TMI Blog2012 (7) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... rating the CFS at Jawahar Lal Nehru Port Trust - Held that:- In the case at hand it is clear that the assets of the CFS are not to be handed over to the Port Trust at any point of time as it is not built on BOT & BOLT Scheme. The CFS is also not located at the Port. CBDT has furnished opinion that ICDs and CFSs are not entitled to such deduction as they do not constitute inland ports, however High Court in the case of Container Corporation of India Ltd (2012 (5) TMI 260 (HC)) held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e.,ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks in containers. Thus, the issue is no longer res-integra. Respectfully following this decision, it is held that a CFS is an inland port whose income is entitled to deduction u/s 80IA(4) - Decided in favor of assessee. - ITA Nos. 5018 to 5022 & 5059/M/2010 - - - Dated:- 6-7-2012 - G. E. Veerabhadrappa, D. K. Agarwal And K. G. Bansal, JJ. For Appellants: S. E. Dastur, B. V. Jhaveri, Madhur Agarwal Manju Sisodia For Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered several decisions which were available at that point of time, the Division Bench opined that a reference is necessary under section 255(3) of the Act to Hon ble President, Income Tax Appellate Tribunal, for constitution of Special Bench. Accordingly, a reference dated 19-12-2011 was made. The operative part of the reference reads as under : 4.1 Having heard both the sides and perused the relevant material on record, it is noticed that the assessment years under consideration are 2004-05 to 2009-10. The Delhi Bench of the Tribunal in Container Corporation of India Ltd. (supra) also considered assessment years 2003-04 to 2005-06. Some of the arguments raised by the Ld. Sr. A.R., in the proceedings before us, were also raised, considered and rejected by the Tribunal. At the same time, it is also true that there is no reference to certain relevant material in the Delhi Bench order, such as Notification S.O.744(E) dated 1.9.1998 (copy placed at page 118 of the paper book), letter of Director, CBDT, to all Chief Commissioners of Income-tax dated 16.12.2005 (copy placed at page 120 of the paper book) etc., which may have some bearing on the issue. 5. Under such circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by issuing a questionnaire dated 25.5.2006. Information and clarification were sought and vide point No. 20(a), the assessee was required to furnish a note on the unit with reference to its commissioning and capital work in progress shown in the balance sheet. This point was specifically responded to in letter dated 6.8.2006, in which it was submitted that the CFS activity commenced from 7.4.2003. A notification had been received from the Commissioner of Customs (Import), Jawahar Custom House bearing No. 03/2003 dated 28.2.2003, classifying the area of 3282 sq meters as customs area for the purpose of storage, stuffing / destuffing and clearance of export / import-cargo. Subsequently the Commissioner has notified the same area as customs area for export cargo and the assessee has been certified as a custodian for cargo under Customs Act, 1962. Copies of relevant notifications were also enclosed. 6. A CFS is common user facility offering services in handling and temporary storing of import / export laden empties / carried under customs control and supervision. It is also a bonded warehousing facility where customers can custom clear the cargo for export to various countries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to him for filing the return in respect of each assessment year falling within six assessment years immediately proceeding the assessment year relevant to the previous year in which the search or the requisition is made. Thereafter, the AO has to assess or reassess the total income of the six assessment years. First proviso is reiteration of the provision containing clause (b) of section 153A (1) that the AO shall assess or reassess the total income of each of the six assessment years as mentioned above. The second proviso contemplates that if any of the aforesaid six assessments is pending on the date of initiation of the search or requisition, the same shall abate. However, there is no provision that even the completed assessment of aforesaid six years shall abate. Therefore, the distinction has been made between a completed assessment and a pending assessment. Further under the provision contained in sub-section (2), the assessment or reassessment relating to any assessment year which has abated under the second proviso, if such an assessment is annulled in appeal or any other legal proceeding, then it shall stand revived w.e.f. the date of receipt of the order of such annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1959-60 u/s 24(2) of the Income Tax Act, 1922? The High Court had held that for an assessee to be entitled to carry forward of the loss to the following year and to claim set off, three conditions must be fulfilled i) the loss must be in a business (ii) the business in which loss was sustained must be continued to be carried on by the assessee in the year of set off, and (iii) the business against the profits of which set off is claimed must be carried on by the assessee in that year. The Ld. Counsel drew our attention to page No. 338 of the report where the contentions of the revenue have been summarised. It was submitted that set off for the carried forward loss is permitted u/s 24(2) only. There must be lliteral construction of this provision, and in view of the provision of section 24 (2) (ii), which stipulates that losses to be carried forward must be sustained by the assessee in any other business and it shall be set off against the profits and gains, if any, of any business carried on by him in that year; provided that the business in which the loss was originally sustained continues to be carried on by him in that year. Therefore, it is required that the business again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to earn profit, it would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose character of a charitable purpose merely because some profit arises from the activity. Therefore, it has been argued before us that the dominant object of the provision contained in section 153A has to be found out for placing proper interpretation in respect of the powers of the AO in dealing with completed assessment and assessments in respect of which proceedings are pending. 12. Reliance has also been placed in the case of CWT vs. N.A. Mayanna. (1991)191 ITR 535 . The question before the Karnataka High Court was whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the partition is deemed to have taken place under Explanation I to section 6 of Hindu Succession Act and the half share of the deceased which has devolved on the heirs cannot be included in the net wealth of Hindu undivided family? On page 544 of the report, it is mentioned that while interpreting the provisions of the law, not only the scheme of the particular legislation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gued that it is possible to reconcile the contents of two proviso by restricting the meaning of the term assessed or reassessed appearing in the first proviso by holding that the total income of the assessee is to be recomputed on the basis of undisclosed income unearthed during search and the same is to be added to the regular income assessed u/s 143(3) or u/s 143(1) for each of the six proceeding assessment years. (b) In the case of Charchit Aggarwal, It is held that the provisions are directed to assess or reassess income for 6 assessment years based on search proceedings and hence the assessment proceedings u/s 153A are beneficial to the revenue. In other words, the proceedings are initiated to asses or reassess the undisclosed income. Referring to the decision in the case of CIT Vs. Sun Engineers works Pvt. Ld. (1992) 198 ITR 297 (SC) , it is further mentioned that section 147 is for the benefit of the revenue and not the assessee, therefore, the assessee cannot be permitted to convert reassessment proceedings into an appeal or revision and seek relief in respect of items earlier rejected or claim relief in respect in respect of items not claimed in the original assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that they are granted with the object of promoting industrial growth or expansion. The Tribunal mentioned that the expression assessment or reassessment used in section 153A connotes determination of total income in respect to the return required to be filed where a search has been initiated. This expression has to be construed in the context of section 153A alone. The word assessment is comprehensive in its content and it takes within its ambit the whole proceeding of ascertaining and imposing tax liability. This has been clarified by the Apex Court in the case of C.A. Abraham Vs. ITO (1961) 41 ITR 425 . On page 429 of the report, it has been held that the word assessment has to be understood in each section with reference to the context in which it has been used. Thus, this expression in the context of section 153A, signifies computation of undisclosed income. The second proviso suspends the pending assessment by using the word abate . The Tribunal took into account the dictionary meaning of the word as well as the meaning assigned to this word in Blacks Law Dictionary. The judicial interpretation of the word pending has also been taken into account. Finally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in assessment u/s 153A, by implications the revenue will also not be permitted to raise new and fresh grounds for making additions in assessment u/s 153A. 16. The fourth preposition canvassed by the Ld. Counsel is that if no incriminating material is found in the course of search in respect of an issue, then no addition in respect of any issue can be made in assessment u/s 153A or 153C. To support the aforesaid preposition, the Ld. Counsel has relied on the decision in the case of LMJ International Ltd. vs. DCIT, 119 TTJ 214 (Kol) , Charchit Agarwal, Hellios Foods Additives Pvt. Ltd., ACIT vs. SRJ Peety Steels Pvt. Ltd. (2011), 53 DTR (Pune) 347 , and Saraya Industries Ltd,. vs. Union of India, 171 Taxman 194 (Del) . (a) In the case of LMJ International, in paragraph 13, it is mentioned that the total income of the assessee is to be recomputed on the basis of the undisclosed income unearthed during search and the same is to be added to regular income assessed u/s 143(3) or computed u/s 143 (1). In paragraph No. 14, it is mentioned that the department seeks to place interpretation on the provisions, which if accepted, would lead to serious hardship, inconvenience, injust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board Circular dated 5.9.2003 clearly shows that after 31.5. 2003, the earlier provision of block assessment in search cases shall not apply. Instead there shall be assessment of undisclosed income of six years preceding the date on which search has been conducted. For this purpose, the AO shall issue notice to the searched person requiring him to furnish return of six years. It is further mentioned that second proviso to section 153A contemplates abatement of assessments pending on the date of initiation of search which means that the AO shall not proceed with such assessment any further but make assessment or reassessment u/s 153A. Thus it will be seen that the decision does speak of undisclosed income . It may however be mentioned by us that the Board circular does not use the word undisclosed anywhere while dealing with the new provision of sections 153A to 153C. (b) We have also seen that in the case of Suncity Alloys, in paragraph No. 17, it is mentioned that the word assessment in section 153A signifies computation of undisclosed income that shall form part of the total income within the meaning of section 2(45) in respect of each year, which is required to be aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that once the warrant of authorisation is issued, the search is conducted and panchnama is drawn, the assessment of 7 years including the instant year has to be completed u/s 153A. This means that the assessments which are completed before the date of search get reopened and the proceedings which are pending at the time of search abate. The case of the ld. counsel is that findings in regard to section 153A etc. in this case are merely in the nature of observations as neither any warrant of authorisation was issued nor any search was conducted. The decision in the case of Gopal Lal Bhadruka vs. DCIT 2012-TIOL 397-HC-IT has been distinguished on the facts by submitting that on money in respect of 8 plots of land was found in the course of search, but no evidence was found in respect of other 24 plots. Since incriminating material was found in respect of 8 plots, Hon ble Court held that the AO can estimate on money in respect of all 32 plots. The fact is that incriminating material was found and, therefore, the facts are distinguishable. 19. In reply, the Ld. Standing Counsel referred to the submissions made by the Ld. Counsel. Further, he referred to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. The intention to produce an unreasonable result is not to be imputed to a statute if there is some other construction available. Where literal construction would defeat the obvious intention of the legislation and produce a wholly unreasonable results, the court must do some violence to the words so as to achieve the obvious intention and to produce a rational construction. The case of the Ld. Standing Counsel is that the statutory language is clear and on its literal construction it does not produce any absurd or anomalous results. Therefore the provision should be read as it exists on the statute. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed that the AO has no option but to issue notice calling for return of all six assessment years. Thereafter, the first proviso casts a duty on him to assess or reassess the total income in respect of each assessment year. In this respect also he has no choice but to make 6 assessments. In order to obviate a necessity of making two assessments in respect of the year for which proceedings are pending, the second proviso provides that pending assessments shall abate, which means that only one assessment u/s 153A shall be made in respect of assessments which have abated because of this provision. Both the first and second provisos direct the AO to assess total income, which has to be computed in accordance with section 5 of the Act. Therefore, in respect of all six assessments, AO has to make assessment or reassessment of total income and in doing so there is no fetter on his powers, i.e. he is not restricted to the consideration of only incriminating materials or undisclosed valuables. Accordingly it is argued that there is no disconnect between proviso 1 and proviso 2. The pending assessments are intended to be abated for the simple reason of avoiding multiplicity of proceedings an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions are ultra virus as they stand. The provisions are not ultra vires and therefore the question of reading down the provisions does not arise. 28. In the case of Calcutta Gujrati Education Society vs Calcutta Municipal Corporation and others (2003) 10 Supreme Court cases 533 , it has been held that mere non service of public or written notices individually to all tenants, subtenants, occupants does not invalidate the consolidated rate determined and apportioned in absence of any serious prejudice to the aggrieved persons. In paragraph No. 35, the court referred to its earlier decision to the effect that at first the attempt should be made by the courts to uphold the charged provision and not invalidate it because one of the possible interpretations leads to absurd results. Thus in case where there are two interpretations possible, the one validating the statute should be adopted. For this purpose, the court may have to give restrictive or expansive meaning keeping in view the nature of legislation. The golden rule in this behalf is that wisdom of the legislature should be respected and that it would have never intended to pass an invalid legislation. Similarly a provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons contained in Chapter XIV B. The intention of the legislature admittedly was to avoid litigation which proliferated on the issue of undisclosed income . If the same controversy is raised under the new provision, by arguing that no reassessment can be made in respect of completed assessment where no incriminating material is found, the avowed purpose of bringing new provisions will be forfeited and the litigation will proliferate on the question as what constitutes incriminating material in respect of such assessments. There is no need to go into any interpretation except following the literal construction. If that is done, the provision of first and second proviso are found to be in harmony and there is no contradiction between them. In fact the whole scheme of assessment or reassessment is clear on literal interpretation. In case of search after the specified date, the AO has to issue notice for requisitioning return of 6 years . Thereafter assessments or reassessments have to be made. The pending assessments abate, which means that the assessments have now to be made u/s 153A. In these assessments, the AO can look into all matters as what he has to do is to compute the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by issuing notice u/s 153A. On the basis of this finding, it is argued that assessment / reassessment has to be done for 6 years covered u/s 153A. In the case of S S P Aviation Ltd. vs. DCIT, (2012) 20 taxman.com 214 (Delhi) the counsel for the assessee had expressed an apprehension that there is grave danger that even disclosed transaction / income are likely to undergo a further scrutiny causing harassment to those persons whose assets or valuable articles or books of account or documents etc. are found in a search conducted in the case of another person. The court is of the view that such apprehension may be justified to a limited extent, if facing an inquiry can be justifiably described as harassment. There can be some inconvenience in a case where the income had already been disclosed by the other person who has not been searched, However, there is no cause for any apprehension that the income-tax authorities will exploit the situation to harass the assesees where requisite evidence is adduced by them to show and establish that the income depicted by the valuable articles etc. has been disclosed by them. Even if the authority acts unreasonably or with undue enthusiasm there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure to be followed. It is further mentioned that essentially both such persons are in similar situation because their valuables or books etc. are seized or requisitioned although from different locations. Further, the seizure or requisition must be of such material that can persuade the AO to reopen a closed assessment. In this sense there is no hostile discrimination between the two persons. The ld. Counsel laid great stress on the words that seizure or requisition must be of such a character as to persuade the AO to reopen a closed assessment. It is pointed that these words support the case of the assessee. It is further submitted that in the case of SPS Aviation Ltd., undisclosed income was found in the course of search by way of a document showing that the assessee had sold development rights in land, the profit from which was assessable in assessment year 2007-08. Till the date of issuance of notice u/s 153A, the transaction was not known to the revenue. Subsequently, the assessee filed audited accounts for assessment year 2009-10, in which the transaction was shown. Even this disclosure was contrary to the contents of the evidence found in the course of search according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions in the case of LMJ International Ltd., and Meghmani Organics Ltd. were noticed. Subsequently, the issue came up for consideration before ITAT Delhi Bench-B in the case of Anil Kumar Bhatia V. ACIT in ITA No. 2660-2665/Del-2009. Hon ble ITAT Bench-B rendered their decision on 01.01.2010 holding that no addition can be made in an assessment u/s. 153A of the Act which is not based on the seized material after noticing the earlier decisions in the case of LMJ International Ltd. and Meghmani Organics Ltd., and after distinguishing the decision of ITAT Delhi in the case of Ms. Shyam lata Kaushik V. ACIT reported in (2008) 114 ITD 305 (Delhi) and Shivnath Rai Harnarain (India) Ltd V. DCIT reported in (2008) 304 ITR (AT) 271 (Delhi). It is respectfully submitted that it is evident that the decision of Shivnath Rai Harnarain (India) Ltd V. DCIT was rendered by ITAT Delhi per incuriam in as much as they were rendered without noticing the earlier decisions rendered by ITAT Calcutta and ITAT Ahmedabad. 2.2.1 It is next submitted that the provisions of section 153A/153C of the Act were inserted by the Finance Act, 2003 w.e.f. 01.06.2003. These provisions have been explained in the Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004, the original assessment u/s. 143(3) was framed on 20.03.2006 by disallowing a sum of ₹ 18,72,920/- claimed as deduction under the provisions of section 801B of the Act. (Paper Book pages 1-3 refers). Being aggrieved, the appellant filed an appeal before CIT(A)-XVI, New Delhi, who has allowed full relief under section 80IB of the Act as per his order dated 15.11.2006, a copy of which is placed in the Paper Book at pages 4-12. However, the learned AO has, inter alia, again disallowed a sum of ₹ 18,72,920/- in assessment order dated 28.12.2007 framed u/s. 153C read with section 153A of the Act by relying on the interpretation that in an assessment framed u/s. 153A/153C of the Act, he is free to make additions which are not based on the seized material. This interpretation has thus led to the absurdity of an AO making an addition which has already been deleted by CIT(A). The interpretation placed by the AO thus clearly flouts the elementary principles of judicial discipline where any authority has to follow the orders of higher appellate authority. 2.2.4 In this connection, it is also submitted that the 3rd 4th provisions to section 153B(1) were inserted by Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 132 provides to unearth the hidden or undisclosed income or property and bring it to the assessment and for this proposition the reliance was also placed on the decision of Hon ble Mysore High Court in C. Venkata Reddy and Another vs. ITO (1967) 66 ITR 212 (Mys) at pages 222, 227, 234-235 and 237 of the report. The reliance was also placed on the decision in L.R. Gupta and Others v. UOI (1992) 194 ITR 32 (Del) at page 34-35 of the report. He further referred to para 71 of the Budget Speech reported in (1995) 212 ITR 69 at page 87 (Statute) wherein the Finance Minister has proposed a new scheme under which undisclosed income detected as a result of search shall be assessed separately at a flat rate of 60%. An appeal against the order can be filed directly before the Tribunal. A reference was also made to clause 32 of Notes on Clauses of Finance Bill, 1995 appearing at page 306 of the same ITR. He has also drawn our attention at page 219 of the Memorandum explaining the provisions in the Finance Bill, 2003 relating to assessment of search cases abolition of the special procedure in Chapter XIV-B and introduction of new provisions u/s 153A reported in (2003) 260 ITR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial found in search. Finality of orders cannot be disturbed. Reliance was also placed in Guruprerna Ent. Vs. ACIT (2011) 57 DTR 465 (Mum) (Trib) at para 19, 21 to 23 and ACIT vs. Uttara Shorewala (2011) 48 SOT 6 (Mum) (URO) at para 15 to 19. He therefore submitted that since no material was found during the course of search, no addition can be made u/s 153A of the Act and therefore the addition made by the A.O. and sustained by the ld. CIT(A) be deleted. 41. Mr. Ajay Vohra, learned Counsel for the intervener in the case of M/s. NIIT Ltd., in addition to what has been submitted by his predecessors referred to: (i) Relevant extract from Finance Bill, 2003: Notes on Clauses: 260 ITR (St.) 164 (Pg. 1-2 of Paper Book), (ii) Relevant extract from memorandum explaining provisions in the Finance Bill, 2003 260 ITR (St.) 219 (Pg. 3-4 of Paper Book), (iii) Relevant extract from the CBDT Circular No .7 of 2003 dated 5th September 2003: Explanatory notes on provisions relating to direct taxes in Finance Act, (2003) 263 ITR (St.) 106 (Pg. 5-6 of Paper Book), and (iv) Filed a scenario explaining the provisions of Section 153 A in the table form as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn 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) issued and assessment pending under section 143(3) Pending regular assessment proceedings would abate and would converge/merge in proceedings under section 153A. Accordingly, the scope of assessment under section 153A would cover the pending return filed as well and would not be restricted to incriminating material found during the course of search. VI Assessment under section 143(3) completed Since regular assessment proceedings have been completed and are not pending, there would be no abatement of proceedings. AO loses jurisdiction to review the completed assessment. Accordingly, the scope of assessment under section 153A would be restricted to incriminating material found during the course of search. Interpretation canvassed by the Revenue would result in defeating the scheme of the I.T. Act and would wipe out the finality attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 CORPORATION OF INDIA LTD., is entitled to the benefit of the incentive under section 80-1A of the Income-Tax Act, 1961. He also placed on record the copy of the said judgment. Therefore, the precedent as relied upon by the Revenue authorities in respect of the Intervener s appeals as are now before the Hon ble Special Bench, in denying the claim under section 80-1A of the Act, is now non-est, and therefore, following the view taken by the Hon ble High Court of Delhi, the second question as before the Special Bench should be decided in favour of the Assessee. 45. Ms. Ritika Agarwal, the ld. Counsel for the Intervener of M/s Shriram Group and Shri Haresh Majethea, in addition t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassess 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 initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner : Provided that such revival shall cease to have effect, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132(1) does not use the word incriminating document . Clauses (a) and (b) of section 132(1) employ the words books of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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. (c) In the case of NA Mayanna, it has been held that not only the scheme of the legislation but also constitutional background will have to be considered. We have seen that since search assessments have to be made after granting appropriate opportunity of being heard to the assessee, when assets or books of account found in the course of search of any person. These books or assets may belong to him or any other person, but in either case the principles of natural justice are met as held in the case of Sarya Industries Ltd. This case has dealt with the issue of vires from the point of view of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 each other. (g) In the case of C.B. Gautam, the finding was that provisions contained in chapter XX do not confer unfettered powers on the appropriate authorities for pre emptive purchase of a property, when it has been agreed to be sold by the assessee for a consideration significantly lower than the fair market value. We are of the view the provisions in section 153A also do not confer any arbitrary or unbridled power on the AO. However, that is not the real issue. The real issue is whether there is any sanctity of completed assessment in respect of which nothing has been found in search. When we l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 results. 57. The various Ld. Counsels for the intervening parties have listed or stated various scenarios regarding what constitutes pending assessment and what constitutes completed assessment. We find that second proviso to section 153A uses the words pending on the date of initiation of search and provides that assessment so pending shall abate. The provision does not use the words completed assessment . Further, the question which has been referred to us is in respect of scope of assessment u/s 153A and whether it encompasses additions, not based on incriminating material found in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 required in re-assessments u/s 153A. (e) In the case of Shaila Aggarwal decided by the Hon ble Allahabad High Court, it has been held that only such assessments or reassessments which are pending on the date of initiation of search stand abated. However, an appeal before the Tribunal against the order of Ld. CIT(A) in respect of assessment is not a continuation of proceedings of assessment. Such proceedings do not abate, and if the appeal has been disposed off by the Tribunal before the date of initiation of search, the order shall hold. Abatement of any proceedings has serio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 review is different from re-assessment. (i) In the case of Manish Meheshwari vs. Asstt. Commissioner of Income Tax, (2007) 289 ITR 341 (SC) , the view taken by Gujarat High Court in the case of N. Khandubhai Vasanji Desai Vs. DCIT (1999) 236 ITR 73 , has been referred to, in which it was held that where a search or requisition has been made, assessment has to be made under chapter XIV B. If the AO comes to a conclusion that any undisclosed income belongs to person other than the person who has been searched etc. a note has to be recorded to this effect to be forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 16.12.2005 clarifying that the structures at the port for storage, loading and unloading constitute port for the purpose of section 10 (23G) and section 80IA. 62. Before us, Ld. Counsel for the Container Corporation of India submitted at the outset that the decision of Hon ble Delhi High Court dated 11.5.2012 has now been received, a copy of which is placed in paper book on page Nos. 14 to 33. The decision was rendered in respect of three appeals filed by the assessee bearing ITA Nos. 1411/2009, 967/2011 and 968/2011. The assessment years involved ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 Cargo Global Logistics Ltd. is that the Hon ble Delhi High Court has held that ICDs are landlocked and situated far off from the sea port such. The ICDs of the Container Corporation of India are located at places such as Jamshedpur, Jodhpur, Jaipur, etc. These have been held to be inland ports for the purpose of deduction u/s 80IA(4). The case of the assessee is better placed than the case of Container Corporation of India Ltd. in as much as it is situated 5 kms away from the port and it is a part of the port for carrying out activities mentioned ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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, however, the CFS the assessee has been granted such certificate. The certificate mentions that the CFS carries on port related activities, and it may be considered as an extendable activity of the port related activities. It is clarified that the CFS has not been built on BOT or BOLT Scheme and that it is situated on land which does not belong to the port. The letters written by port trust to the assessee also state that the matter has been referred to the Income Tax Department. The department has clarified that an ICD / CFS does not constit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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