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TMI Blog2012 (7) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80IA(4) of the Act 3. The CIT(A) erred in relying on the decision of the Appellate Tribunal in the case of Container Corporation of India Ltd. vs. ACIT [30 SOT 284 (Del.)], without appreciating that the facts in the present case are different from that of the aforesaid case. 4. The Commissioner (Appeals) failed to appreciate that the appellant is covered by the definition of the term "infrastructure facility" given in Explanation to section 80IA(4)(i) of the Act as "Ports" 5. The Commissioner (Appeals) erred in not following circular No.793 dated 23rd June, 2000 and clarification dated 16th December, 2005 issued by the CBDT which is binding on the Income Tax Authorities. 6. The Commissioner (Appeals) failed to appreciate that sub-clause (aa) of section 7 of the Customs Act, 1962 clarifies that the Customs Ports are the places which are identified and demarcated for the unloading of imported cargo and the loading of exported cargo and, therefore, the Container Freight Stations would be Customs Ports with reference to the Customs Law and, therefore, it would be qualified for the benefit of section 80-IA(4)(i) of the Act. 7. In the alternative and without prejudice, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) and therefore, the Tribunal should not entertain this ground at this stage without following the procedure laid down for admission of an additional ground. The rival parties addressed detailed arguments in this regard and wanted us to pass an interim order before proceeding further. The Special Bench accepted Revenue's preliminary objection and passed an interim order on 25-1-2012 treating the aforesaid ground No.1 as an additional ground. Therefore, our interim order dated 21-5-2012 should be read as part and parcel of this order. With these preliminary observations, we proceed to the questions which are referred to us by the Hon'ble President, Income Tax Appellate Tribunal. 5. The appeals involved assessment years 2004-05 to 2009-10. The facts are summarised here. In the previous years relevant to assessment years 2004-05 to 2008-09, the assessee had been operating the CFS at Jawahar Lal Nehru Port Trust. Such CFS was also operated at Chennai in the previous year relevant to assessment year 2009-10. The facts for assessment year 2004-05 to 2006-07 are somewhat similar. Original assessment for assessment year 2004-05 was competed on 30.12.2006 u/s 143(3) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G) and section 80IA. The AO considered the claim specifically in paragraph no. 5 of the assessment order. He allowed the deduction at Rs. 1,21,97,347/- against the claim of Rs. 1,25,77,637/-. The reduction is on account of disallowance of the deduction in respect of damages of Rs. 3,80,290/- 8. It is argued by the learned Counsel of the assessee before us that an assessment u/s 153A is different from regular assessment. It is made only where a search is initiated u/s 132 or books of account, other documents or any assets are requisition u/s 132A after 31.5.2003. In the course of search, generally incriminating documents etc. or unaccounted assets are found. Thus, assessment u/s 153A can be made only when books of account, incriminating documents or unaccounted assets are found or seized. Therefore, this provision is inextricably linked with the provision contained in section 132(1), which means that existence of books of account , incriminating documents or unaccounted assets is or are sine qua non of making the assessment under this provision. Therefore, if nothing is found in the course of search, there will be no purpose served by making assessment or re-assessment u/s 153A. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provision contained in section 153C, in respect of a person whose assets or documents are found in the course of search of another person. It is argued that even if nothing incriminating is found in the course of search, the literal interpretation would subject him to fresh assessments for six years. Therefore, finding incriminating material in the course of search is the essence of assessment or re-assessment to be made u/s 153A. Section 153D itself provides a safeguard that if an order of assessment or reassessment is to be made u/s 153A by an officer below the rank of Joint Commissioner, then previous approval of the Joint Commissioner is necessary. Therefore, the interpretation to be placed on the provision contained in section 153A has to take into account the safeguard so that the assessees are not put to harassment by subjecting them to reassessment in case of a completed assessment in respect of which no incriminating material has been found in the course of search. This restriction is inherent in the provision as there is no positive assertion of opposite, i.e., wider powers given to AO. 10. In this context, reliance is placed on the decision of the Apex Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trued, if possible, that absurdity and mischief may be avoided. It has been further mentioned that where the literal interpretation of a statutory provision leads to a manifestly unjust result which could never have been intended by the legislature, the court might modify the language used by the legislature so as to achieve the intention of the legislature and produce a rational construction. It is also mentioned that the language is an imperfect instrument for the expression of human intention. It is well to remember the warning that one should not make a fortress out of dictionary and that Statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning. The case of the Ld. Counsel is that the true intention should be found out from reading of the provision as a whole and by harmonious interpretation of provisions contained in first and second proviso to section 153A(1). 11. Further, reliance has been placed on the decision of the Apex Court in the case of Additional Commissioner of Income vs. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1. The decision is that the test which has to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax 129 TTJ 438 (Del), and Helios Food Additives Pvt. Ltd. vs. DCIT in ITA No. 3900, and 3901/2009 have been relied upon. (a) In the case of Shaila Aggarwal, on page 283 of the report in paragraph Nos.19 & 20, it is mentioned that the second proviso refers to abatement of pending assessment or reassessment proceeding. The word "pending" is not amenable to the interpretation that where-ever the appeal against the assessment or reassessment is pending, the same alongwith assessment or reassessment proceedings also abate. The principles of interpretation of taxation do not permit the court to interpret the second proviso in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in Tribunal, the proceedings will abate. The abatement of any proceeding has serious causes and effects as it takes away all the consequences that arise thereafter. In this case, after detecting bogus gifts in the regular assessment proceedings, penalty proceedings u/s 271 (1) (c) of the Act were initiated. The material found in the search may be a ground for notice and assessment u/s 153A but that would not efface all the consequences which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered - (i) whether any assessment is pending on the date of search, and (ii) whether there is justification for partial withdrawal of deduction claimed by the assessee u/s 80IA/80IB ? It has been held that as per law applicable to the assessee, if the notice u/s 143(2) is not issued and served on the assessee within 12 months after the month in which return has been furnished, no assessment can be completed u/s 143(3) and the income declared by the assessee attains finality unless proceedings are initiated u/s 147, 263 etc. As per section 153A, second proviso thereto, the assessment or reassessment pending on the date of initiation of search abates. Since assessments for these two years were not pending as aforesaid, there is no question of applying the second proviso. Further there is also no justification for making partial disallowance of the deduction claimed u/s 80IA/80IB as no material or evidence was found during the course of search and also that it was not a new claim made by the assessee. 14. The second proposition canvassed by the Ld. Counsel is that even if an intimation has been made u/s 143(i)(a), the assessment is not pending and it does not abate. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar assessment had been completed prior to initiation of search. We find that this decision does not deal with a case where the return has been processed u/s 143(1) (a) only prior to initiation of search. Undoubtedly in the case of Helios Foods, it has been mentioned in para No. 10 which we have adverted to earlier that if the notice u/s 143(2) is not served within the prescribed period, then no assessment can be completed u/s 143(3) and, therefore, the income declared in the return attains finality unless proceedings are initiated u/s 147 or 263. 15. The third line of the argument of the Ld. Counsel is based on the premise that in proceedings u/s 153A, the assessee cannot raise a new or fresh claim. In this connection, reliance Is placed on the decision in the case of Suncity Alloys Pvt. Ltd. and Charchit Aggarwal (supra). We have seen that the finding in the case of Suncity Alloys is that proceedings u/s 153A do not constitute de-novo assessment. The assessee is precluded from raising any fresh claim after expiration of the time allowed to file revised return u/s 139 (5). Therefore, no such fresh or revised claim can be raised in assessments made u/s 153A. Similar finding has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) In the case of SRJ Peety Steels, in paragraph No. 33, it has been mentioned that the additions made in assessment years 2000-01 to 2005-06 are not based on seized material found during the course of search. The returns were filed prior to initiation of search. The returns had been accepted and, therefore, no assessment can be said to be pending on the date of initiation of search, which would abate in the light of provisions contained in section 153A. (d) The question in the case of Sarya Industries Ltd. was quite different and the grievance of the petitioner was with regard to constitutional validity of section 153C read with section 153A of the Act. Section 153A applies to a person in whose case a search has been initiated u/s 132 or whose books etc. have been requisitioned. Section 153C applies in the case of a person whose books or valuables etc. have been seized from the premises of another person in the course of search. The court held that the procedure in respect of both of them overlap, but that is hardly of any consequence, since both have to be treated in accordance with principles of natural justice. 17. The 5th & final line of argument is that only undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment u/s 153A should be based on any material seized in the course of search. Further, under 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 come to an end , which means that the AO gets jurisdiction on such assessment years for making an assessment or reassessment. In the case of Ms Shyam Lata Kaushik vs. ACIT, 306 ITR (AT) 117 (Delhi), it has been reiterated that there is no requirement under the Act that an assessment made u/s 153A should be based on material seized in the course of search. It has also been mentioned that in accordance with the second proviso, pending assessments or reassessments abate with the result that the AO has jurisdiction to make assessment or re-assessments u/s 153A. The Ld. Counsel, referring to these cases, submitted that on the facts there is no commonality of issues between original assessments and assessments u/s 153A. Therefore, the fact of these cases are distinguishable. In the case of Harvey Heart Hospitals Ltd. vs. ACIT, (2010) 130 TTJ (Channai) 700, it has been held that it will not be corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments or re-assessments. In this connection, our attention has been drawn towards note No. 10 made in the return of income and placed in the paper book on page No. 27. This return pertains to assessment year 2004-05. The disclosure of Rs. 3.50 lakhs has been made to cover any error, omission, discrepancy etc. It is argued that such error etc. can only be in the books of account. In such a situation, it cannot be said that no material was found in the course of search, for the simple reason that as per self incriminatory statement of the Managing Director, the discripencies exist in the books of account. In such a situation, the AO cannot restrict himself to the amount of Rs. 3.50 lacs only. It is his right as well as duty to examine the whole assessment with a view to work out the total income of the relevant year. Further, such offers have been made in every year and therefore the submissions made above in respect of assessment year 2004-05 are applicable to all the years. 21. The Ld Standing Counsel referred to paragraph No. 15 of the decision in the case of Padmasundara Rao (Decd.) v. State of Tamil Nadu [2002] 255 ITR 147 (SC) in which the Hon'ble Court mentioned that two pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Saraya Industries Ltd. that the provisions are intra-vires. 23. The ld. Standing Counsel also relied on the decision in the case of Prakash Nath Khanna vs. CIT (2004) 266 ITR 1 (SC), in which it has been held that the first and foremost rule of construction is that the intention has to be found from the words used by the legislature itself. The courts interpret the law and do not legislate the law. If a provision has been misused or is absurd, it is for the legislature to amend, modify or repeal it, if deemed necessary. The legislative casus omissus cannot be supplied by judicial interpretative process. Thus it is argued that the provisions should be read as a whole and as they exist, and there is no necessity of reading them down or providing any casus omissus. 24. In the light of the aforesaid position of law in respect of interpretation of the statutes, the ld. Standing Counsel proceeded to analyse the provisions contained in section 153A. The provision contains non obstante clause in respect of sections 139, 147,148, 149, 151 and 153, and deals with cases where search has been initiated or requisition has been made after 31.5.2003. In such a case, it is provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , will cause violence to the language of the section. It is well known method of construction of a taxation statute that literal construction is the only safeguard. A number of decisions have thereafter been quoted from various courts which have taken a similar view. 26. Same view is taken in the case of Shankaranarayana Construction Co. and Ors vs. State of Karnataka and ANR (2004) 276 ITR 56(Kar.), in which it has been held that nothing is to be added and nothing is to be taken away from the statute unless there are adequate grounds for doing so. The court should not so interpret a statute as to create casus Omissus when there is really none. A matter which should have been provided but has not provided in the statute cannot be provided by the courts. Therefore, the general rule of literal constructing should be followed. 27. In the case of K.G. Ashok & Others vs. Kerala Public Service Commission & Others, (2001) 5 Supreme Court case 419, it has been held that the provision containing restriction regarding rejection of application by candidates for recruitment to Public Sector Corporations, should not be read down in favour of the candidates who contravene the restrictions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of CIT(A) in revision and not to order made by him pursuant to a direction or order passed by the Tribunal under sub-section (4) or by any other higher authority. Such a view will be in consonance with the principle that all parts of the section should be construed together and every clause thereof should be construed with reference to the context and other clauses thereof so that the construction put on that particular provision makes a consistent enactment of the whole statute. 31. In the case of Mahendra Saree Emporium vs. G.V. Srinivasa Murthy, (2005) Supreme Court cases 481, it has been mentioned in paragraph No. 13 that abatement kills the right to sue and has the effect of unceremoniously terminating pending legal proceedings without any merits. It has to be strictly construed and applied only to such cases to which its applicability is undoubtedly attracted, excepting where an otherwise legislative intention is expressly or by necessary implication deductible. A provision for abatement of pending proceedings shall abate only such proceedings as were pending on that day and at that stage and not the original proceedings which had already stood concluded but were reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the new scheme as only undisclosed income detected in the course of search can be added and charged to tax. It was held that where the words of statute are clear, plain or unambiguous, the court should give effect to the meaning irrespective of consequences. The language of section 153A is ambiguous and susceptible to more than one meanings. In such a circumstance, the literal construction is of no help and therefore recourse to other guiding rules will have to be taken. It is argued that this finding is not correct as the words are clear and unambiguous. In the case of Sarya Industries Ltd., it has been held by the Hon'ble Delhi High Court that the provisions are intra virus the Constitution. Therefore, there is no need to read down the provisions. In the case of Ramballabh Gupta vs. ACIT 288 ITR 347 (MP) (2007), it has been held that the only fetters on the powers of the AO in taking recourse to section 148 is that it cannot be issued for those six years which are covered u/s 153A. This is because the provision contains nonobstante clause. For all other years, recourse can be taken to section 148 if requisite conditions are satisfied. It was also mentioned that these provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. Therefore, assessments u/s 153A have to be made in accordance with the provisions contained therein. The surest way is to interpret it in literal sense as there is no ambiguity. Coming to the apprehension of the Ld. Counsel that same addition, which was made in original assessment and deleted by the higher forum, may be made in reassessment u/s 153A, it is clarified that such an apprehension is unfounded as the AO will have to follow the decision of the higher forum as a matter of judicial discipline. If that is not done, taking a cue from the decision in the case of SPS Aviation Ltd., it is argued that there are enough safeguards by way of appeals etc. to correct such misplaced addition. 37. In the rejoinder reply, Ld. Counsel referred to the decision in the case of Sarya Industries Ltd., in which it was argued that the two persons situated differently are being treated similarly. In paragraph no. 5 of the report on page 197, it is mentioned that Section 153A applies to a person in whose case search has been initiated, etc. while section 153C applies in a case where assets or documents of a person are found in the course of search of another person. The procedure of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments shall be made in respect of completed assessments where incriminating material is found. Such a construction would be in consonance with the principle that each clause should be read in conjunction with all other clauses and in the relevant context, so as to make enactment or consistent law. 39. Shri G.N. Gupta, the Ld. Authorised Representative for the intervener in the case of National Industrial Corporation Ltd. filed written submissions dt. 26-04-2012 which are reproduced as under: "2.1 It is submitted that the issue arising for determination by the Hon'ble Special Bench is not res-integra. The issue first came up before the Hon'ble ITAT Calcutta Bench-E in the case of LMJ International Ltd., V. DCIT which is reported in 2008 (119 TTJ) page 214. For detailed reasons, the Hon'ble ITAT Bench-E, held that no addition can be made in an assessment framed u/s. 153A/153C of the Act which is not based on the seized material. A similar view was taken by Hon'ble ITAT Bench-A, Ahmedabad in the case of Meghmani Organics Ltd., V. DCIT in ITA No. 2909-2913/Ahd-2008. However, a different view was taken by ITAT, Delhi Bench in the case of Shivnath Rai Harnarain (India) Ltd., V. DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the reassessment proceedings. However, some other High Courts had taken the opposite view that this cannot be done and in an assessment opened u/s. 147 of the Act, the AO can proceed to tax only X but not any other income. To resolve this controversy, the legislature stepped in and added Explanation 3 to section 147 by Finance Bill No.2 of 2009 w.r.e.f. 01.04.1989. As submitted earlier, by 2009. The problem under the consideration of the Special Bench had arisen namely, whether an assessment framed u/s. 153A/153C, and addition can be made which is not based on the seized material. However, no amendment was carried out under the provisions of section 153A/153C in 2009. This clearly shows that it was not the intention of the legislature to bring to tax any income not relatable to the documents seized. 2.2.3 It is an established law in selecting out of different interpretations "the Court will adopt that which is just reasonable and sensible rather than that which is none of those things" as it may be presumed "that the Legislature should have used the word in that interpretation which least offends our sense of justice". In this connection, reference is kindly invited to page No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law which really may or may not be applicable. This would be a blatant case of judicial indiscipline or ii) follow ITAT's order without taking into account subsequent case law making the reference academic. 2.2.4.3 The same problem will be faced by DRP when considering assessee's objections against the draft order of A.O. The same problem will finally be faced by ITAT in disposing off the appeal filed under section 253(1)(d). 2.2.4.4 Surely, the law cannot postulate such an absurd, anomalous & inconvenient situation. 3. It is lastly submitted that it is settled law that where two interpretations are possible, Courts should give an interpretation which is in favour of the appellant. Accordingly, the Hon'ble Special Bench may kindly hold that in an assessment framed u/s. 153A/153C of the Act, no addition can be made unless it is based on the seized material". 40. Shri Reepal Tralshawala, representing for the intervener M/s Pratibha Industries Ltd. relied on the submissions made prior to him on behalf of the assessee on the issue as to whether in the absence of any incriminating material found during the course of search action, any addition/disallowance can be made while ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reliance was also placed in K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) at pages 598-599, 604, 605, 606, 610-612, 617 and 618. He further submitted that section 153-A merely lays down the manner/procedure for making assessment/reassessment and also the maximum number of years for which assessment/reassessment can be made. However, assessment/reassessment are made in pursuance to search action and, therefore, scope of assessment/reassessment confined to undisclosed income as enumerated in section 132 and does not give sweeping powers to re-compute regular income by conducting search action. He further submitted that if cash credits considered and accepted in original assessment, same cannot be once again re-considered in 153A assessment except if some evidence or material is found in respect of such cash credits leading to interference of undisclosed income and for this proposition reliance was also placed in SSP Aviation Ltd. V. DCIT (2012) 20 Taxmann.com 214 (Del) wherein it has been held that if income reflected in document found in search has been accounted, proceedings have to be closed thereby suggesting that addition can be made only on the basis of material found in sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it for notice u/s. 143(2) has not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have the authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment under section 143(3). IV Return of Income filed by the Assessee Intimation passed or not passed under section 143(1) and time limit for issue of notice under section 143(2) has expired Return of income of the assessee shall be treated as having been accepted and attained finality. AO loses jurisdiction to verify the return of income. Since, no assessment would be pending there would be no abatement of any proceedings. Accordingly, the scope of assessment under section 153A would be restricted to incriminating material found during the course of search. Refer: -Vipan Khanna v. CIT: 255 ITR 220 (P&H) -Kailash Auto Finance Ltd., v. CIT: (2009) 32 SOT 80 (Luck.):- Held that by processing the return and by issuing acknowledgment as token of accepting the return, the proceedings initiated by filing the return are terminated and no proceedings, therefore, remain pending. V Notice under section 143(2) iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 ITR 32 (P&H), (f) Ramesh Chander & ors vs. CIT : 93 ITR 244 (P&H), (g) Om Prakash Jindal vs. Union of India & Ors : 104 ITR 389 (P&H), (h) Oil India Ltd. vs. CIT : 138 ITR 836 (Cal), (i) Smt. Sujata Grover vs. Dy. CIT : (2002) 74 TTJ 347 (Del), (k) CIT vs. PNB Finance & Industries Ltd., : 340 ITR 50 (Del), (l) Smt. Mahesh Kumari Batra Vs. JCIT (2005) 95 ITD 152 (ASR) (SB) (para 23) and (m) SSP Aviation Ltd. Vs. DCIT (WPC No. 309/2011 dt. 29-03-2012) (Del HC). 43. He therefore submitted that since in this case, no incriminating material was found, therefore the addition made by the AO and sustained by the learned CIT(A) u/s. 153 A is without jurisdiction and the same be deleted. 44. Mr. Krishnan, the Ld. Counsel for the intervener in the case of M/s. Container Corporation of India Ltd., at the outset, submitted that the decision of the division bench in Container Corporation of India Ltd. V. ACIT, [2009] 30 SOT 284(Del) dated 27.02.2009 stands specifically overruled by the Hon'ble High Court of Delhi, vide their judgement dated on 11.05.2012, in ITA No. 1411/2009 & others wherein Their Lordships have been pleased to hold that the INTERVENER, i.e., CONTAINER CORPORA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt, 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 referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this {sub-section} pending on the date of initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing represents either wholly or partly income or property [ which has not been, or would not be, disclosed"] for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property) 48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. 50. The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso ? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment in pending and completed assessments. Obviously a search is undertaken for discovering undisclosed income or asset. It is also undertaken to find books of account or other documents which had not been produced or which would not have been produced in the course of assessment. Therefore, taking into consideration all such books, documents, income or asset for making assessment u/s 153A does not produce in any manner absurd or irrational result. It also does not cause any mischief. (b) The decision in the case of Surat Art Silk Manufacturer Association emphasized the ascertainment of predominant object while understanding the meaning of the term "charitable purpose". Any activity, howsoever carefully arranged will produce either surplus or deficit and in all cases of surplus it cannot be said that the activity was undertaken for profit. Thus, the legislative intent is found by ascertaining dominant intention behind the activity. Again our decision does not come in conflict in any manner with this decision as it is held that only such material which was not produced before the AO, undisclosed income or asset, if found in the course of search, has to be taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 153A /153C have been held to be intra vires when tested on the principles of natural justice. Therefore, what is required is that we should ensure that our interpretation does not render any provision to the ultra-vires. In our interpretation, we are not reading down the provision but reading it along side the provision contained in section 132A(1) as a consequence of which these proceedings come into existence. A harmonious interpretation of the two provisions does not amount to reading down the instant provision. (f) In the case of Prakash Nath Khanna, it has been held that the first and foremost rule is that intention has to be found from the words employed in the provision. The possible misuse of the provision or absurdity has to be taken care by the legislature, for which judicial interpretation is not the right forum. We have read the words employed in section 153A and 132 (1) as they exist, and harmonized the two provisions. This does not amount to supply of casus omissus. We have not supplied any words which are not there or omitted any words which are there. What we have done is only the reading of two sections together, which are inextricably linked with eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cidental to the aforesaid finding. We may add that we have not held that the assessment can be made only for those years in respect of which books or assets etc. are found. We have come to the clear finding that assessment / reassessment for all six years will have to be made. The real question is the scope of re-assessment which is not pending, for which we have read provisions of section 132(1) and section 153A together. Thus the total income under reassessment may be the same as in the original assessment or may be higher than that, depending upon the materials which are uncovered in the course of search. We are also of the view that issue of notice for six years and computing reassessment for these years even if no material is found in the course of search for some years does not amount to harassment etc. and even if it does so, the same has to be ignored in view of the clear statutory provision. 56. Thus the interpretation placed by us takes in to account the principles of literal interpretation and reading the relevant provisions together. This interpretation does not in any manner give results which can be said to be ultra vires. It also does not give any absurd or unjust r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as), the provisions contained in section 133A have been distinguished from the provisions contained in section 132, especially in regard to statements recorded in the course of operations. Board Circular dated 10.3.2003 has been highlighted that in such operations stress should be laid on discovering evidence of income which has not been disclosed or which is not likely to be disclosed rather than on recording confessions, The AOs have been directed to rely on the evidence / material gathered in such operations. (d) In Board Circular No.7 of 2003 dated 5.9.2003, the AOs have been informed that they shall make assessment or reassessment of the total income of 6 years, and the pending assessments on the date of initiation of search shall abate. In this connection, it is clarified that the appeals,review or rectification proceedings pending on the date of initiation of search or requisition shall not abate. This only means that the issues which stand concluded in assessments made earlier shall continue to remain intact subject to aforesaid jurisdictions. The other conclusion may be that in respect of matters debated and discussed in the assessments already made, no further action is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions contained in section 153A (1) (a) and the first proviso. (h) In the case of Kunhayammed and Others vs. State of Kerala, (2000) 245 ITR 360 (SC), it is mentioned on page number 379 of the report that this court held that the crucial date for determination whether or not the terms of Order XLVII Rule 1(1) Code of Civil Procedure, 1908, are satisfied is the date when application for the review is filed. It is pertinent for the court hearing the petition to dispose off that application on merits notwithstanding pendency of appeal, subject only to this, that if before the application for review is finally decided the appeal has been disposed off, the jurisdiction of the court hearing the review petition would come to an end. This means that review application abates if appeal against the order to be reviewed has been finalized. This finding may have only a limited application on the facts of our case, i.e. the issues which have already been debated and in respect of which the appeal has been decided, such issues may not be taken up for making addition again in reassessment u/s 153A unless further material is found in the course of search. However, it may be noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area for the purpose of storage, stuffing / destuffing and clearance of export / import cargo. Subsequently the assessee has been certified as a custodian of Cargo under Customs Act 1962, by notifying the area as "Customs area". It has been submitted that a CFS is common user facility offering services in handling and temporary storing of import / export laden empties carried under custom control and supervision. It is also a bonded ware house facility where customers can clear the cargo for export to various countries and receive customs - cleared cargo for home consumption. The staff of Customs Department is posted in the CFS for such clearances. The assessee enclosed a certificate from the Chartered Accountant in form No. 10CCB, which is a pre-condition for claiming the deduction u/s 80IA (4). A certificate from the port trust has also been enclosed to the effect that the activities may be considered as extended activities as of port related activities in accordance with the circular No. 793(b) dated 26.3.2000, read with circular No. 133/95 - Cus. Dated 22.12.1995 of the Board of Excise and Customs. The Central Board for Direct Taxes had also issued circular No. 10/2005 dated 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Inland Port. The error committed by the Tribunal is to overlook that both before and after the above amendment, Inland Ports were specifically mentioned as an infrastructure facility in the statutory provision and in the understanding of the CBEC, which administers the Customs Act, an Inland Container Depot was actually an Inland Port. There is also no dispute that even in 1983 amendments had been made to the Customs Act by treating the Inland Container Depots as part of the customs port for purpose of customs formalities and clearances. In these circumstances, the real question was not whether the CBDT notified the ICD as an Inland Port but whether the ICD can be considered to be an Inland Port. In our opinion having regard to the provisions of the Customs Act, the communications issued by the CBEC as well as the Ministry of Commerce and Industry, the object of including "inland port" as an infrastructure facility and also having regard to the fact that customs clearance also takes place in the ICD, the assessee's claim that the ICDs are Inland Ports under Explanation (d) of Section 80IA(4) requires to be upheld." 63. The submission of the Ld. Counsel in the case of All Carg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad and rail access and cargo storage spaces and states that the expression "infrastructure facilities" shall be construed accordingly. In this Act, inland port is included as item, thus, this term has a distinct meaning, separate and apart from other terms. Therefore, ICDs and CFSs cannot be interpreted to be included in the term "inland port". It is also submitted that circular No. 74/97-cus. dated 30.12.97 of the Central Board of Excise and Customs makes a distinction between inland ports and ICDs /CFSs for grant of duty draw back benefit. It is also submitted that a study prepared by Transport and Tourism Division of Economic and Social Commission for Asia and pacific (a division of the United Nations) provides an insight in the concept of "inland port" vis. a vis. "sea port". It is mentioned there that access should be provided to inland ports through waterways from sea by developing them. 65. We have considered the facts of the cases and submissions made before us. It may be mentioned that one of the arguments advanced by the Ld. Counsel for the assessee is that the case of Container Corporation of India is not based on any of the circulars issued by the Port authorities, how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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