TaxTMI 
TaxTMI 
TaxTMI 
2007 (12) TMI 237
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....4. For that the learned CIT(A) erred in confirming the disallowance of donation amounting to Rs. 38,171. 5. For that the learned CIT(A) erred in confirming the action of the AO in partly disallowing the deduction claimed under s. 80HHC being Rs. 64,22,953." The Revenue, on the other hand, has raised the following sole ground of appeal: "That on the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting provisions of brokerage and commission amounting to Rs. 1,13,75,000, the liability to pay the amount did not accrue to the assessee during the year." 3. Brief facts relating to the disposal of this case are that a search under s. 132 of the Act was conducted on one Sri Jayant Kumar Jain at the Kolkata Airport, who was found in possession of cash of Rs. 86.26 lakhs, out of which Rs. 86 lakhs was seized by the IT authorities. Besides a number of incriminating documents were also seized from his possession. As according to the AO, some documents related to the assessee company, proceedings under s. 153C were also initiated against it by the Department. 4. As the assessee has challenged the validity of the assessment framed under s. 153C r/w s. 144, we ....
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....les of Statutory Interpretation" by the Hon'ble Justice G.P. Singh and made following submissions- (a) If out of two provisos, the later is repugnant to the earlier one, the later prevails. (b) The provisions of one section of a statute cannot be used to defeat those of another unless it is impossible to effect reconciliation between them. (c) The marginal note to s. 153A states "assessment in case of search", indicates that only that income is required to be assessed which is hidden from the Department. The learned counsel also relied upon a Supreme Court judgment in the case of C.A. Abraham vs. ITO (1961) 41 ITR 425 (SC) for the proposition that the word "assessment" may also mean merely "computation of income". He, also placed reliance upon Parashuram Pottery Works Co. Ltd. vs. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC). Relying upon the judgments in the case of Vipan Khanna vs. CIT (2002) 175 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H); CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) and Amrinder Singh Dhiman vs. ITO (2004) 192 CTR (P&H) 351 : (2004) 269 ITR 378 (P&H), the learned counsel submitted that roving enquiries are not p....
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....ier search. Consequential amendments made to ss. 234A and 234B make this further clear. First the relevant portion of s. 234A may be seen. A plain reading of sub-s. (3) of s. 234A shows that it refers to a situation when notice under s. 153A requiring return of income for any assessment year is issued after the determination of income under s. 143(1) or the completion of a regular assessment under s. 143(3) or s. 144 for that assessment year based on a return filed earlier under s. 139 or 142. In this regard it is important to note that as per Expln. 3 to s. 234A(1), such earlier regular assessment includes even an assessment made for the first time under s. 153A. In other words, even if the first assessment is made for any assessment year under s. 153A, a reassessment under the same section is envisaged in case another search is initiated later in the case of same assessee. The section then refers to the amount on which interest is chargeable under the section when assessment is made under s. 153A. The said amount is the amount by which the tax on the total income determined on the basis of reassessment under s. 153A exceeds the tax on the total income determined earlier under s. ....
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....rce of such income is disclosed or not. It is also immaterial whether such income is based on entries recorded in regular books or entries not recorded in regular books. It is, therefore, clear that the total income assessed under s. 153A means all incomes of whatever nature from whatever source. The learned CIT-Departmental Representative further submitted that in its normal sense "to assess" means "to fix the amount of tax or to determine such amount". The process of reassessment is to the same purpose and is included in the connotation of the term "assessment" as seen from s. 2(8) of the Act which defines assessment as "assessment includes reassessment". Sec. 147 of the Act contemplates different cases in which the power to assess escaped income has been given; where there has been no assessment at all, the term "assessment" may be appropriate and where there was assessment at too low a rate or with unjustified exemptions, the term "reassessment" may be appropriate, and it may have been necessary to use two different terms to cover with clarity the different cases dealt with in the section; but this does not mean that the two terms should be treated as mutually exclusive o....
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....s in the instant case is that the search action under s. 132 of Act was conducted on Sri Jayant Kumar Jain, one of the directors of the assessee company, on 26th March, 2004. Therefore, new provisions relating to the assessment in case of search comprising of ss. 153A to 153C, which were brought on the statute book by the Finance Act, 2003 w.e.f. 1st June, 2003, apply to the assessee's case. These provisions replace the special procedure contained in Chapter XIV-B for assessment of search cases, whereby the undisclosed income detected as a result of search was assessed separately as the income of the block period and such income was taxed separately at a flat rate of 60 per cent. Further, the assessee was not visited with the interest liability under ss. 234A, 234B and 234C in respect of such undisclosed income detected. Sec. 153A under the new scheme relates to the assessment of a person searched under s. 132, while s. 153C prescribes the procedure of assessment of any other person whose money, jewellery or books/documents are found from the premises/possession of the searched person. Sec. 153C states that the assessment or reassessment of income of such other person shall be made....
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....bate. In other words, the assessments which are not pending, shall hold the field. The assessee contends that the concluded assessments cannot be disturbed by the AO and even under the new scheme, only undisclosed income detected in the course of search can be added and charged to tax. The Department, on the other hand, vehemently contends that once a search is conducted, the preceding six years assessment of the searched person and any other person whose valuables and/or books, or documents are found during search are ripped open and the assessments/reassessments shall be framed afresh. 9. As the issue under consideration is new and no direct legal precedents are available on the point, we take aid from the principles of statutory interpretation and also from a judgment of the Hon'ble Jharkhand High Court in the case of Abhay Kumar Shroff vs. CIT (2007) 210 CTR (Jharkhand) 602 : (2007) 290 ITR 114 (Jharkhand), where the new provisions of assessments of search cases have fallen for consideration although in a different context. 10. The basic principle of interpretation of a statute is that where the words of a statute are clear, plain or unambiguous, the Courts should give effect....
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....uce repose in and set at rest judicial and quasi controversies as it must in other spheres of human activity. 13. In view of the above discussions, it is possible to effect reconciliation of the two provisos appended to s. 153A by restricting the meaning of the term "assess or reassess" appearing in the first proviso. After the search, in our considered opinion, the total income of the assessee is to be recomputed on the basis of the undisclosed income unearthed during search and the same is to be added with the regular income assessed under s. 143(3) or computed under s. 143(1) for each of the six preceding assessment years. Where any prepaid taxes are there, the same are required to be given credit for computing the further tax payable by the assessee. The assessee is also required to pay interest under ss. 234A and 234B on the tax due on the basis of new calculation. Where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed in our considered view. 14. The construction that the Department seeks to place on the impugned provisions would lead to serious hardship, inconvenience, injustice, absu....
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...., all other provisions of this Act shall apply to the assessment or reassessment made under s. 153A. It is also clarified that assessment or reassessment made under s. 153A shall be subject to interest, penalty and prosecution, if applicable. In the 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." A reading of the abovementioned circular clearly indicates that the appeal, revision etc. arising out of earlier assessments shall not abate. In other words, there is no merger of the earlier assessments with the assessments done under the new scheme, i.e., s. 153A or 153C. 16. The Hon'ble Jharkhand High Court in the case of Abhay Kumar Shroff, has held recently that there shall be assessment of undisclosed income of six assessment years preceding that in which search was conducted under the new scheme of assessment. 17. The learned CIT-Departmental Representative has mainly relied upon the literal construction of the provision. We have elaborately dealt with the issue and for the reasons stated hereinbefore, we are unable to subscribe to this view. The learned C....