TaxTMI 
TaxTMI 
2024 (5) TMI 1690
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....1961 for the year could be made only on the basis of incriminating document seized in the course of search of the assessee. The Commissioner (Appeals), however, confirmed the additions not on the basis of any document seized but by relying on uncorroborated material collected from sources unconnected to the search of the assessee u/s 132. In the case of a concluded assessment, such additions are not permissible. Consequently, the additions are bad in law and deserve to be deleted. 3. The Commissioner (Appeals) failed to appreciate, as held by the courts and Chennai Tribunal, that existence of undisclosed income or incriminating evidence evidenced by a seized document is sine qua non for making additions in the assessment under section 153A in respect of unabated assessments. 4. The material relied upon by the Commissioner (Appeals) to confirm the additions was not found during the course of the search of the Appellant. The said material was already available with the Assessing Officer which had been collected in the course of the search of another entity. The Commissioner (Appeals), therefore, erred in confirming the additions made by the Assessing Officer who rel....
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.... and then disposed of the same on merits. Thus, by this decision, the Hon'ble Supreme Court has pronounced the law on the subject and that answer is final. It is in favour of the Appellant. 8. The Commissioner (Appeals) erred not following the ratio of the judgments cited above, more so the judgment of the Hon'ble Supreme Court and the judgment of the Hon'ble Chennai Tribunal and confirming part of the additions made in the assessment made u/s 153A. Consequently, it is requested that the additions may kindly be deleted. 9. Without prejudice to the grounds No. 1 to 7 above (a) The Commissioner (Appeals) erred in confirming a sum of Rs. 46,25,760/- as proportionate share in 'on money' of Rs. 1,73,00,000/- received by Mr. Venkatram Reddy from M/s. Omshakthi Agencies (Madras) P Ltd., despite acknowledging the fact that Mr. Venktram Reddy has received this money in his individual capacity as broker to Mis. Omshakthi Agencies (Madras) P Ltd. for their land aggregation. (b) The Commissioner (Appeals) ought not to have made the addition of Rs. 46,25,760/- in the hands of the Appellant when the evidence corroborated that Mr....
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....ara-7 of assessment order, Ld. AO referred to another search conducted in the case of Om Sakthy Agencies (Madras) Pvt. Ltd. (OSAPL) on 02.07.2010 wherein it was found that OSAPL inflated expenses on purchase of land from assessee group. A search was also conducted on the assessee on 21.06.2011 wherein it was found that the assessee company along with its sister concerns made land sales to OSAPL through two brokers in financial years 2006-07 and 2007-08 which were alleged to be partly unaccounted. Total land sold by the assessee group was 102.87 acres against sale consideration of Rs. 24.01 Crores. Despite search and cross examinations, there was no clarity as to whether the sale figure was correct figures of sales as the books of buyer as well as sellers had been manipulated. Therefore, the assessment was framed based on evidences available on record. 3.3 It was noted by Ld. AO that OSAPL claimed payment of Rs. 24.01 Crores whereas brokers claimed to have received Rs. 11.9 Crores for payment to assessee group. Both the brokers as well as BVR were produced on 01.07.2011 as witnesses of OSAPL and statement was recorded from executive director Shri N Manigantan. Shri....
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....ere deposited in the above-mentioned undisclosed bank accounts. Therefore, there could be no different source of money. MSR, post-search cross-examination, had accepted the fact of accepting on money. The Ld. AO also held that BVR acted for and on behalf of the assessee group and he had deposited on-money or money from undisclosed sources in his personal name as they were not to be incorporated into the accounts and were not to be disclosed to the department. The same was also evidenced from the fact the many withdrawals / cheques issued found its way back in to the group companies as credits in some other name. Some of the payments had also gone to persons from whom these companies had purchased land or had given advances for land purchases. Few of such instances have been recorded by Ld. AO in the assessment order. 3.8 Based on these findings, Ld. AO alleged that all such deposits were to be considered as unaccounted money of the assessee-group. In this year, the amount of Rs. 623.10 Lacs was directly attributable to four companies including the assessee company. The proportionate share of the assessee company worked out to be Rs. 171.35 Lacs which was added back to ....
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....normal provisions like 143(3) and 147. It is not restricted to abating the pending assessment / reassessment proceedings. The Ld. AO could not resort to Sec. 143(3) or 147 as these provisions would become unoperational. The provisions of Sec. 153A are substituted provisions for Sec. 143 as well as for 147. In other words, all the powers vested with AO under normal provisions of Sec. 143 & 147 are now available with AO u/s 153A upon initiation of search u/s 153A. However, Ld. AO is not permitted to re-visit the already concluded issues, especially in unabated concluded assessment years and could not require the assessee to prove its claim once again. In all such already concluded assessment years, the assessment of total income should be strictly based on the material evidences and information gathered during search proceedings and / or during the course of 153A proceedings. Finally, Ld. CIT (A) held that in the present case, no assessment was made in any of the AYs prior to search and therefore, these assessment years could not be considered as concluded or assessment years having reached finality. Therefore, presence of seized material would not be a mandatory requirement for dete....
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....bank accounts were opened by Shri BVR prior to his joining the assessee group of companies on 24.08.2006. The impugned income / benefits so earned by nominal shareholder could not be considered as the income of the assessee. Therefore, Ld. CIT (A) held that BVR merely acted as a broker and the amount was more of brokerage rather than on-money portion of sale consideration. The Ld. CIT (A) however, held that the cash portion of Rs. 1.73 Crores could be deemed to have been received by the assessee company. The proportionate share of the assessee therein was Rs. 46.25 Lacs which was to be confirmed as receipt of on-money by the assessee. 4.7 On the issue of lease advance of Rs. 10 Lacs, the assessee submitted that though the lease agreement was entered by the assessee and the same was registered, the same was never acted upon. The assessee never paid any such lease advance to prospective sellers. In support, the assessee drew attention to the confirmation from prospective seller as placed before Ld. AO during assessment proceedings. However, Ld. CIT(A), noted that the seized document include lease agreement. As per this agreement, the assessee paid an amount of Rs.&n....
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....f Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399), considering all the earlier decisions holding the field, would squarely apply to the facts of the case settling the impugned issue in favor of the assessee. The adjudication of Hon'ble Court was as under: - 5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the 'total income' takin....
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....sment 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 assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under 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 153A 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 ....
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....he intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Subsection (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of, the Act is annulled in appeal or ....
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.... High Court in the case of Saumya Construction (supra), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under section 158BA of the Act, 1961. The erstwhile scheme of block assessment under section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rate of 60% under section 113 whereas income other than 'undisclosed income' was required to be assessed under regu....
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....is Act shall, so far 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 sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, 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 sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived ....
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....tion under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that i....
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....incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Civil Appeal Nos. 7738-7739/2021, 7736- 7737/2021, 7732-7735/2021 and 7740-7743/2021 15. Insofar as the afore....
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....43(1). The present case before us is on similar fact. It was held by Hon'ble Court that in respect of non-abated assessment, the additions are to be strictly based on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search and undisclosed income or undisclosed property discovered during search. 9. We find that similar is the view of Hon'ble Delhi High Court in Pr. CIT V/s Meeta Gutgutia (82 Taxmann.com 287) which has primarily followed the decision of Kabul Chawla (supra). We also find that Special Leave Petition (SLP) filed by the revenue against this decision has already been dismissed by Hon'ble Supreme Court on 02.07.2018 which is reported at 96 Taxmann.com 468. The decision of Hon'ble Court was as under: - 1. Delay condoned. 2. We do not find any merit in this petition. The special leave petition is, accordingly, dismissed. 3. Pending application stands disposed of. Therefore, the attempt of Ld. CIT (A) to seek distinction in these case laws is devoid of any merits and needs to be rejected. Respectfully following the ratio of all these binding judicial precedents, the ....