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2019 (9) TMI 153 - GUJARAT HIGH COURTApplication u/s 220(6) for stay of unreasonably high-pitched and that enforcement of recovery of the demand - Assessment u/s 153A - addition of income where assessment has already completed - HELD THAT:- In case of section 153A the search or requisition are the trigger points, and once the trigger operates the AO is required to assess or reassess the total income of the assessee for six assessment years preceding the assessment year relevant to the previous year in which the search is carried out. Thus, while under section 158BB of the Act, it is the undisclosed income which is to be computed, u/s 153A there is assessment or reassessment of the total income of six assessment years. While in those cases, where an assessment order has already been framed under section 143(3) prior to initiation of proceedings u/s 153A or 153C of the Act, it has been held that any addition made in those proceedings should be on the basis of the material found during the course of search. In case of reassessment, the addition has to be based upon material found during the course of search, but insofar as assessment is concerned, all available material can be taken into consideration, whether it is found during the course of search, requisition or survey or is otherwise available with the AO. In case of assessment, the additions cannot be restricted to the material found during the course of search alone. Application made u/s 220(6) - PCIT has nowhere applied his mind to the contention of the assessee that the assessment is unreasonably high-pitched and that enforcement of recovery of the demand would cause genuine hardship to the assessee since the demand is unusually high looking to the financial standing of the assessee. In the opinion of this court, when the statute vests power in an authority, such power is required to be exercised in a reasonable manner, and not in the perfunctory manner in which both the AO and the PCIT have dealt with the applications made by the petitioner under section 220(6) of the Act. There is some merit in the submissions insofar as the additions are concerned. Moreover, considering the amount assessed during the course of regular assessment in the preceding years, the assessment order for the year under consideration appears to be unreasonably high-pitched. However, for the reasons recorded hereinabove, no case has been made out for unconditional stay of the demand. Besides, a perusal of the assessment order reveals that on behalf of the petitioner it has been admitted that an amount of ₹ 91,50,156/- is to be treated as out of books sales which is unrecorded in the books of accounts. Assessment is unreasonably high-pitched, the court is of the view that the ends of justice would be met, if instead of 20% of the demand, further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of ₹ 8,57,91,420/-. The petition partly succeeds and is, accordingly, allowed to the following extent. The impugned orders dated 8.2.2019 and 11.3.2019 passed by the first and the second respondents, respectively, as well as the impugned notice dated 25.3.2019 issued under section 226(3) of the Act, are hereby quashed and set aside. Further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of ₹ 8,57,91,420/-. Rule is made absolute accordingly to the aforesaid extent. It is clarified that the view expressed in this order is a prima facie view for the purpose of deciding the application under section 220(6) of the Act and the CIT (Appeals) shall decide the appeal without in any manner being influenced by any observations made in this judgment.
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