TMI Blog2011 (8) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... which was not added during the original assessment, in the like manner, there is no restriction on the assessee to claim any deduction which was not allowed in the original assessment.The requirement of section 153A is to compute the total income of each of such assessment years. Such determination of the total income has to be done afresh without any reference to what was done in the original assessment. Of course, the AO is entitled to make any addition in the fresh assessment, which he made in the original assessment, provided he is satisfied with the merits of the addition. But the mere fact that there was some addition in the original assessment, would not preclude the assessee from contesting the addition in the subsequent proceedings. As it is going to be a fresh exercise of framing assessment or reassessment of the total income at the end of the AO, the assessee cannot be stopped from not even arguing about the merits of his case qua the addition which was made in the original assessment. Debarring the assessee from making a claim about the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income. Conditions fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch action was taken upon the assessee on 22.03.2007. Accordingly notice u/s 153A was issued, in response to which the assessee filed its return of income on 03.03.2008 declaring total loss of ₹ 3,43,19,413. It is pertinent to note that the original return filed by the assessee on 31.10.2001 was subjected to scrutiny assessment and in the order u/s 143(3) dated 31.03.2004, the A.O. disallowed interest of ₹ 58,86,483. The assessee-company did not agitate the disallowance of interest before the first appellate authority. In other words, the disallowance so made in the original assessment attained finality. However, while filing the return in response to notice u/s 153A on 03.03.2008, the assessee voluntarily disallowed the disallowance of interest of ₹ 58.86 lakh made in the original assessment subject to the reservation of right for contesting the allowability of entire interest during the course of assessment proceedings. Copy of computation of income along with the Notes furnished along with the return filed on 03.03.2008, is available on record and Note No.3.5, which is relevant for our purpose, reads as under:- In quantifying business loss for the year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd keeping the right reserved for making submission at the stage of assessment in support of the deduction. The view point of the learned Departmental Representative is that the assessee was not entitled to seek relief on any addition which was finally made in the original assessment as the provisions of section 153A do not permit the assessment at income lower than the one finally assessed in original assessment completed before the date of search. In order to appreciate this contention it would be relevant to note down the provisions of section 153A which is as under:- 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 within six assessment years re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse to notice u/s 153A(1) is a return required to be furnished under section 139 ; - First proviso to sub-section (1) states that the Assessing Officer is required to assess or reassess total income in respect of each assessment falling within the relevant six assessment years. -The second proviso to sub-section (1) provides that the assessment or reassessment, if any, relating to any of the six assessment years pending on the date of search u/s 132 or making requisition u/s 132A, shall abate. - Sub-section (2) of section 153A provides that if due to one reason or the other the assessment made u/s 153A is annulled in any appeal or any other proceedings then the assessment or reassessment which had abated in second proviso to subsection (1) shall stand revived with effect from the date of receipt of the order of such annulment. 7. A close look at the above provision manifests that the Assessing Officer is required to make assessment afresh and compute the `total income in respect of each of the relevant six assessment years. As there is no specific inhibition on the jurisdiction of the Assessing Officer in not including any new income to such fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 147. It is sine qua non that some escaped income must be brought to charge in order to make a fresh assessment u/s 147. On the contrary, the search action itself mandates on the Assessing Officer to pass orders u/s 153A computing total income for all the relevant six assessment years, irrespective of the fact whether some concealed income has surfaced as a result of search or not. It is thus apparent that the ambit of assessment u/s 147 cannot be imported into the scope of section 153A. 9. It is further important to note that the provisions of assessment in the case of search u/s 153A etc. have been inserted by the Finance Act, 2003 with effect from 01.06.2003. These provisions are successor of the special procedure for assessment of search cases under Chapter XIV-B starting with section 158B. Whereas Chapter XIV-B required the assessment of undisclosed income as a result of search, which has been defined in section 158B(b), section 153A dealing with assessment in case of search with effect from 01.06.2003 requires the Assessing Officer to determine total income and not undisclosed income . 10. If any deduction is claimed by the assessee in the proceedings u/s 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Goetze (India) Ltd. Vs. CIT [(2006) 284 ITR 323 (SC)]. The learned Departmental Representative contended that the claim for a deduction not made in the return cannot be entertained by the Assessing Officer otherwise than by filing a revised return. In the light of the above judgement, it was argued that since the assessee did not file revised return u/s 153A, the A.O. was right in not considering deductibility of interest of ₹ 58.86 lakh on the basis of notes to the computation of total income. 13. There is no quarrel on the proposition laid down by the Hon ble Supreme Court in the afore-noted case that the claim for deduction not made in the return of income cannot be entertained by the A.O., otherwise than by filing a revised return. However it is not the end of the matter. The Hon ble Supreme Court in para 4 of the same judgment has clarified the position by further holding : However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal u/s 254 of the Income-tax Act, 1961. From this judgement it is obvious that the restriction has been pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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