TaxTMI 
TaxTMI 
2025 (3) TMI 1887
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.... to law, fact and in circumstances of the case. 2. The CIT(Appeals) 20, Chennai erred in confirming the validity of framing of the assessment under Section 153A of the Act in the absence of seized material during the course of the search made in hands of the appellant and further erred in confirming the addition made in the search assessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that having assessed the appellant in terms of Section 153A of the Act based on the incriminating materials seized during the search in the premises of Mr. O. Arumugasamy and others in contra distinction to the search in the premises of the appellant herein, wherein no incriminating materials were seized for the purpose of making the disputed addition(s) in the search assessment order(s), the consequential search assessment order passed should be reckoned as bad in law. 4. The CIT(Appeals) - 20, Chennai failed to appreciate that having used the disputed search materials seized in the premises at Mr. O. Arumugasamy and others for making the disputed addition and fu....
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.... to appreciate that appellant had discharged the onus cast upon in explaining the transaction under consideration by way of affidavits from the person whose statements were relied on and ought to have further appreciated that the action of the First Appellate Authority in not conducting any further enquiry while passing the order impugned is unsustainable in law. 12. The CIT(Appeals) 20, Chennai failed to appreciate that reasons provided in the affidavit for explaining the transactions under consideration was not understood in proper perceptive while rejecting the same on mere suspicion and surmises. 13. The CIT(Appeals) 20, Chennai failed to appreciate that the findings rendered from paras 7.2.4 to 7.2.12 of the impugned order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 14. The CIT(Appeals) - 20, Chennai failed to appreciate that the entire re-computation forming part of the assessment order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 15. The CIT(Appeals) - 20, Chennai failed to appreciate that the assessment order under consideration ....
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....ted for assessment years 2014-15 to 2018-19 by making following additions:- S. No Nature of additions AY 2014-15 AY 2015-16 AY 2016-17 AY 2017-18 AY 2018-19 1 Unexplained investments u/s.69 of the Act (Presumed loan given to Mr.O. Arumugasamy) 2,56,00,000 4,50,00,000 - - 1,50,00,000 2 Interest quantified as presumed earning u/s.56 of the Act on such loans 5,50,000 77,00,000 1,73,00,000 47,66,000 - 3 Total Addition 2,61,00,000 5,27,00,000 1,73,00,000 47,66,000 1,50,00,000 5. Aggrieved by the additions made in the assessments completed u/s.153A of the Act vide order dated 16.04.2021 for assessment years 2014-15 to 2018-19, assessee preferred appeals before First Appellate Authority. The CIT(A) dismissed appeals of the assessee. The CIT(A) held that search was conducted in the premises of the assessee and therefore, necessarily assessment u/s.153A of the Act has to be completed. It was further held by the CIT(A) there is nothing wrong in making addition by the AO based on the material found during the course of search in the case of Shri O.Arumugasamy and Senthil group, since seized material clearly....
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....itted that additions were made in the case of assessee in an assessment completed u/s.153A of Act, relying on material seized in the course of search u/s.132 of Act in the case of Shri O.Arumugasamy which is bad in law. The learned AR relying on the judgement of the Hon'ble Supreme Court in the case of PCIT, Central-3 Vs. Abhisar Buildwell Private Limited (454 ITR 212) (SC) submitted that in absence of any incriminating material found during the course of search in the case of assessee i.e., on 06.03.2019, no addition u/s.153A could be made. The learned AR submitted that on identical facts emanating from same search conducted on Shri O.Arumugasamy and Shri Senthil Kumar group (search conducted on 09.11.2017), additions made in the hands of M/s.SG Wind Farm Private Limited, Mr.P.K.Ganeshwar and Smt.Chitradevi Ganeshwar, have been deleted by the Tribunal in the case of aforementioned assessees (in assessments completed u/s. 153A of the Act) for the reason that there was no incriminating material in the case of said assessees, but utilize the incriminating material / loose sheets found during the course of search in the case of Shri O.Arumugasamy and Shri Senthil Kumar group which is ....
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.... AO has to assess or reassess the total income of the 'other person' by initiating proceeding only u/s 153A of the IT Act. He cannot do parallel assessment u/s 153A of the IT Act on account of search carried out u/s 132 of the IT Act in his case and one more assessment u/s 153C of the IT Act on the basis of documents and books of accounts found and seized in first search. This is not the legislative intention explained by various High Courts and Hon'ble Supreme Court referred supra. (v). During the course of pendency of assessment initiated u/s 153A of the IT Act or u/s 153C of the IT Act, the AO may receive some other seized material of the assessee found and seized during the course of search and seizure operation carried out in some other case or fresh information of income escaping assessment. Invariably, the AO ought to use such information or the seized material while completing the assessment already pending u/s 153A of the IT Act or u/s 153C of the IT Act. The AO need not initiate one more fresh proceeding either u/s 153C or u/s 147 of the IT Act respectively. It is not envisaged in the statute. (vi). The decisions of Hon'ble High Court of ....
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....rch conducted in the case of assessee on 06.03.2019. Therefore, short issue for consideration is validity of addition made in consequence to assumption of jurisdiction u/s.153A of the Act, in light of dictum laid down by the Hon'ble Apex Court in the case of PCIT, Central-3 Vs. Abhisar Buildwell Private Limited (supra). Further, the undisputed facts are that for assessment years 2014-15 to 2017-18, assessments have attained finality. In other words, for these assessment years assessments were unabated (attained finality). The fact that for assessment years 2014-15 to 2017-18, assessments have attained finality and are unabated assessments is evident from the following dates and events :- S. No. Assessment year Date of filing of ROI Due date for issuance of notice u/s.143(2) Date of search in premises of third party - 09.11.2017 Date of search in premises of assessee - 06.03.2019 1 2014-15 20.12.2014 30.09.2015 2 2015-16 06.11.2015 30.09.2016 3 2016-17 17.10.2016 30.09.2017 4 2017-18 30.10.2017 30.09.2018 12. In view of the admitted position of non-availability of incriminating seized materials in direct search con....
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.... 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 132A 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' taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court....
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....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 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 153A only on the basis of some incriminating material unearthed during the ....
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....2A, as the case may be, shall abate. Sub-section (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 any other proceeding. 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 a key to the interpret....
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....nd 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 regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ....
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....ous 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 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 sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.-For the removal of doubts, it is hereby declare....
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....ial 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 in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case....
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....ng 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 aforesaid Civil Appeals preferred by the assessee - M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 6-9-2016 passed in ITA Nos. 270/2014, 269/2014, 15/2015, TANVI 16/2015, 268/2014 a....
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....but found in the course of search and undisclosed income or undisclosed property discovered during search. 8. 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. 9. Similar is the decision of this Tribunal in the case of M/s Pearl Printers & Publishers Pvt. Ltd. (ITA Nos.1042/Chny/2023 dated 03-06-2024). The bench, under similar circumstances, held that the ratio of decision of Hon'ble Apex Court in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399) would squarely apply wherein it was held by Hon'ble Court that concluded assessment could not be disturbed in search proceedings u/s 153A and the additions h....
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....completed u/s.153A of the Act, after conducting independent search on the said assessee namely M/s.SG Farm Wind Pvt.Ltd. The Tribunal in the aforementioned decision had held addition is not based on any incriminating material and deleted additions made. On similar set of facts, co-ordinate Bench of the Tribunal in the case of Mr.Palladam Krishnasamy Ganeshwar in ITA Nos.1222 to 1225/Chny/2024 vide order dated 19.11.2014 and Smt.Chitradevi Ganeshwar Vs DCIT in ITA Nos.1218/Chny/2024 vide order dated 19.11.2014 had deleted additions made in the aforementioned assessees cases by holding that there is no incriminating material found during the course of direct search conducted in the premises of the aforementioned assessees. 14. Before concluding, it is to be mentioned that learned CIT DR had sought to argue the validity disputed assessments on the premise of direct search being consequential of search conducted in the premises of Shri O.Arumugasamy. The said contention of the learned DR is incorrect, since direct search was conducted after expiry of nearly two years from the date of first search in the case of Shri O.Arumugasamy. It is also to be noted when the search was conducted....
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....d these loans. It is also further evident from sworn statement that assessee is a friend of Shri Senthilkumar S/o. of Shri O.Arumugasamy and Shri O.Arumugasamy knows the assessee only through his son. He has also mentioned in the sworn statement the correct details with regard to interest and amounts that were paid in cash needs to be verified. In the search conducted in the premises of the assessee, the assessee was asked about loose sheets that was seized from premises of search conducted in Shri O.Arumugasamy and Shri A.Senthilkumar group of companies. In response to the same, assessee submitted that all the transactions of advancement of loan by the assessee to Shri O.Arumugasamy and Shri Senthilkumar is accounted through banking channels. The relevant question and answer given [Question No.25 and Answer to 25) is as follows:- "Q 25 - A search was conducted on 09-11-2017 in the case O.Arumugasamy, Shri Senthilkumar and M/s Senthil Paper & boards pvt Ltd. From the premise of office premises of M/s Senthil Group of Companies, registers and folders were seized vide annexure CBE/132/OA/17-18/A1-7. Similarly, from the premises of Smt R.Santhamani, cashier of M/s Se....
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....me and address of the person is also mentioned in the affidavit. The relevant portion of the affidavit of Shri O.Arumugasamy clearly spells out that assessee is not known to him, but only through his son. The same is reproduced below: "4. That Mr.S.Mohanraj, S/o. Mr.M.K.Shanmugam residing at No.18, Santhosh Nagar, Nanjundapuram Road, Ramanathapuram, Colmbatore-641036 is known to me anly through my son Mr.A.Senthilkumar and all transactions with Mr.S.Mohanraj were through my son and were through bank only. 5. That my son A.Senthilkumar had clarified that all the cash transactions mentioned in the name of Mr.S.Mohanraj in our books really do not relate to Mr.S.Mohanraj but to the person referred by him only. 6. That In fact the amounts were given by B.Saravanakumar residing at 1/447, Avinashi road, Neelambur, Coimbatore-641062." 17. From the aforesaid retraction affidavit filed by Shri O.Arumugasamy, it is clear that address and details who had advanced cash loan is mentioned. In other words, transaction of advancement of loan by cash does not pertain to assessee, but to Shri B.Saravanan residing at 1/447, Avinashi Road, Neelambur, Coimbatore-641 062. Sh....
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....an given by Shri B.Saravanan. Further, the loose sheets found in the premises of Shri O.Arumugasamy which is the basis for addition u/s.69 of the Act, does not come within ambit and scope of 'book of entry' or as 'evidence' under the Indian Evidence Act, 1872. In this context, we rely on the law declared by the Hon'ble Supreme Court with regard to acceptance of loose sheets in the case of CBI vs. V.C.Shukla & Ors. [1998] 3 SCC 410 (SC), wherein at para 16 to 18 of the judgement it was observed as under:- "16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no othe....
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....e term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34." 19. Applying the above test, it must be held that loose sheets seized vide annexures i) GM/RS/LS/17-18/A 1-39; ii) GM/RS/BA/17-18/A & iii) CBE/132/OA/17-18/A 1-6, cannot be regarded as 'books of accounts' or 'documents' seized in the course of search. We also refer to the judgement of the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) Vs. Union of India (394 ITR 220) (SC), wherein the Hon'ble Apex Court reiterated the principles laid down by its earlier judgement in the case of CBI vs. V.C.Shukla & Ors. (supra). The relevant finding of the Hon'ble Supreme Court reads as follows:- "278. With respect to the kind of materials which have been placed on record, ....
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.... against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake tha....