TMI Blog2017 (10) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... o Clearing Agency (Gujarat) [ 2008 (8) TMI 86 - GUJARAT HIGH COURT ] wherein held Once assessment has been framed u/s 158BA in relation to undisclosed income for the block period as a result of search there is no question of the Assessing Officer issuing notice u/s 148 for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for block period - no notice u/s 148 is required to be issued for the purpose of proceeding under Chapter XIV-B. Consideration received on cancellation of any agreement to sell or JDA - Also from perusal of reasons recorded, it cannot be inferred that there is income in the hands of the appellant, even if there is payment to appellant, but there is nothing on record suggesting that it constitutes income in the hands of the appellant. Even assuming for a moment that the contention of the AO that payments were made towards consideration for cancellation of Joint Development Agreement (JDA) which the assessee had entered with in respect of property at survey Nos.3/3, 7, 8, 9/2A, 9/213, Mallasandra. In the absence of evidence that the appellant is the owner, had interest of any nature in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peak credit / debit in the declaration made before the Settlement Commission (which has been erroneously rejected) and submitted a letter to the department that these amounts have not been paid to the assessee. 5. Both the authorities below committed an error in holding that a sum of ₹ 3, 97, 59, 000/- reflected in the dummy tally ledger in the name Of Sri. Krishna Properties had been admi t ted by the assessee' s husband and therefore an adverse inference has to be drawn that all the other dummy tally accounts are deemed to have been received by the assessee as deemed income. 6. Both the authorities below committed an error in holding that Dart of the income which has been accepted in the Settlement Commission reflected in the dummy tally entry by Mr. Dayanand pai and M/S. Canara Housing Development Company only can be exempted from tax in the hands of the assessee and the rest should be brought to tax in herds of the assessee. 7. Both the authorities below committed an error in relying on the survey proceedings conducted in the case of M/S. Duo Associates and Sri. Sachin Kamath to hold that dummy tally entries should be treated as deemed income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of ₹ 5,01,00,000/-, ₹ 4,84,00,000/- ₹ 6,83,83,190/- and ₹ 2,29,00,000/- for the assessment years 2005-06, 2006-07, 2007-08 and 2008-09 respectively vide assessment orders dated 13/03/2013. 5. Being aggrieved, appeal was filed before CIT(A) contending inter alia that there is no valid assumption of jurisdiction u/s 148 as the entire addition is based on the seized material found as a result of search action u/s 132 in the case of Smt. Adlene Kagoo. It was further contended that there was no conclusive proof that payments have been made to the appellant and even assuming there is payment, there is no evidence suggesting that it is taxable income in the hands of the appellant. It was further contended that these payments were in any event are owned up by Shri Dayanand Pai before the Settlement Commission and tax has been paid. Thus, it was contended that the question of assessing this money in the hands of the assessee does not arise. The CIT(A), after considering the rival submissions and after considering the remand report of the AO held as follows: The AO has held that the debit entries pertaining to the appellant remained in the original as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessments were made u/s 143(3) r.w.s. 153A of the Act vide order dated 28/12/2010. Subsequently, consequent to search operations in the case of Smt. Adlene Kagoo, material disclosing alleged payment to appellant was found. The AO had proceeded to make assessment by issuing notice u/s 148 of the Act. Now the issue that arises is whether the AO was correct in law in assuming jurisdiction u/s 148 when the provisions of section 153C of the Act prescribe a separate scheme of assessment in the case of material found as a result of search in the case of third parties. A similar issue had arisen in the context of block assessment prescribed under Chapter XIV-B of the Act and these provisions were subsequently substituted by inserting sections 153A, 153B, 153C and 153B in Chapter XIV. But the spirit of both old provisions and new provisions remained same. The Hon ble Gujarat High Court in the case of Cargo Clearing Agency (Gujarat) vs. Joint CIT (307 ITR 1), in the context of block assessment i.e. 153BD, after considering the entire scheme of the Act, held as follows: 22. There is one more aspect of the matter. Entire Chapter XIV-B of the Act relates to assessment of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he block assessment of undisclosed income is to be based not only on the evidence found at the time of search, but also on the basis of material and information gathered during the inquiries made after the search proceedings. However, on the basis of evidence found during the search proceedings certain further inquiries are undertaken by the AO resulting in collection of material or information gathered during such inquiries. The assessment for the block period shall also include computation of such income as a consequence of such inquiries. Thus, there would be no scope for any income escaping or remaining undisclosed when the special procedure laid down by Chapter XIV-B of the Act is resorted to. The contention, on behalf of the Revenue, that there might be income which might have yet escaped assessment from the block assessment cannot be accepted because the scheme itself provides for bringing to tax all undisclosed income, whether recovered during the course of search proceedings or recovered in the course of post-search inquiries made on the basis of material collected during search. Hence, the legislative intent is clear. Once a block assessment is framed the same is final un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or substitute words while interpreting a provision. The Court can only read and interpret the language employed by the statute. Only in the event of a provision not conveying the intended meaning, in other words, a plain reading resulting in absurd situation, can the Court import words to make sense out of the provision. However, at the same time, even a purposive interpretation does not permit the Court to substitute the statutory language unless and until the provision as it stands would not result in the provision being workable. If the language of the statute is capable of a plain meaning without doing violence to the language, it is not open to add any words therein so as to give meaning which one or the other side thinks to be more appropriate. 28. In the present case none of the exceptional contingencies exist. As already noticed, on a plain reading it becomes discernible that there are two separate streams of procedure provided by the legislature : (1) under Chapter XIV of the Act which provides for procedure for assessment , and (2) under Chapter XIV-B of the Act which provides for a special procedure for assessment of search cases . Only in the event the special proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen from the portion wherein emphasis is supplied by this Court, that the Supreme Court was concerned mainly with computation of undisclosed income under s. 158BB(1) of the Act. This Court has already noticed that s. 158BH of the Act provides for invoking other machinery provisions to an assessment made under Chapter XIV-B of the Act and does not require other provisions of the Act to be applied to a block assessment to be made under Chapter XIV-B of the Act. 31. The apex Court decision also provides for a harmonious construction on the basis of reading of the mode of computation provided in Chapter IV of the Act and provided under Chapter XIV-B of the Act by stating that s. 158BH inter alia provides that other provisions of the Act shall apply if there is no conflict between the provisions of Chapter XIV-B of the Act and other provisions of the Act. This becomes clear from the extracted portion wherein emphasis has been supplied. To put it differently, in a situation where there is a conflict between the provisions of block assessment procedure prescribed under Chapter XIV-B of the Act and other provisions of the Act, it will be the special procedure prescribed under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, such special procedure can alone be applied and not other procedure. It has been further held that where the Legislature prescribes special procedure for assessing income in the case of search matters, special procedure shall prevail over normal procedure. Therefore, in the present case, undisputedly addition was made by the AO based on evidence found as a result of search. Therefore, in such cases, income can be assessed only by invoking provisions of section 153BC subject to fulfillment of other conditions laid down therein. Even the co-ordinate benches of Tribunal in the cases of Arun Kumar Kapoor (supra) and Rajat Shubra Chatterji (supra) laid down the same ratio. The co-ordinate bench (Amritsar) of Tribunal in the case of Arun Kumar Kapoor (supra) held as follows: 8. On a perusal of the above provisions, it would be clear that the provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under s. 132 of the Act and the same were sent to the assessee s AO at Amritsar by the officer at Delhi in our view, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO that payments were made towards consideration for cancellation of Joint Development Agreement (JDA) which the assessee had entered with in respect of property at survey Nos.3/3, 7, 8, 9/2A, 9/213, Mallasandra. In the absence of evidence that the appellant is the owner, had interest of any nature in the said property, it cannot be said that the payments constituted taxable income in the hands of the appellant. One cannot come to conclusion that the payments constituted taxable income in the hands of the assessee. Furthermore, even assuming that these payments were made towards consideration of cancellation of JDA, same does not represent taxable income for period under consideration. It is only after insertion of clause (ix) to section 56(2) by Finance (No.2) Act 2014 w.e.f. 01/04/2015 that provisions of the Act have been amended to tax any consideration received on cancellation of any agreement to sell or JDA. Therefore, viewed from any angle, we cannot uphold the validity of assumption of jurisdiction u/s 147 and therefore, we hereby quash the impugned assessment orders as bad in law. 9. In the result, the appeals filed by the assessee are allowed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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