TMI Blog2008 (2) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... been framed due to non-filing of returns etc. for the above-mentioned assessment years even if such assessment made u/s 153A is not based on material found during course of search. The word abate or abatement has not been defined in the Act or in the Departmental Circular. According to Chambers Dictionary the word abate means demolition or to put an end to . Therefore, the contention of the learned counsel for the assessee have, no force because there is no requirement for an assessment made u/s 153A of the Act being based on any material seized in the course of search. Further, under the second proviso to section 153A pending assessment or reassessment proceedings in relation to any assessment year falling within the period of six assessment years referred to in section 153A(b) of the Act shall come to an end (abate), which means that the Assessing Officer gets jurisdiction for six assessment years referred to in section 153A(b) of the Act for making an assessment or reassessment. Further, it is not the contention of the assessee before us that any income, which was already subjected to assessment under section 143(3) or under section 143(3)/147 of the Act completed pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience as the facts and issues involved in all these appeals are identical except variation in amounts. 2. Before the Tribunal, the assessee raised two additional grounds and the same being legal in nature, so considering the decision of the Apex Court in the case of NTPC Ltd. v. CIT [1998] 229 ITR 383, the same were admitted by the Tribunal. 3. Now, the identical effective grounds of appeals, including the additional grounds taken by the assessee required to be decided by the Tribunal, are stated as under :- (1) That the assessment under section 153A is without jurisdiction as same is not based on any seized material or a case of any undisclosed income and as such same is not sustainable under the law. (2) That the provisions of section 153A does not provide and contemplate assessment or reassessment in respect of any income which has already been considered at the time of original assessment. (3) It is contented that addition due to retrospective amendment in the provision of section 80HHC of the Income-tax Act, 1961 as wrong, incorrect, erroneous, immoral, bad in law and is against the natural justice. 4. Briefly stated, the facts relating to the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that Legislature is empowered to make retrospective amendments and recently Hon ble Supreme Court in the case of CIT v. Varas International (P.) Ltd. (283 ITR 484) has held that if in the amended provisions, the operation is stated to be with retrospective effect then it is perfectly valid and shall be operative with retrospective effect itself. The said decision was a Constitutional Bench decision given by the Bench of five judges of Hon ble Supreme Court. Moreover, the appellant has not filed any petition before High Court on this issue and no material is also made available that the appellant is a party to any of such writ petition before any High Court. Considering this and clarity of legal provisions, the request not to dispose the appeal is not acceptable. Since the Assessing Officer has correctly worked out the allowable deduction under section 80HHC of Income-tax Act for assessment year 1999-2000 and nil deduction for assessment year 2002-03 as well as for assessment year 2003-04. Therefore, the same is hereby confirmed by rejecting the only ground of appeal taken by the appellant. 6. We have considered the rival contentions of both the parties, perused the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 132 of the Act whereas the above case law relates to provision of sections 263, 147, 148 and 149 of the Act wherein for invoking these sections, the ingredients of those sections are required to be looked into and it has to be examined whether before invoking those sections, the ingredients of those sections have been fulfilled or not. Hence, in this view of the matter, this case law, relied upon by the learned AR for the assessee, does not help the assessee in resolving the issue under consideration before us. On the contrary, there are two recent decisions, relied upon by the learned DR for the revenue, in the cases of Abhay Kumar Shroff v. CIT [2007] 290 ITR 114 (Jharkhand) and Ramballabh Gupta v. Asstt. CIT [2007] 288 ITR 0347 (MP) which provided assistance to the Tribunal in understanding the validity of the provisions of section 153A of the Act. 9. For better appreciation of section 153A of the Income-tax Act, 1961, the same is reproduced hereinbelow :- 153A. Assessment in case of search or requisition.-Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Chapter XIV-B provide for a single assessment of undisclosed income of a block period, which means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. The main objectives for the introduction of the Chapter XIV-B were avoidance of disputes, early finalization of search assessments and reduction in multiplicity of proceedings. The idea was to have a cost-effective, efficient and meaningful search assessment procedure. However, the experience on implementation of the special procedure for search assessments (block assessment) contained in chapter XIV-B, has shown that the new scheme has failed in its objective of early resolution of search assessments. The new procedure postulates two parallel streams of assessment, i.e., one of regular assessment and the other for block assessment during the same period, i.e., during the block period. Controversies have sprung up questioning the treatment of a particular income as undisclosed and whether it is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. The Finance Act, 2003, has provided that the provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after 31-5-2003, by inserting a new section 158B(1) in the Income-tax Act. Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after 31-5-2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of each of these six assessment years. 13. Further, the second proviso to section 153A makes it clear that assessment or reassessment relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A shall abate. In other words, if on the date of initiation of search or requisition under section 132 or section 132A any assessment or reassessment proceeding is initiated relating to any assessment year falling within the period of six assessment years, it shall stand abated and the assessing authority cannot and shall not proceed with such pending assessment after initiation of search or requisition as contemplated hereinabove. These amendments will take effect from 1-6-2003. From reading section 153A and second proviso to section 153A, it is further clear that on the date of initiation of search or requisition under section 132 or section 132A the pending assessment or reassessments relating to any assessment year falling within a period of six assessment years shall stand abated but, assessment or reassessments can be done under section 153A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years under consideration, we now proceed to consider the issue regarding eligibility of deduction claimed by the assessee on the receipts of sale of DEPB licenses under the amended provisions of section 80HHC of the Act. 17. Undisputedly, in all the assessment years under consideration i.e. 1999-2000, 2002-03 and 2003-04, the total turnover of the assessee in each assessment year is more than Rs. 10 crores. The assessee has shown impugned receipts on sale of DEPB and special import licence in each of the above-mentioned assessment years, respectively and claimed deduction under section 80HHC of the Act thereon. It is also not in dispute that after the insertion of section 28(iiid) and provisos under sub-section (3) of section 80HHC of the Act through the Taxation Laws (Amendment) Act, 2005, it is inserted that any profit on transfer of the DEPB License is also an export incentive and 90 per cent of the same has to be deducted from the profit calculated as per the provision of section 28 to arrive at the profit of the business. The profits so computed shall be further increased by the amount which bears to 90 per cent of any sum referred to clause (iiid) of section 28, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition the assessee is mandatorily required to give an option to choose either duty drawback or DEPB Scheme and in case the assessee fulfils the first condition, then the assessee would be required to fulfil the second condition mandatorily. Therefore, it is immaterial whether in the existing circumstances, the assessee was not able to fulfil both the conditions as the assessee has not received any duty drawback as the Legislature clearly laid dawn that in case the total turnover of the assessee is exceeding Rs. 10 crores and the assessee has receipts of duty drawback and from sale of DEPB licence then the assessee has to choose one out of the two i.e., either duty drawback or DEPB Scheme and thereafter also fulfil the second condition. 21. Admittedly, in the instant case, the assessee has not fulfilled either of the above-mentioned two conditions because in the assessment years under consideration the assessee has no receipts from duty drawback. Therefore, finding force in the arguments of learned DR for the revenue and agreeing with same, we hold that since in the instant case, in the facts and circumstances, it is clear that the assessee during the financial years relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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