TMI Blog2010 (1) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income-tax (Appeals)-II, New Delhi, dated March 27, 2009, in the appeals against orders framed under section 153A read with section 143(3) of the Income-tax Act, 1961 ("the Act"). Since common issues are involved in all the appeals, therefore we heard them together and deem it appropriate to dispose of them by this common order. 2. Brief facts relating to these common appeals are noted hereinafter. A search was conducted under section 132 of the Act on the assessees on December 13, 2005. Pursuant to the same, assessments for the assessment years 2000-01 to 2006-07 have been framed under section 153A read with section 143(3) of the Act. 3. The chart for various additions as made by the learned Assessing Officer and respectively disputed by the assessee and the Revenue, vis-a-vis orders of the learned Commissioner of Income-tax (Appeals) is reproduced below: Anil Bhatia (paper book page 1) Assessment year Assessee's appeal grounds Revenue's appeal grounds 2006-07 Gift Rs.5,18,631 from real brother in law Agricultural income Rs.36,474 Notional interest Rs.27,000 2005-06 Agricultural i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) relevant income-tax returns for the said years were filed prior to the search in normal course, suo motu disclosing the particulars of subject additions, which stood accepted under section 143(1) of the Act ; and (iii) returns having been accepted under section 143(1), no assessment as such could be said to be "pending" on the date of initiation of search and have "abated" in light of the contextual and harmonised reading of the second proviso to section 153A(1). (Reference invited to returns filed and assessments made in this regard as per paper book). (c) That assessment as contemplated under section 153A is not a de novo assessment and additions made therein, have to be necessarily, restricted to undisclosed income unearthed during search. (d) That as per the Supreme Court ruling in Manish Maheshwari v. Asst. CIT [2007] 289 ITR 341, the present provisions of section 153A leading to six years' assessment, being drastic in consequences needs to be interpreted most strictly and wherever possible to the favour of the assessee. (e) That since the longest arm of the Revenue, being search action under section 132 of the Act, stands exercised in present case, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A assessment vis-a-vis the second proviso thereto, particularly with reference to the phrase "pending" and "abate". It was further submitted that these decisions have been considered by the Income-tax Appellate Tribunal, Ahmedabad Bench in the case of Meghmani Organics (supra). 8. We have considered the rival submissions and perused the record carefully. We find ourselves in complete agreement with the submission of the learned authorised representative, on legal point, in view of analysis/reasoning following next. 9. We quote hereinbelow section 153A of the Act, for the sake of ready reference: "153A. Assessment in case of search or requisition:- (1) 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 initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel as to the scope of 153A assessment being de novo in nature is not acceptable and submission of the learned Departmental representative that the scope of 153A assessment is qua search material deserves to be accepted ; (ii) that pending assessments within meaning of section 153A(1) shall be: (a) where the return is filed in accordance with section 139, the same is neither processed under section 143(1) nor any section 143(2) notice is issued for the same; (b) where section 143(2) notice has been issued and assessment thereon is still pending on search date; (iii) that issuance of notice under section 153A for all six assessment years also does not entail altogether a fresh exercise of making fresh assessment. (iv) that necessarily only undisclosed income after defraying expenses for earning the same is taxable, when interpreted in the specific context of section 153A. 11. In the Ahmedabad Bench of the Income-tax Appellate Tribunal in Meghmani Industries Ltd. and Meghmani Organics Ltd. (supra) the following ratio is available: "Learned counsel, Shri Soparkar, senior advocate submitted that a search was conducted by issue of warrant of authorisation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hyam Lata Kaushik v. Asst. CIT [2008] 306 ITR (AT) 117 (Delhi) Shivnath Rai Harnarain (India) Ltd. v. Deputy CIT [2008] 304 ITR (AT) 271 (Delhi) Held-From a plain reading of the aforesaid provisions it is clear that where a search initiated under section 132 or books of account are requisitioned under section 132A of the Act, the Assessing Officer shall issue notice and assess or reassess the total income of six assessment years immediately preceding the assessment relevant to which the search is conducted. As per the first proviso to section 153A the Assessing Officer is empowered to frame assessment or reassessment. However, as per the second proviso the assessment or reassessments which are pending on the date of initiation of charge shall abate. Therefore, what abates are only the pending assessment or reassessment and not the completed assessments. In such a situation the power to frame assessment under section 153A of the Act shall be to the extent of income escaping assessment coming to the knowledge of the Assessing Officer during the course of search. Sub- section (2) of section 153A of the Act inserted by the Finance Act with retrospective effect from June 1, 2003 dispels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on facts. 13. The Kolkatta Bench of the Income-tax Appellate Tribunal in LMJ International Ltd. v. Deputy CIT [2008] 119 TTJ (Kol.) 214 held as under: "A reading of section 153A reveals apparent contradiction in the first proviso and the second proviso. The proviso provides that the assessment or reassessment shall be done by the Assessing Officer in respect of each assessment year falling within six assessment years preceding the year of search. The second proviso, on the other hand, provides that the assessment/reassessment pending on the date of search shall abate. In other words, the assessments which are not pending, shall hold the field. The language of section 153A is not unambiguous and is not susceptible to only one meaning. In the circumstances, the principle of literal construction is of no help. One of the salutary rule is rule of harmonious construction. According to this rule, a statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment. The meaning of assessment/reassessment does not always mean taking recourse to the whole procedure laid down in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity." 16. From the aforesaid analysis of judicial precedents, we are of the considered view that since for all the assessment years in consideration, processing returns under section 143(1)(a) stood completed, for returns filed in due course before search, and no material being found in search thereafter, no addition can be made for agricultural income, gifts, unexplained deposit as stated in chart (supra). 17. As regards, solitary addition of Rs.1,50,000 relating to alleged unexplained/unaccounted loan to Mohani Sharma (Anil Bhatia case) and consequential addition of presumed/alleged interest thereon of Rs 27,000 in the assessment years 2003-04 to 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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