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2015 (7) TMI 5 - ITAT KOLKATA

2015 (7) TMI 5 - ITAT KOLKATA - TMI - Validity of assessment framed u/s. 153A - Held that:- In view of the second provision of section 153 of the Act, it is clear that assessment or reassessment relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s. 132 of the Act shall abate. It means if on the date of initiation of search u/s. 132 of the Act, any assessment proceedings is initiated relating to any assessment year falli .....

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[2015 (5) TMI 656 - BOMBAY HIGH COURT] in the case of Shaila Agarwal, [2011 (11) TMI 213 - ALLAHABAD HIGH COURT ] and in the case of All Cargo Global Logistics, [2012 (7) TMI 222 - ITAT MUMBAI(SB)], we are of the view that there is no incriminating material found during the course of search in the present case for these assessment years, except the statement of one Shri Sambhu Kr More, as admitted by the AO in his remand report dated 23.09.2011 and despite number of opportunities revenue could .....

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Kumar, CIT, DR For the Respondent : S/Shri S. L. Kochar & Anil Kochar, Advocate ORDER Per Bench: I.T(SS)A Nos. 12 to 16/Kol/2012 by revenue and Cross Objection Nos. 13 to 17/K/2012 by assessee are arising out of common order of CIT(A), Central-III, Kolkata in Appeal Nos. 87,86,83,84,82/CC-XXIII/CIT(A)C-III/10-11 dated 20.12.2011. Assessments were framed by ACIT, CC-XXIII, Kolkata u/s. 153A read with section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessme .....

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ross Objection Nos. 18 to 20/K/2012 by assessee are arising out of common order of CIT(A), Central-III, Kolkata in Appeal Nos. 103, 104 & 105/CC-XXIII/CIT(A)C-III/10-11 dated 16.12.2011. Assessments were framed by ACIT, CC-XXIII, Kolkata u/s. 153A read with section 143(3) of the Act for Assessment Years 2004-05 to 2006-07 vide his separate orders all dated 31.12.2010. 3. At the outset, Ld. counsel for the assessee stated that there is a legal issue raised in the Cross Objections of the asses .....

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oducing the grounds from C.O. No. 13/Kol/2012 arising out of IT(SS)A Nos. 12/Kol/2012 for AY 2003-04, which reads as under: 1. For that the Ld. CIT(A) erred in holding that the proceedings initiated by the AO u/s. 153A of the Income Tax Act, 1961 in the case of the Respondent-assessee were valid and enforceable. 2. For that the Ld. CIT(A) ought to have appreciated the fact that there being no incriminating material found in the course of search conducted u/s. 132 relating to assessment year in a .....

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number of individuals and group companies within the Surana Group of cases on 19.03.2009. The assessee is one of the persons searched u/s. 132 of the Act. The assessee in response to notice u/s. 153A of the Act disclosed the return of income at ₹ 3,05,880/- for the relevant AY 2003-04 (as returned originally u/s. 139 of the Act). During the course of hearing before us as well as before CIT(A), assessee contended that no incriminating material was found during the course of search on Surana .....

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tered Accountant on 09.05.2009. Statement of Shri Sambhu Kr More was recorded u/s. 132(4) of the Act. During of search on Sambhu Kr More a statement u/s. 132(4) of the Act was recorded and the relevant queries is reproduced in the order of CIT(A) and that of the AO, which reads as under:- 8. During the course of survey u/s 133A conducted today in your business premises at 52, Weston Street, Kolkata-700012, the names of number of companies mostly having their registered offices at the said premis .....

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e detailed list of the above on 12/5/2009. 9. Are you director in any of the companies maintained in Ans. No.-8? Ans.-No. However, I am a director in M/s. More highrise Pvt. Ltd., 52, Weston Street, Kolkata-700012. In the other companies the directors are my brother Sri Raj Kumar More and my employees, Sri Ravi Agarwal etc. 10. Please explain the nature of business conducted by the above mentioned companies. Ans.-All the above mentioned companies are engaged in the business of share trading, loa .....

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all the said transactions, first cash is received from Sri Shanti Kumar Surana. Then after a series of transactions through my companies, cheques of relevant amounts are finally issued to the relevant companies belonging to Sri Shanti Kumar Surana as per instructions received from Sri Shanti Kumar Surana, from time to time. 13. Please explain in details the transactions which take place after receipt of cash from Sri Shanti Kumar Surana, till the issue of cheques of relevant amounts to companie .....

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mpanies, through loan transactions / advances / share transactions, etc. c. Finally as per the requirement of Sri. Shanti Kumar Surana, cherques of appropriate amounts are finally issued to his companies in the form of share capital or unsecured loans. d. I may also mention that in some of the cases, the shares of Sri Shanti Kumar Surana s companies are brought back by the promoters and their family members at 20% of the share value, approximately. The cheques received for the said transactions .....

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e of the concerns of the Surana group, were procured from Sr. Debesh Upadhyay and Sr Vinod Jaiswal, having their offices at Waterloo Street and Girish Park, respectively. However, I will check the records and submit details of the same on 12/5/2009. 15. What is your remuneration for laundering the unaccounted money of Sri Shanti Kumar Surana by routing it through accommodation entries in the books of your companies. As enumerated above by you? Ans.- I earn on an average 0.6% of the cash received .....

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eque, net of TDS. This amount of interest income is offered to tax by the relevant companies and TDS thereon is accordingly claimed. The cash of amount equal to the net interest income (cheque amount) is given back to Sri Shanti Kumar Surana. The TDS amount is also given back subsequently in the form of cash to Sr. Shanti Kumar Surana. Also, any further tax liability on account of the said interest income is usually very small amount running into a few thousand and is borne by us. 17. In respons .....

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F.Y 2004-05 in the case of Bikaji Mercantiles Pvt. Ltd (PAN-AABCB4120A) which is a company belonging to the Surana Group . From the details it is seen that all the 12,24,000 equity shares of this company have been subscribed by the following companies a. M/s Alfa Tie-Up Pvt. Ltd. b. M/s. Rang Vardhan Febtrade Pvt. Ltd. c. M/s Cygnus Publishers Ltd. d. M/s Payagpour Vyapaar Pvt. Ltd. e. M/s Anuvrat Transport System Ltd. f. M/s Manush Distributors Ltd. g. M/s Teji Mandi Securities Pvt. Ltd. Does t .....

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n the shares of Bikaji Mercantiles Pvt. Ltd. 19. Now I am showing you details of unsecured loans taken by Bikaji Mercantiles Pvt. Ltd., during the F.Y 2004-05, wherein, it is seen that this company has entered into unsecured loan transactions with 19 companies. Please identify the companies belonging to you and confirm the modus opeandi as explained by you in answer to Q. No. 13 and 14. Ans.- Out of the 19 companies, 2 companies namely Anuvrat Transport Systems Pvt. Ltd., and Manush Distributors .....

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ill submit the details after verifying our records on 12/5/2009. 6. During the course of assessment proceedings, the AO provided copies of all statement of Shri Sambhu Kr More to the assessee and another statement of assessee was recorded u/s 131 of the Act on 15.09.2010, by virtue of which he denied having made any disclosure of ₹ 8 cr. during the course of post search proceeding and also denied having taken any entries in lieu of cash from the various companies as admitted by Shri More. .....

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2,2,50,000 1,22,50,000 1,61,538 Bikaji Mercantiles Pvt. Ltd. Anuvrat Transport Systems Ltd. 2003-04 2,09,50,000 1,49,50,000 1,66,800 Shanti Kr. Surana Rang Vardhan Febtrade Pvt. Ltd 2003-04 15,00,000 15,00,000 12,986 Shanti Kr. Surana Manush Distributors Ltd. 2003-04 4,65,00,000 2,05,00,000 8,38,093 Shanti Kr. Surana Anuvrat Transport Systems Ltd. 2003-04 4,05,00,000 1,20,00,000 6,91,726 Sub Total 13,17,00,000 6,12,00,000 18,71,143 Bikaji Mercantiles Pvt. Ltd. Manush Distributors Ltd. 2004-05 4 .....

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ort Systems Ltd. 2004-05 50,00,000 0 0 Sub Total 16,79,00,000 19,84,00,000 90,21,304 Bikaji Mercantiles Pvt. Ltd. Manush Distributors Ltd. 2005-06 2,73,00,000 4,03,00,000 6,27,090 Bikaji Mercangiles Pvt. Ltd. Anuvrat Transport Systems Ltd 2005-06 1,00,00,000 1,50,00,000 4,44,493 Shanti Kr. Surana Manush Distributors Ltd. 2005-06 3,40,00,000 4,60,00,000 15,63,288 Shanti Kr. Surana Anuvrat Transport Systems Ltd. 2005-06 2,00,00,000 2,00,00,000 2,95,726 Amar Impex Pvt. Ltd. Anuvrat Transport System .....

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0,000 25,00,000 9,041 Devanshi Consultants Pvt. Ltd. Anuvrat Transport Systems Ltd. 2007-08 71,00,000 71,00,000 19,396 Sub Total 2,98,00,000 2,98,00,000 2,42,103 Grand Total 44,09,00,000 44.09,0,000 1,47,70,388 DETAILS OF SHARE APPLICATION MONEY IN THE GROUP COMPANIES OF SHANTI KUMAR SURANA Name of the Company Name of the Applicant Financial year Amount given Bikaji Mercantiles Pvt. Ltd. Manush Distributors Ltd. 2004-05 50,00,000 Bikaji Mercantiles Pvt. Ltd. Anuvrat Transport Systems Ltd. 2004-0 .....

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004-05 8,00,000 DSL Technologies Ltd. Payagpour Vyapaar Pvt. Ltd. 2004-05 13,00,000 Sub Total 2,99,80,000 Amar Impex Pvt. Ltd. Payagpour Vyapaar Pvt. Ltd. 2005-06 70,00,000 Amar Impex Pvt. Ltd. Teji Mandi Securities Pvt. Ltd. 2005-06 82,15,000 Amar Impex Pvt. Ltd. Alfa Tie-Up Pvt. Ltd. 2005-06 21,00,000 Amar Impex Pvt. Ltd. Cygnus Publishers Ltd. 2005-06 80,00,000 Amar Impex Pvt. Ltd. Rang Vardhan Febtrade Pvt. Ltd. 2005-06 62,50,000 Devanshi Consultants Pvt. Ltd Payagpour Vyapaar Pvt. Ltd. 2005 .....

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td. 2005-06 20,00,000 Sub Total 5,29,65,000 Grand Total 8,29,45,000 7. The AO added all these share application money and loans as unexplained cash credit U/s.68 of the Act, consequential disallowance of interest on loans and disallowance of expenses of exempted income by invoking the provisions of section 14A of the Act, in identically worded assessments. The AO noted in the assessment order that a statement of Sh. Raj Kuamr More, who is brother of Sh Shambhu Kumar More is one of the directors .....

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a detailed list of unsecured loans, interest on such loans and share capital/premium for which he had provided accommodation entries to Sh. Shanti Kumar Surana and other group companies owned by him through the companies controlled by him. The details as furnished by him are reproduced in the above para. The AO, in view of the above statement of Shri Shambhu Kr More held that the assessee has availed the services of Shri Sambhu Kr More to obtain accommodation entries himself and the group compa .....

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00/-. The AO during the course of assessment proceedings recorded statement of assessee u/s. 131(1) on 15.09.2010, wherein he denied having made any disclosure of ₹ 8 cr. during post search proceedings and also denied having taken accommodation entries in lieu of cash. The AO, finally, noted the following reasons for treating the share application and loans as income of the assessee against unaccounted cash: 1.By disclosing an additional income of ₹ 8 crores during the course of post .....

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e undersigned also conducted similar enquiries from the said bank. From such enquiries the following facts were discovered - a. Cash of ₹ 4,50,000/- and ₹ 3,70,000/- deposited in the account (No.-1033167) of Sh. Vikas Kumar Agarwal on 22/12/2004 and 23/12/2004 respectively. Cash of ₹ 3,50,000/- and ₹ 50,000/- deposited in the account (No.-992328) of M/s. MJ Enterprise on 23/12/2004 and 24/12/2004 respectively. Both of them utilized this amount to advance ₹ 9,20,000/ .....

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; 245,00,000/- by transfer to the account (No.-891096) of M/s. Surana Mercantile Pvt. Ltd., i.e., the assessee and the ultimate beneficiary of the whole chain of transaction. b. Cash of ₹ 5,00,000/- deposited in the account (No.-1033167) of Sh. Vikas Kumar Agarwal on 27/12/2004. Cash of ₹ 4,00,000/- deposited in the account (No.- 994133) of M/s. MA Trading Company on 27/12/2004. Both of them utilized this amount to advance ₹ 19,00,000/- by transfer to the account number 262430 .....

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and M/s MA Trading Company to furnish the source of cash deposited by them. However, no reply was received from them. 3. The above description of the transactions clearly indicate that the cash deposits were ultimately transferred to the assessee company. The cash was deposited in accounts opened in the name of fake holders who were not traceable. 4. During the course of search at the office premises of the assessee company at Century Towers, 45, Shakespeare Sarani, several books documents were .....

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377; 21 lakh, ₹ 70,000/- and ₹ 1,50,000/- in various names. Page No. 51 contain details of transactions @ 4 and @ 2 in the name of various persons. Page No. 49 contain details of transactions of ₹ 30 lakh, ₹ 10 lakh, ₹ 50 lakh and ₹ 10 lakh in the name of various persons. Page No. 44 contain notings of transaction of ₹ 15 lakh in the name of Prabho. Page No.-41 contain notings of transaction of ₹ 2,64,726/- and ₹ 6,66,534/-. Page No.-38 conta .....

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rded u/s. 132(4) before D.D.I.T.(Inv) and u/s 131(1) by the undersigned and he was given an opportunity to cross examine Sri More. On the stipulated day of 16/12/2010, both Sri More and Sri Surana appeared before the undersigned but Sri Surana refused to cross examine Sri More. This clearly indicates the guilty mindedness of Sri Surana. In view of the above facts and circumstances of the case, the AO for all these assessment years 2003-04 to 2007-08 held that the assessee and his group concerns .....

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bmissions and have gone through all the facts and material relevant to the issues. Facts which are on record show that the appellant had obtained loans by account payee cheques which have been cleared and credited to the appellant s bank account. The loans have been refunded by the appellant by a/c payee cheques which have been cleared from the bank account of the appellant. Thus all these transactions of loans received and refunded are by a/c payee cheques through the banking channel. In suppor .....

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the appellant has furnished all documentary evidences to prove the identity and the creditworthiness of the loan creditors as well as the genuineness of the transactions. It is a matter of great surprise that the assessment order is absolutely silent about the plethora of documentary evidence available during the course of assessment. The fact that the AO has simply brushed aside these overwhelming documentary evidence without even discussing these in the assessment order shows that the assessme .....

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l unsecured loan amounting to approximately ₹ 43 crores and share subscription amounting to approximately ₹ 8 core have been added U/s. 68 in respect of assessee s of this Group. It is an admitted fact that no incriminating documents or evidence were found during the course of the search in the premises of the appellant which even remotely suggest that the appellant has resorted to introduce its unaccounted cash through accommodation entries. The premises of Sri Sambhu Kumar More wer .....

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. 6.10 The relevant portion of the statement of Sri More has been reproduced in the assessment order. It is apparent that the search and survey operation in respect of Sri More and the companies were undertaken with the objective of establishing some link between these companies and the assessee of the Surana Group. The manner in which the statement was taken also indicates the same. No questions were asked to Sri More as to whether he provides accommodation entries in general i.e to persons oth .....

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g was also asked about the alleged entries given to Bikaji Mercantile Pvt. Ltd. In other assessment years as well as ent5ries provided to other Group entities. Sri More on his own furnished a letter dated 15.05.2009 to the DDIT (Inv.) in which he provided a detailed list of unsecured loans, interest on such loans, repayment of loans and details of share capital / share premium in respect of which he had allegedly provided accommodation entries. These details run across six group entities for the .....

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tal in providing accommodation entries without any evidence. Apparently he has taken these figures from the books of accounts of the company relating to all the loans and share subscriptions given to the entities of Surana Group. 6.11 Certain other factors emerged from the statement which requires to be mentioned here. (a) In the statement dated 09.05.2009 Sri Sambhu Kumar More has categorically stated that in the case of concerns of Surana Group cheques in lieu of cash were procured from Sri De .....

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link in the alleged accommodation entry transaction. 6.12 These factors clearly indicate that the investigations in these cases were made in a very half hazard manner with a closed mind. The statement of a third party i.e. Sri More has been accepted as gospel truth in spite of his candid admission of not having any evidence to support his statement. The statement of a third party does not have any evidentiary value unless supported and corroborated by evidence furnished by him or any independen .....

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Shanti Kumar Surana were recorded thrice. In the first statement recorded u/s 132(4) of the I.T. Act dated 20.03.2009 no such disclosure was made. The statement was read to Sri Surana in Hindi by Sri Narendra Kochar which indicates that Sri Surana does not understand English very well. Another statement was recorded U/s 132(4) of the I.T. Act on 8.4.2009. Surprisingly this statement was not read to him in Hindi. In any case in this statement it was stated I voluntarily wish to declare an income .....

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77; 8 Crore was asked to him. He was asked to comment on the statement of Sri Sambhu Kumar More regarding his allegation about providing accommodation entries. In response he stated that without the copies of statement of Sri More he could not make any comment but on his part he could only say that he received the cheques of share capital and loans and the same were repaid by cheque only. He categorically stated that he never had any cash transactions with then. From this it is crystal clear tha .....

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lared in his individual return filed U/s. 153A. Thus, I am of the opinion that the disclosure of ₹ 8 crore in no way corroborates the statement of Sri More regarding the alleged accommodation entries. (b) Secondly, the AO mentions about cash deposits in certain accounts in the ABN Amro Bank which have been rerouted to the appellant company as loans. This point has been discussed in detail in the assessment order which is also made a part of this order. It is seen that cash was deposited in .....

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mine them with respect to the source of cash deposited in these accounts except issuing notices U/s 13(6) for which no reply was received. Further, as per the AO the total amount of cash deposit in these accounts amounted to ₹ 22,20,000/- whereas M/.s Surana Mercantile Ltd. Received a loan of ₹ 50,00,000/- through these transactions. What about the rest of the on amount received? It is also interesting to note that the AO has furnished the same argument in case of all the assessees o .....

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es. c) The AO also speaks about seized documents SSI/5 with notings and abstracts of monetary transactions. I am of the opinion that these rough notings have absolutely no connection to the alleged accommodation entries. Sri Surana had explained it as rough notings and account information. Apparently no effort have been made to cross verify these rough notings with regular books of accounts of the appellant. In this view of things these rough notings, in no way can be accepted as evidence corrob .....

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e letter dated 16.12.2010. In such a case, in my opinion, the purpose of cross examination is generally to demand evidences supporting the allegations and trying to rebut them. As Sri More categorically admitted of having no evidence I agree with the appellant s contention regarding the futility of cross examination. Therefore, I am of the opinion that this issue also does not in any way corroborate the statement of Sri More. 6.13 To sum up - (a) The appellant discharged his initial burden by fu .....

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ee was returned in cheque form. On the facts and circumstances of the case I am convinced that the criterion laid down by the Hon ble Gujarat High Court in relation to the case of DCIT Vs. Rohini Builders (256 ITR 360) and Hon ble Gujarat High Court in the case of Nemichand Kothari Vs. CIT (264 ITR 254) were satisfied in the appellant s case. (b) No incriminating papers or documents were found in the search operation in case of the appellant indicating that loans were obtained through accommodat .....

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Kr. More which is admittedly bereft of any evidence the AO has proceeded to brush aside all documentary evidences adduced by the assessee in support of the loans. I have already given my findings that the so called corroborative evidence adduced by the AO abjectly fails to actually corroborate the statement of Sri More. In this view of things the statement of Sri More regarding arranging accommodation entries for the appellant is nothing but mere allegation base don which no addition could be m .....

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35,00,000/- Aggrieved, for these assessment years, revenue came in appeal on merits before Tribunal against deletion wherein assessee came in Cross Objection against validity of assessment framed u/s. 153A of the Act for the reason that there is no incriminating material for these assessment years and the assessments u/s. 143(3)/143(1) of the Act have already been completed and the proceedings cannot be revived unless the same is abated. In these assessment years the completed assessment cannot .....

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ars just based on the statement of Shri Sambhu Kr More recorded u/s. 132(4) of the Act on 09.05.2009. According to Ld. counsel, the Income tax Department conducted a survey u/s. 133A of the Act on the business premises of Shri Sambhu Kr More on 09.05.2009 and the same was converted into search and seizure operation u/s. 132 of the Act on the very same day. The department on the basis of Shri Sambhu Kr More came to conclusion that he has provided accommodation entries to Shri Shanti Kr Surana, th .....

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cording to Ld. counsel, as the revenue has issued notices u/s. 153A of the Act in respect to assessee and his group concerns after search and assessee has filed return in response to the same depicting the same income as originally returned and assessed by the department, in the absence of any incriminating material found during the course of search, the revenue should not have framed assessment. According to him, the assessment framed u/s. 153A of the Act without incriminating material is bad i .....

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orded in the regular books of account on the basis of which assessments were framed originally by the revenue. 10. On the other hand, when the Bench required the Ld. CIT,DR to produce the search material/incriminating material found during the course of search pertaining to these assessment years vide order sheet entry dated 23.04.2005 and the relevant order sheet entry reads as under: 23.04.2015: These group cases were heard partly today. During the course of hearing, the Ld. CIT, DR was asked .....

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cases. The Ld. CIT, DR is also requested to produce the search materials and assessment records in the case of Shambhu Kumar More and their group cases so that it can be corroborated, if any search material is linked to the statement of Shri Shambhu Kumar More with that of assessee s group cases, i.e. Shanti Kumar Surana and group cases. The Ld. CIT, DR is also directed to give the details of cash introduction, vis-à-vis the cheque as stated by Shri Shambhu Kumar More in his deposition d .....

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015: When these matters were called up, the Ld. CIT, DR Shri Vijay Kumar stated that he has brought appraisal report prepared by ADIT in these group cases and he can argue the same. The Ld. CIT, DR was asked whether he has brought the seized materials or not. He denied that the same could not be traced. The Ld. CIT, DR insisted on hearing without seized materials for the reason that everything is recorded in the appraisal report. On this, Bench insisted for seized materials. However, in the inte .....

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Ld. CIT, DR filed something in writing which reads as under: Three issues. 1) Appraisal report available, 4 volumes. 2) 153A challenged. 3) Seized material not produced. CIT requests time May 2015 4) Bogus share capital issue. Covered in favour of revenue by Kolkata Benches orders. 5) Written communication by email to CIT and by phone by Pr. CIT (DR). Volume-I Page 1-3 Background of main persons. Share capital issue Pages 4-7 Persons covered u/s. 153A Page 8 133A - (or 153C) PP 9-16 Assets foun .....

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umar Surana and Surana Mercantile (P) Ltd. relating to search periods are being heard in ITAT. The case was last heard on 23.4.2015 requiring production of some papers. Please find enclosed herewith a copy of the ITAT order sheet noting dated 23.4.2015. I only received copy of Appraisal report with three Annexures on 27.4.2015 evening. It does not apparently satisfy Para 2 of ITAT instructions dated 23.4.2015. Today, Shri Rajat Datta, DCIT case. Since all papers are not available, the matter is .....

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isakha Sales Pvt. Ltd., Kolkata. In term of the above factual position and opportunities given on number of times to the revenue, revenue could not produce the incriminating material found during the course of search in relation to share capital/premium and loans added by AO while framing assessment u/s. 153A of the Act. 11. We have heard rival contentions and gone through facts and circumstances of the case. We find that the assessee had borrowed funds and these borrowings are duly confirmed by .....

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of Shri Shambu Kumar More. Further, survey operations were conducted u/s 133A in the case of companies who had advanced loans to assessee. No incriminating paper/document was found in the course of such Survey. The AO has simply proceeded on the basis of a verbal statement of Shri Shambhu Kumar More which has no evidentiary value. Firstly because he himself admitted that he has no evidence in support of what he deposed u/s 132(4) and secondly, in fact important to note that searches and Surveys .....

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antile Pvt. Ltd. Has furnished certain details and documents in connection with the appeal proceedings before you. Copies of these details and documents have also been filed before me. These include the following:- 1. Balance sheet of companies under the control of Shri Shambhu Kumar More and from which the loans and share application money was received by the assessee. 2. Confirmations in respect of unsecured loans received from the said companies. 3. Bank statements of the assessee reflecting .....

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ce as mentioned in Rule 46A(1) of the I.T. Rules, 1962. Hence, the question of examination of the same again at this end does not arise. As regards your query as to whether any incriminating document / evidence was found and gathered during the course of search or post search operations I would like to state that no such document or evidence was found. But Shri More was very categorical in his statements recorded u/s. 132(4) and 131(1) on various occasions about the modus operandi! Involved and .....

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had made certain enquiries from the concerned Bank from which it was gathered that certain payments to the assessee had originated from cash deposits in various accounts. The facts related to this aspect were also discussed in the assessment order itself. We find from the above remand report of the AO that he has observed that the assessee has filed the documents, which include (a) Balance Sheet of companies from who loans were received by the assessee, (b) confirmations in respect of the unsec .....

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of the Income Tax Rules, 1962 hence the question of examination of the same again does not arise. Further, we find that the AO summed up the matter by holding that the assessee accepted accommodation entries for himself as well as other group concerns in lieu of unaccounted cash due to the following reasons (the same report is reproduced in the order of CIT(A): The appellant disclosed ₹ 8 crores during the course of post search proceedings and that the appellant indirectly admitted of hav .....

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actions of loans are duly supported by evidences. It is totally a perverse observation made by the AO. The AO states that during the post search proceedings DDIT (Inv.) conducted a selective enquires from ABN Amro Bank. The AO states that he also conducted similar enquiries from the said Bank. Thereafter, in subsequent three paras the AO has given certain names & amounts. We find that the assessee was never confronted this report as argued by Ld. counsel for assessee before us now and even b .....

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account proved that those loan creditors that all of them have funds and they have invested in shares and loans of the assessee in the year under assessments. But now it is to be seen from the correspondence between the CIT-in-charge of the assessment and CIT, DR that revenue could not produce the incriminating material found during the course of search despite number of opportunities provided to revenue as is evident from the order sheet entries reproduced above. In such circumstances whether .....

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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. 13. In view of the second provision of section 153 of the Act, it is clear that assessment or reassessment relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s. 132 of the Act sh .....

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High Court in the case of CIT Vs. Smt. Shaila Agarwal (2012) 346 ITR 130 (All) has held as under: 12. A plain reading of Section 153A would show that where notice under this Section is issued as result of any search under Section 132, assessment or reassessment if any relating to any assessment year falling within the period of six assessment years referred to under Section 153, pending on the date of initiation of search under Section 132 or requisition under Section 132A shall abate. The words .....

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;Abatement" means, in respect of any chargeable accounting period, ending on or before the 31st day of March, 1947 a sum which bears to a sum equal to- (a) in the case of a company, not being a company deemed for the purposes of Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having- (i) nor more than two working partners, .....

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(21 of 1947), S.2 (1)] Removal or destruction, (as) of a nuisance; failure; premature end, suspension or diminution, (as) of an action or of a legacy. The action of abating; being abated. {O.XXII, R.1, CPC (5 of 1908)]; decrease [S.12 (3) (b) (i), Specific Relief Act (47 of 1963)]. Of An Action Or Suit: In civil law an abatement of a suit is a complete termination of it. Abatement of a matter or cause is caused by the same becoming defective on account of the death of the parties materially inte .....

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on or in store." 13. The word 'abatement' is referable to something, which is pending alive, or is subject to deduction. The abatement refers to suspension or termination of the proceedings either of the main action, or the proceedings ancillary or collateral to it. The word is commonly used in the legislations, which provide for abatement of action/ suit; abatement of legacies; abatement of nuisance; and all actions for such nature, which have the pendency or continuance. The proce .....

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sment against which an appeal has been decided by CIT (A) is not a continuation of the proceedings of assessment. An appeal under the Income Tax Act lies to the Appellate Tribunal on a question of law. Even if it is pending on the date of search, no such intention has indicated by the Tribunal arises out of the provisions of second proviso to Section 153A, to abate the proceedings, which have been completed, or concluded, and to restore assessment to the file of the Assessing Officer. 16. We do .....

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a result of search, some undisclosed income is found to have escaped assessment, the Assessing Officer, may initiate steps for reassessment after sanction of competent authority, within the prescribed period of limitation. 17. A Circular No.7 of 2003 dated 5.9.2003 issued by the Commissioner of Income Tax has clarified the position in para 65.5 as follows:- "The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if .....

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his Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 18. In State of Rajasthan & Ors. v. Khandaka Jain Jewellers, (2007) 14 SCC 339 the S .....

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g time to get a decree for execution against the vendor that consideration cannot weigh with the Court for interpreting the provisions of the taxing statutes." 19. The second proviso to Section 153A of the Act, refers to abatement of the pending asssessment or re-assessment proceedings. The word 'pending' does not operate any such interpretation, that wherever the appeal against such assessment or reassessment is pending, the same alongwith assessment or reassessment proceedings is .....

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nsequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271 (1) (c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty. 14. In a recent judgm .....

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ourse of search or not. Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of conducting search u/s. 132 of the Act stand abated and not the assessments/reassessments already finalised for those assessment years covered u/s. 153A of the Act. Hon'ble High Court also discussed the CBDT Circular No. 8 of 2003 date .....

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proceedings u/s. 153A of the Act, the reassessment finalised for assessment years covered u/s. 153A of the Act stands abated. Only the pending assessments get revived u/s. 153A of the Act. Hon'ble High Court further held that once assessment has attained finality, then the AO while passing independent assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act est .....

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d determine the total income afresh for those assessment years. Thus, earlier assessment orders abate as the proceedings in which they are passed have no legal consequence was the argument. Once the notice under section 153A was issued and an assessment order passed pursuant thereto, it is that order which was erroneous and prejudicial to the interest of the Revenue. 28. In dealing with those arguments, the Division Bench outlined the ambit and scope of the powers conferred by section 153A and o .....

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estion, as to whether a particular income could be treated as undisclosed income' or whether a particular income could be said to be relatable to the material found during the course of search, etc. which led to prolonged litigation. To overcome that difficulty, the legislature by Finance Act 2003, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. 9) What Section 153A contemplates is that, notwithstanding the regular provisions for assessme .....

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assess the total income for those assessment years. The second proviso to Section 153A provides for abatement of assessment/reassessment proceedings which are pending on the date of search/requisition. Section 153A (2) provides that when the assessment made under Section 153(A)(1)is annulled, the assessment or reassessment that stood abated shall stand revived. 10) Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of the proceedings under Section .....

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ctification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepte .....

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fect the assessment finalised on 29-12-2000. 12) Once it is held that the assessment finalised on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143 (3) of the I.T. Act could not have disturbed the assessment / reassessment order which has atta .....

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ase, the A.O. while passing order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80 HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act. 29. We are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only i .....

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s a specific opinion. The provision deals with those cases where assessment or reassessment, if any, relating to the assessment years falling within the period of six assessment years referred to in sub-section (1) of section 153A were pending. If they were pending on the date of the initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessme .....

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53A of the Act. Since we are not required to trace out the history and we can do nothing better than to reproduce the observations and conclusions as above that we are not repeating the same. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated unde .....

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ght on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of .....

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me 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 sh .....

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ued 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 regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should b .....

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e is no casus omissus and supplying any would be against the legislative intent and against the very rule in this behalf that it should be supplied for the purpose of achieving legislative intent. The submissions of the Ld. Counsels are manifold, the foremost being that the provision u/s 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the latter deals with search and seizure and the former deals with assessment in case of search etc, thus, .....

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d 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, .....

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ccount 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) .....

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e, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in section 132(1). 52. The provision comes i .....

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e, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two .....

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53A (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 .....

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rd 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 Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be .....

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ound. He also wanted the additional ground to be retained in case of any future contingency. 32. We would be failing in our duty if we do not note the reliance placed by Mr. Pinto on the judgments rendered by the High Court of Delhi at New Delhi and the High Court of Karnataka. Mr. Pinto would submit that the above observations and conclusions of the Special Bench and reproduced by us are specifically disapproved in Commissioner of Income Tax vs. Anil Kumar Bhatia by the Delhi High Court. We do .....

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s residence and business premises on 13th December, 2005 under section 132 of the Act. Pursuant to the search, the Assessing Officer issued notice under section 153A of the IT Act and called upon the assessee to file the return of income for the six years as envisaged in that section. Notices under section 142(1) and 143(2) alongwith a detailed questionnaire were issued in response to which the assessee submitted an explanation. After consideration thereof, the Assessing Officer made additions t .....

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ncome of the assessee for the assessment year 2003-04 and an order was made to that effect. Against this addition, the appeal was preferred before the Commissioner of Income Tax contending, inter alia, that the seized paper on the basis of which the addition was made did not contain the signature of the assessee; that no loan was given to Mohini Sharma. There was no admission of the statement of Mohini Sharma to that effect and there was only a proposal. The Commissioner of Income Tax confirmed .....

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carried in appeal to the Tribunal and thereafter the Delhi High Court noted the Tribunal's conclusions. It noted the arguments before the Tribunal and thereupon the Tribunal having deleted these additions and the notional interest, the matter was taken in appeal to the High Court of Delhi under section 260A of the IT Act by the Revenue. 33. The arguments, therefore, have been noted and from paragraphs 16, section 153A was analysed. 34. Mr. Pinto heavily relied on paragraphs 18, 19 and 20 of .....

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hi was required to consider the ambit and scope of the powers. Further, pertinently the Delhi High Court did not ignore any of the provisions. Those are correctly understood by the Delhi High Court. We do not see how and where the Delhi High Court disapproves the view taken by the Tribunal that its observations can be read torn from the context. Once these observations and noted by us from the paragraphs cited by Mr. Pinto are read as a whole and in entirety, it is not possible to agree with Mr. .....

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rse of search, incriminating material leading to undisclosed income was seized. Therefore, the proceedings under section 153A of the Act calling upon the assessee to file return of income under section 153A(1)(a) came to be initiated by a notice dated 13th January, 2012. Return of income was filed pursuant to receipt of such notice and for six years as required by the provision. When this return was under consideration on 14th March, 2013, the Commissioner of Income Tax initiated proceedings und .....

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as been invoked during the pendency of proceedings under section 153A of the Act, then, that was impermissible. That was impermissible for the assessments including for the assessment year 2008-09 stand reopened. Once they are reopened, then, there is no order of assessment in force and in regard to which any action under section 263 of the IT Act can be initiated. It is in dealing with this argument and which was negatived by the Tribunal that all the observations of the High Court of Karnataka .....

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Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed fo .....

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e Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income bein .....

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officer by initiation of proceedings under Section 153A, the legal effect is the assessment gets reopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceed .....

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initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and a .....

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r is erroneous insofar as it is prejudicial to the interest of the revenue. Once the order passed by the Assessing Officer gets reopened, there is no order which can be said to be erroneous insofar as it is prejudicial to the interest of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction. 11. The Tribunal has proceeded on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be .....

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ess the total income of six assessment years which means the said total income includes income which was returned in the earlier return, the income which was unearthed during search and income which is not the subject matter of aforesaid two income. If the commissioner has come across any income that the assessing authority has not taken note of while passing the earlier order, the said material can be furnished to the assessing authority and the assessing authority shall take note of the said i .....

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he judgment be said to be laying down a proposition and as canvassed by Mr. Pinto. True it is that the assessment which has to be made in pursuance of the notice is in relation to the six years. An order will have to be made in that regard. While making the order the income or the return of income filed for all these assessment years is to be taken into account. A reference will have to be made to the income disclosed therein. However, the scope of enquiry, though not confined as held by the Hig .....

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