TaxTMI 
TaxTMI 
2025 (3) TMI 2146
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....for A.Y. 2010-11 to 2018-19. We note that the ld. CIT (A) passed the ex-parte orders in all the abovementioned assessment years. It was submitted by the ld. AR that Shri Ravinder Sarwagi, CA, was handling the tax matter of the assessee and the assessee was under the belief that he was attending the taxation matters before the tax authorities. The ld. counsel submitted that it was only when enquired about the status of the appeals from the counsel in October, 2024, the assessee came to know about the appellate orders having been passed ex-parte. Immediately steps were taken to prepare the appeals by approaching the Counsel Mr. Siddharth Agarwal, advocate and finally, the appeals were filed on 01.11.2024 for which therewith a delay of 85 days in A.Y. 2010-11, 84 days in A.Y. 2012-13, 82 days in A.Y. 2013-14, 21 days in A.Y. 2014-15, A.Y. 2015-16 & 20 days in A.Y. 2016-17. The ld AR stated that in terms of provisions of Section 253(5) of the Act, the Tribunal has the power to admit the appeal even after expiry of the period referred to in sub-section (3) & (4) of Section 253 of the Act if the Tribunal is satisfied that there were sufficient causes and reasons for not presenting the ap....
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.... assessee filed return of income on 18.11.2019, declaring total income of Rs.5,10,80,996/-. Thereafter statutory notices were issued and served upon the assessee along with questionnaires which were duly attended by the Counsel of the assessee and the necessary details/evidences were filed. Thereafter details/ evidences/ explanations were furnished before the ld. AO from time to time as called for. The ld. AO noted during the assessment proceedings that there was non-compliance and deliberate delay on the part of the assessee in every stage of assessment proceedings in furnishing their replies/ evidences. The ld. AO finally stated that upon perusal of audited accounts as noted in Para 6 of the assessment order that assessee has raised share capital to the tune of Rs.16,10,15,000/-including share premium. According to the ld. AO, the assessee only furnished the list of new share subscribers without filing the requisite documents such as ITRs, balance sheets, books of accounts, details of share application letters allotment certificates, etc. Thereafter AO noted that in respect of 7 subscribers in Para 8 of the assessment order that in reply to notice u/s 133(6) of the Act, all the s....
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....e therefore, prayed that the order passed by the ld. AO may kindly be quashed as there was no jurisdiction with the AO to make the additions. The ld. Authorized Representative also argued that this being a legal issue and therefore need not to be restored to the file of ld. CIT(A) for fresh adjudication. In defense of his arguments, the ld. AR relied on the decision of Special Bench in case of Zuari Leasing & Finance Corpn. Ltd. Vs. ITO [2008] 112ITD205 (Delhi) (TM) and the decision of Bombay High Court in case of Kansai Nerolac Paints Ltd. VS DCIT [2014] 364 ITR 632 (Bombay). 07. On the other hand, the ld. DR sought time from the Bench during the course of hearing to seek clarification from the ld. AO whether the addition made on the basis of incriminating materials found and seized during search. Accordingly, the sufficient time of more than two weeks was allowed to the ld. DR. On the next date of hearing when the case was called for hearing, the ld. DR has pointed out that so far as the A.Ys. 2010-11 to 2015-16 are concerned, there were no incriminating material found and seized during the course of search. However, he prayed that the issue has not been examined at the level ....
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.... 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, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. CIT v. Mehndipur Balaji 2022 SCC Online All 444/[2023] 147 taxmann.com 201/ [2022] 447 ITR 517 has taken a contrary view....
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.... 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 course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (supra) and after considering the entire scheme of block assessment under section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 & 16, it is held as under: "15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of ....
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....r 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 interpretation of the operative portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue no....
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....er 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 'undisclosed' income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under section 153A are triggered by conducting of a valid search under section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A ....
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....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 declared that, - (i) save as otherwise provided in this section, section 153-B and section 153-C, 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." 11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessme....
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....e 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, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under section 153A of the Act is linked with the search and requisition under sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such aba....
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....21, 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 BhandarSahson, 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, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21-9-2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has ....
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.... has held that : "The tribunal should have answered the legal issue itself. The tribunal s not prevented in any manner and in law from considering a purely legal issue for the first time, especially if this issue went to the root of the matter. The issue was of the impact and legal effect of an order of amalgamation and winding up of the assessee on the penalty proceedings. If the proceedings were initiated prior to the order of the winding up being passed or the scheme of amalgamation being sanctioned then whether the subsequent act of an order sanctioning the scheme would permit continuation of the proceedings against an entity or a company which was wound up an in terms of the provisions contained in the Act was, thus, a clear legal issue. It should have been answered by the Tribunal, particularly when it had admitted the question or ground and the additional evidence filed by the assessee. The only two documents which required to be looked into were the scheme of amalgamation and the order passed in pursuance thereof by the court. The Tribunal was obliged to answer the legal question. Its omission to answer it, therefore, was vitiated in law. The direction to remit and....
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....ully satisfied in this case. 12.3 Reason (iv) in the proposed order of learned Accountant Member is not based on any material on record. It has been the case of the assessee that not a single penny has been recovered out of the debts claimed as bad debts. The learned CIT (Appeals) or the learned Accountant Member has not shown any material to establish alleged considerable recoveries in the subsequent years. At any rate, if recoveries have been made of debts written off as bad, then the same is to be taxed under section 41(4) of the Income-tax Act as laid down by their Lordship of Delhi High Court in the decisions quoted (supra). Bad debts could not be disallowed on this ground. 12.4 Reason No. (v) has already been referred to above. 12.5 It is, therefore, clear that all relevant material to decide the matter with reference to section 36(1)(vii) read with section 36(2) was available on record and it was not necessary for the Bench to remand the case to the file of the Assessing Officer. The learned Judicial Member has referred to the relevant material and I have also discussed how conditions of the statutory provisions were fully satisfied. 13. I....
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....udicated at this stage and may be decided at a later stage if need arises for the same in future. The appeal of the assessee is allowed. IT(SS)A No. 2 to 5/GTY/2024 for A.Ys. 2012-13 to 2015-16 13. Since, the legal issue raised in these appeals for A.Ys. 2012-13 to 2015-16 is similar to one as decided by us in IT(SS)A No.01/GTY/2024 for A.Y. 2010-11 above, therefore, our decision would, mutatis mutandis, apply to these appeals as well. Consequently, the appeals of the assessee in IT(SS)A Nos. 2 to 5/GTY/2024 for A.Ys. 2012-13 to 2015-16 are also allowed. IT(SS)A Nos. 6 & 7/GTY/2024 for A.Ys. 2016-17, 2017-18 and ITA No. 224/GTY/2024 for A.Y. 2018-19 14. In these appeals, the assessee has challenged the addition on legal issue as well as in merit. For the sake of convenience, we would first take the facts from A.Y. 2016-17 and decide the issue accordinly. The grounds for A.Y. 2016-17 is extracted below:- "1. For that the assessment order dated 30.12.2019 passed u/s 153A r.w. section 143(3) is bad in law and is liable to be quashed. 2. (a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have deleted the addition made b....