of assessment proceedings under s.153A of the Act on 21.11.2016 which required the assessee to make compliance thereof at a very short notice on 28.11.2016 at 11:30 a.m. On this date and time, the assessee was directed to furnish replies on various points. Admittedly, the assessee could not turn up on this date appointed for compliance. A reply to questionnaire was however filed on next day i.e. 29.11.2016. The AO....
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.... 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 revenue and public money. We are unable to visualize as to how such long and complex assessment orders could be prepared and finalized for the approval of superior authority in few hours even if some ongoing draft works were assumed to be available in this regard. A natural question would arise as to what was the hurry for doing so? When seen in conjunction, it is yet more difficult to perceive that an y superior authority, expected to keep a strict vigil on the actions of AO under s.153D of the Act, can possibly grant approval to such longish and high staked matters of as many y as 28 cases in virtually y no available time and remit the same to the AO on the same day for passing final order. Such inordinate and extravagant speed smacks of pretense and provokes ....
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....stances. 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 probability that a reasonable person may, on its basis, believe in the existence of facts in issue. The conduct of Assessing Officer cannot be countenanced, howsoever soft stance we may incline to take. The conduct, when seen in totality y, is unprecedented and casts infallible impression that the assessment orders giving rise to the captioned appeals are antedated indeed and thus a nullity in the eyes of law. All the assessment orders are required to be cancelled at the threshold in such sordid circumstances. 14.5 It would however be also pertinent to delineate whether the so- called approval of JCIT under s.153D of the Act meets legal requirement or not. As repeatedly observed above, the JCIT purportedly carried out the exercise of granting approval in a baffling haste.....
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.... 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: "6. On Ground No.3, assessee challenged the approval granted by JCIT under section 153D without application of mind. 6.1. The approval under section 153D of the Act is filed at page-96 of the PB which reads as under : "GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX -CENTRAL RANGE, Room No. - 205, Aayakar Bhawan, Hoshangabad Road, Bhopal (M.P.)-462011 [email protected], Telephone No.0755-2551326 F.No. JCIT (Central)/BPL/153D/2017-18/1401 Date 22.12.2017 To The Asstt. Commissioner of Income Tax (Central) Jabalpur. Sub:- Approval u/s 153D of the Income Tax Act, 1961 in the case of JHRC & Metro Group - reg. Please refer to your letter in F.No ACIT/Central/JBP/153D/2017-18 dated 22.12.2017 se....
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.... "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 duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the section is not turned into an empty ritual. Needless to emphasise that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the A.O. The approval must reflect the application of mind to the facts of the case." ....................................... ...................................... " 13.2. The ITAT, Jodhpur Branch in the case of Smt. Indira Bansal vs., ACIT (supra), held as under: "Conclusion : Jt. CIT having granted the approval under s. 153D on the very same day on which the forwarding letter seeking approval was received in his office, and circumstances indicate that this exercise was carried out by the Jt. CIT in a mechanical manner without proper application of mind and even without....
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....he 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 passing of the assessment order on 31st January 2014. The above decisions are clearly applicable to the facts and circumstances of the case. In view of the above discussion, we are of the view that no valid approval/sanction have been granted by the Addl. CIT, Chandigarh before passing the assessment order in the matter. The requirement of Section 153D of I.T. Act, 1961, are not satisfied in this case. We accordingly hold that entire assessment order is vitiated and is null and void. We, accordingly, set aside the orders of the authorities below and quash the assessment order in the matter. Resultantly all additions stand deleted. In the result, Ground No.1.3 of the appeal of Assessee is allowed." 6.5. In the above case, an identical issue have been considered in the light of Judgment of Hon'ble Bombay High Court in the case of Pr. CIT vs., Smt. Shreelekha Damani in Income Tax Appeal No.668 of 2016, Dated 27th November, 2018 and it was held that "requirement of Section 153D of the I....
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....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 mechanical manner, not in terms of the mandate prescribed under Section 153D of the Act. The same, is, therefore, not found to be sustainable. We have also discussed different judgments passed by different judicial forums on the identical issue and has been inspired to come to the conclusion as made by us hereinabove. We, therefore, set aside the approval granted by the ACIT (Central), Bhopal. The consequential impugned assessment orders on this nonest approval under Section 153D of the Act are, thus, void-ab-initio and on this score alone, the entire proceeding is, thus, quashed. This covers both abated and unabated assessments. 19. We would also like to note that the ld. AR made vehement arguments in support of the order passed by the Ld. CIT(A) on another legal ground to the effect that in the absence of incriminating document found during the course of search, addition made in unabated assessment under Section 153A of the Act is bad in law and liable to be quashed. 20. It is an admitted position that A.Ys. ....
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....de 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 opportunities, the assessee failed to furnish the complete details, evidences during the course of assessment proceedings and therefore, the request of the assessee to consider the additional evidences may be rejected. 3. Additional grounds: The assessee has raised additional grounds in respect of additions made on various grounds for all the A.Ys. stating that- i) On the date of search assessment years 2008-09 to 2011-12 have been concluded / completed in the eyes of law, since the assessment reached to the finality, ii) No incriminating material/ document related to these additions is found during the course of search in respect of these assessment years. iii) The additions are made by the A.O. only on the basis of balancesheet filed before him & queries raised by him during assessment proceedings, iv) Such additions are not permissible as per law as held by various cited decisions. These decisions are discussed by the assessee in its written submission. These additional grounds of the assessee are not accep....
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....iminating documents related to additions is necessary to be found & seized from the plain reading of the decisions cited by the assessee. From the plain reading of various decisions cited by the assessee it is clear that the primary condition to assess the income of the assessee afresh is that some incriminating documents is to be found and seized during the course of search action and it is not necessary that the documents needs to be related to the additions made but the documents should indicate that some income and / or assets is not disclosed in the return of income. Here in the assessee's case various incriminating documents found and seized at LPI-1 (page 1 to 48) shows that the assessee has incurred various unaccounted expenses which are not recorded in the books of accounts, which form the undisclosed income of the assessee. Thus the primary condition that some incriminating documents / material indicating some income and / or assets not disclosed in return of income, is fulfilled in this case. Without prejudice to the above, it is necessary to discuss the following issue regarding necessity of incriminating seized material for making any addition / disallowance in t....
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....uch revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." Further to state that Section 153A of the Act along with Section 153B and 153C replaced the "Post Search Block Assessment Scheme" in respect of any search under Section 132A or requisition under Section 132A made after 31.05.2003. Earlier, Chapter XIV-B provided for assessment to be made in cases of search and seizure, which was known as Post Search Block Assessment Scheme because this Chapter provided for single assessment to be made in respect of a block period of 10 assessment years prior to the assessment in which the search was made. With the introduction of Section 153A to Section 153C of the Act, the single block assessment concept was given a go-by. Under Section 153 A of t....
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....n or omission is made by the assessee, it is mandatory to rectify his mistake by filing revised return under section 139(4), filing rectification application under section 154 or in search cases disclosed it under section 132(4) of the Act. The final opportunity of rectification is given through notice under section 153 A of the Act. If the case is scrutinized under section 143(3) of the Act, it is his duly to disclose this fact to the Assessing Officer. Notices under section 143(2) and 142(1) served during the assessment proceedings bind the assessee to assist the Assessing Officer disclosing all the material facts for proper assessment of his income. If anything has left for addition or disallowances, it is his statutory liability to disclose this fact. If the assessee looses all the opportunities for such disclosure, any addition made on account of mandatory provisions it can be added or disallowed during the course of assessment proceedings under section 153A of the Act. In such cases, addition and disallowances cannot be barred by incriminating seized material. In view of the provision of Act, the assessee was requested to file return of income u/s 153A of the IT Act in resp....
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.... 153 A of the IT Act empowers the Assessing Officer to 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. In order to further strengthen the findings of the investigating agency, inquiries may be conducted by issuing of notices u/s 133(6) of the IT Act as well as by issuing commissions u/s 131D of the IT Act. As per provisions of Section 139 (1) of the Act, the assessee is required to furnish his income and investment in prescribed format and in the manner provided in the Act. Due to omissions or commission if any particular of his income or investment has been left, the Act facilitated the assessee to revise his ITR under section 139(4). Further, he may have file application under section 154 of the Act to rectify his mistake. In search proceedings, he was given further opportunity under section 132(4) and further by filing ITR under section 153A of the Act for disclosure of commission and omission of income and fact. If the assessee has made no efforts to disclose the facts affecting his income and the assessee has failed to avail the above ....
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....iminating seized material even though the case is previously assessed under section 143(3). Enquiry based addition can be made if the facts is contrary to the findings made in the order under section 143(3) of the Act. Any mandatory violation made by the assessee, subject to addition or disallowances even if no incriminating documents found during the course of search and if the Assessing Officer failed to detect, during the assessment proceedings under section 143(3) of the Act. In view of the above discussion, objection raised by the assessee deserves to be rejected. 4. Without prejudice to the above, as directed by the Hon'ble CIT(A), vide letter dated 10/08/2016, the additional evidences submitted by the assessee are verified 7 examined and the report in this regard is submitted as under: - (Since the issue involved are common in various assessment years, the report is submitted on issue basis). 4.1 Unexplained cash credits u/s 68: (Unsecured loans) A.Y. 2008-09 to A.Y. 2013-14 During the course of assessment proceedings the assessee has been asked to prove the identity, creditworthiness and genuineness of the unsecured loans received by it from 19 parties. Out of the....
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....ficer during the assessment proceedings. The submission made by the assessee during the assessment proceedings has already been considered by the Assessing Officer. Considering the above facts and since no additional evidences on the above issue has been submitted by the assessee at the stage of remand report, the additions made on this account may be confirmed in view of the detailed reasons and discussion made by the Assessing Officer in para 7 (page no. 6 to 29) of the assessment order. The correct position of year wise details of introduction of share capital and share application money has been submitted by the assessee during the course of appellate proceedings. It is seen that in the assessment order, the year wise details of introduction of share capital as mentioned above is not correct. On verification, the correct position of year wise details of introduction of share capital and share application is as under: Sr. No. Name of the person 2008-09 2009-10 2010-11 Total 1. Mahendra Ahuja 12550000 20900000 8770000 42220000 2. Roma Ahuja 50000 6200000 40000 6290000 3. M/s M.R. Agriculture - 24100000 3200000 4900000 27300000 4900000 Total 12600000 5....
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....ram, Santosh S/o Indaldas Dhobi, Smt Shanti Bai, D/o Indaldas Dhobi, Vill- Tulsi, Block- Dharsinwa, Distt- Raipur 4-12-10, Land at Vill-Tulsi, PHNo. 111/41, Kh.No. 130/3, 0.115 hec, 0.028 acre 11,57,500 8,26,000 3,31,500 2011-12 The assessee has not submitted any additional evidences during the appellate proceedings. The above additions are made on the basis of value fixed by stamp value authority which has been accepted by the purchaser i.e. assessee for payment of stamp duty for purchase of these properties. The valuation fixed by one Government Authority i.e. Stamp Duty Valuation Authority has been accepted by the assessee for purchase of these properties and therefore the said value adopted for working of unexplained investment in purchase of property is in order. Therefore the submission of the assessee on this issue is not acceptable. The additions made on this account may kindly be confirmed. " 21. The assessee filed rejoinder before the Ld.CIT(A) and finally the Ld. CIT(A) vide order dated 30.09.2016 for A.Y. 2008-09 and the appellate order dated 18.10.2016 for A.Y. 2009-10 to 2011-12 granted relief by deleting the additions on the premise that in absence of any inc....
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....earch takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AY'S immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AY's will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the ....
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.... CIT vs. Continental Warehousing Corporation Ltd. [2015] 58 taxmann.com 78 (Bombay HC) dated 21.04.2015 4. Jai Steel (India) Ltd 219 Taxmann 223 (Rajasthan HC) dated 24.05.2013 5. Pr CIT vsKurele Paper Mills (P) Ltd ITA No. 369/2015 (Delhi HC) 6. CIT (C)-I vs MGF Automobiles Ltd. ITA No. 13,14/2014 (Delhi HC) 7. Jaipuria Infrastructure Developers (P) Ltd. vs ACIT ITA No. 5522, 5523/Del/2015 dated 27.06.2016 8. Pr. CIT vs Dinesh Tarachand Kasat Tax Appeal No. 469.470 of 2016 (Gujarat HC) dated 28.06.2016 9. CIT vsThakkarPopatlalVelji Sales Ltd 2016-TIOL-709-HC-MUM-IT dated 29.03.2016 10. ACIT vs. Mahagun Realtors (P) Ltd. 2016-TIOL-95 5-ITAT-DEL 11. All Cargo Global Logistics Ltd. [2012] 23 taxmann.com 103 (Mum.) (SB) 23. Upon considering the case made out by the respective parties and the judicial pronouncements as relied upon by the assessee, the Ld. CIT(A) concluded as under: "16. Considering the aforesaid judicial view on the scope of search assessments in the unabated cases which is consistently followed by jurisdictional Tribunal at Indore and several other High Courts and Tribunals, I have no option but to respectfully follow the ....
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.... Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the c....
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....ed on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 28. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as ....
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....arch came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition as well as the copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that a....
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....complete agreement with the view adopted by the Rajasthan High Court in the ca e of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed." 29. Apart from that the Hon'ble Delhi High Court in the case of PCIT vs. Meeta Gutgutia, reported in (2017) 395 ITR 526 (Delhi) on the identical issue has held as under: "Sec. 153A is titled "Ass....
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.... 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 s. 153A." 30. Recently, ITAT, Mumbai Bench in the case of Jasmin K. Ajmera Vs. DCIT, in ITA No.983/Mum/2020 in its order dated 02.11.2021 has considered the scope of section 153A of the Act wherein the Tribunal discussed proposition of law laid down by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra), and decision of Hon'ble Gujarat High Court in the case of CIT vs. Saumya Construction (supra) and finally since no incriminating material was unearthed during the search, no additions could have been made to income already assessed and concluded was of the finding of the Bench. The relevant discussion in this regard is as follows: "7. We have carefully heard the rival submissions and perused relevant material on record including the documents seized by the department from the assessee group during the course of search operations. We find that the assessee had filed original return of income on 20/07/2011 and search operations were carried out on as....
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....not acceptable. On 12th May, 2004, a return of income declaring the loss at the same figure as declared in the original return was filed by the respondent-assessee under protest. A copy of the reasons recorded was furnished by the Revenue on the request of the assessee sometime in November, 2004. The assessee raised various objections, both on jurisdiction and the merits of the subject matter recorded in the reasons. The Revenue disposed of these objections on 4th February, 2005 holding that the initiation of reassessment proceedings was valid and it had jurisdiction to undertake such an exercise. The notice under Section 148 of the IT Act dated 12th May, 2004 was challenged by the respondent-assessee. 23. That Writ Petition was allowed and hence, the Revenue was in Appeal. 24. Mr. Ahuja's argument overlooks this factual aspect and when he relies upon the observations of the Hon'ble Supreme Court, and particularly in paragraph 13, he forgets that they were made in the context of a challenge to the notice under Section 148 of the IT Act. The Supreme Court, in paragraph 13 of this judgment, noted that intimation under Section 143(1)(a) was given without prejudice to the p....
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....lready part of assessee's regular books of accounts and have not been referred to by Ld. AO while making impugned additions in the hands of the assessee. In the assessment order, the long-term capital gains earned by the assessee have been held to be bogus in nature, however the same are not corroborated, in any manner, by the seized material. The allegations of Ld. AO are primarily based on the search findings in the case of Shri Shirish C. Shah and his group entities whereas no incriminating material has been seized from the assessee. In fact, in the remand report dated 09/01/2017 (page nos. 196 to 199) filed by Ld. AO during first appellate proceedings, it has categorically been admitted by Ld. AO that there was no incriminating material in the case of the assessee. Nothing has been shown to us to controvert these findings of Ld. AO. Therefore, the ratio of cited decisions as referred to in para-6 is quite applicable to the facts of the case. 9. So far as the admission in the form of assessee's own statement is concerned, we find that this statement has been retracted by the assessee by way of on affidavit on 02/08/2013 (page nos. 7 to 10 of assessee's paper book) ....
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....und during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to sustain additions on the basis of recorded statement. Similar is the view of Hon'ble High Court in an earlier judgment of CIT V/s Sunil Aggarwal ( 379 ITR 367; 2016) and also the decision of Hon'ble Andhra Pradesh High Court in CIT v. Shri Ramdas Motor Transport (238 ITR 177) wherein Hon'ble Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patently u/s 132(4) did not have any evidentiary value, was upheld. The ratio of all these decisions makes it clear that the surrendered income must be correlated with some incriminating material found during the course of search action so as to justify the addition. We find that there is no such incriminating material in the case of the assessee which wou....
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....the assessee admitted undisclosed Income in his statement u/s.132(4) of the Income Tax Act 1961. It is totally immaterial that the assessee later on retracted the statements recorded u/s 132(4) of the Income Tax Act 1961. Therefore assessment of AY 2011-12 and AY 2012-13 which was made on the basis of undisclosed income admitted during the course of search is totally valid assessment and does not get affected by the decision of Hon'ble Bombay High Court in the case of Continental Warehousing (Supra)". 17. In this case it appears that except the statement of the assessee u/s. 132(4) agreeing for the addition there is no seized incriminating material found in the premises of the assessee in the course of assessment proceedings. When there is no incriminating material found in the course of search in assessee's premises the addition/disallowance cannot be made merely on the statements recorded in the course of the search proceedings. The facts in the above case are quite identical to the case before us since the additions permeates from same search action and similar additions were made in the case of this assessee. Therefore, the ratio of above decision is quite applicabl....