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2022 (4) TMI 807 - HC - Income TaxLegality and validity of the impugned notice issued u/s 148 seeking to reopen an assessment as undertaken u/s 153A - whether the law permits the Assessing Officer to reopen an assessment carried out u/s 153A of the Act by issuing a notice u/s 148? - HELD THAT:- In the case on hand, the AO seeks to reopen the assessment for the assessment year 2013-14. The search was carried out on 07.08.2013. As a result of the search, notice u/s 153A of the Act was issued by the AO on 19.08.2014 for the year under consideration. AO framed the assessment vide order dated 28.03.2016 under Section 143(3) read with Section 153A - The consequence of notice under Section 153A (1) of the Act is that the assessee is required to furnish fresh return of income in each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the revenue for the first time in the case of abated assessment proceedings. Consequent to the notice under Section 153A of the Act, the earlier return that may be filed for the purpose of assessment which is pending would be treated as non est in law. Further, section 153A (1) of the Act itself provides that on filing of the return consequent to the notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore, the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act. Whether the material found in the course of the survey in the premises of the builder could be used in Block Assessment of the assessee? - A block assessment under Chapter XIVB of the Act is for bringing to tax undisclosed income which is computed on the basis of evidence found as a result of search and/or other information as is available with the AO which is relatable to such evidence. Final conclusion on the issue in question is as under:- (a) Unlike Chapter XIV-B which provided for a special procedure for assessment of search cases, Section 153A which provides for an assessment in case of search, and was introduced by the Finance Act, 2003 w.e.f. 01.06.2003, does not provide that a search assessment has to be made on the basis of evidence found as a result of search or other documents and such other materials or information as are available with the AO and relatable to the evidence found. The earlier Section 158BB which is not applicable in case of a search conducted after 31.05.2003, provided that the computation of the undisclosed income can only be on the basis of the evidence found as a result of search or other documents and materials or information as are available with the Assessing Officer, provided they are relatable to the evidence found. It is in such circumstances that this Court in the case of Cargo Clearing Agency [2008 (8) TMI 86 - GUJARAT HIGH COURT] held that one cannot envisage escapement of undisclosed income once a search has taken place and material recovered on proceeding of which undisclosed income is brought to tax. To put it in other words, to contend that the undisclosed income has escaped assessment despite an assessment having been framed under Chapter- XIVB of the Act by adopting special procedure prescribed by the said chapter is to contend as observed by this Court in Cargo Clearing Agency (supra) is something which is inherently not possible. (b) Section 153A(1)(b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. (c) To say that the assessment undertaken u/s 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law. The matters shall now be placed for further hearing so as to determine on facts whether any case has been made out by the Revenue for the purpose of reopening of the assessments undertaken u/s 153A of the Act.
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