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2015 (7) TMI 736 - ITAT CHENNAI

2015 (7) TMI 736 - ITAT CHENNAI - TMI - Invoking jurisdiction u/s.263 by the Commissioner of Income Tax directing the Assessing Officer to pass fresh assessment order which was completed u/s.153A r.w.s. 143(3) of the Act - Validity of assessment u/s.153A - Held that:- The original assessment order for the assessment year 2006-2007 was already completed u/s.143(3) of the Act. Hence the assessment u/s.153A to be made on the basis of incriminating material, which means books of account, other docum .....

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fficer failed to examine the books of accounts produced by him due to paucity of time and the Assessing Officer proposed the Commissioner of Income Tax to review the order u/s.153A of the Act.

In our opinion, the Commissioner of Income Tax wanted to do the things indirectly which cannot be done directly. Further, he mentioned in the order that the Assessing Officer examined the statement of affairs for the assessment years 2006-07 and 2007-08 during the course of assessment u/s.143(3) .....

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passed u/s.153A of the Act duly considered the seized material and in the present case the Commissioner of Income Tax wanted to consider the statement of affairs filed by the assessee during the course of assessment u/s.153A though it was not part of the seized material and it cannot be considered for framing assessment u/s.153A of the Act as assessment for the assessment year 2006-07 has already been completed u/s.143(3) and re-assessment u/s.153A be made only on the basis of incriminating mate .....

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which cannot be treated as error unless the view taken by the Assessing Officer is unsustainable under law. Moreover, while making assessment the Assessing Officer examined the accounts, made enquiries, applied his mind to the facts and circumstances of the case and determined the income, the Commissioner of Income Tax while exercising his power u/s.263 is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. In our opinion, the Assessing .....

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urse of assessment u/s.153A of the Act and the assessee has given a detailed explanation to Assessing Officer to consider the same after being satisfied by the explanation given by the assessee, he adopted not to make any addition.

Further, as held in the case of Mariam Aysha vs. Commissioner of Agricultural Income Tax [1971 (7) TMI 50 - MADRAS High Court ] that consent cannot give jurisdiction is an essential principle of law. The taxing authority can act only if there is power under .....

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lled. - Decided in favour of assessee. - I.T.A. Nos.2634, 2635, 2636, 2637, 2638 & 2639/Mds/2014 - Dated:- 17-7-2015 - Shri Chandra Poojari & Shri Challa Nagendra Prasad, JJ. For the Petitioner : Ms. S. Vidya, C.A. For the Respondent : Shri. Pathlavath Peerya, IRS, CIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These six appeals by assessee s are directed against the different orders of the Commissioner of Income Tax, Chennai, passed u/s.263 of the Act dated 31.07.2014 for the above assess .....

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f search u/s.132 of the Act. 3. The facts of the case for the A.Y 2006-2007 are that in this case original assessment was completed u/s.143(3) of the Act followed by u/s.153A r.w.s. 143(3) of the Act. Consequent to search action at the residential premises of the assessee on 18.11.2011. According to the Commissioner of Income Tax the Assessing Officer could not examine certain issues relating to investment made by the assessee in various companies and firms and the interest income received /rece .....

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,000/- cannot be accepted as the drawings reflected in such Cash Flow Statement would not have been adequate for the assessee's life style and has accordingly proposed to estimate the drawings at a higher level and thus add back the cash found during 'search as unexplained cash since not supported by the Cash Flow Statement filed. For all these deficiencies, he has proposed that the assessment completed u/s 153A be reviewed u/s 263 as Assessing Officer could not examine the issues due to .....

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of the proceedings u/s 143(3) finalized on 31.12.2009, the Assessing Officer has analyzed the Statement of Affairs for the assessment years 2006-07 and 2007-08 and has made additions in the Asst.Year 2007-08 as below:- The assessee s business is money lending and filed a statement of affairs as on 31.03.2007 Opening Balance of capital i.e as on 31.03.2006 : 13,16,06,077/- Net profit for the financial year 2006-07 was : 1,87,00,173/- 15,03,06,250/- Closing balance of capital as on 31.03.2007 : 1 .....

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assessee's representative contention was not accepted by Assessing Officer while completing assessment u/s.143(3) of the Act as the assessee's business in money lending, and the assessee has not charging interest from the person to whom money has been lent. According to the Assessing Officer it can't not be distinguished whether that particular loan was interest bearing or not. Hence, the difference of ₹ 22,90,232/- was added to the returned income. Aggrieved, the assessee pref .....

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the assessment years 2006-07 and 2007-08, the Assessing Officer has noticed a shortage of ₹ 1,01,97,722/- in the liability side for the assessment year 2006- 07 and ₹ 12,15,79,373/- for the assessment year 2007-08. When these differences were sought to be explained by the assessee, the assessee has come up with another revised Statement of Affairs as substantial differences in the balances of Assets and Liabilities. Thus, there was substantial discrepancies in the three Statements of .....

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res of loans received has been increased to ₹ 15,02,54,907/- from ₹ 8,70,17,359/- (difference ₹ 6,32,37,548/-. The credit appearing in the books of accounts of assessee is not explained, therefore ,it would have been covered u/s.68, after allowing the assessee an opportunity to explain being difference in opening balances for assessment year 2006-07. (b) Figures for opening balance of loan given for assessment year 2006-07 has been increased to ₹ 43,25,53,096/- (28,97,14, .....

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es that either the assessee has repaid ₹ 10,50,85,816/- (if compared with the SOA filed along with return u/s 139) / repaid ₹ 9,70,00,000/- (if compared with the final SOA filed on 28/03/2014) or the balances shown are not true. The sources of repayment have not been verified due to scarcity of time. The bank books filed by the assessee for assessment year 2006-07 do not show any such repayment of loan. therefore. it may be presumed that the assessee has repaid from undisclosed sourc .....

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er shown as ₹ 11,69,94,360/- and now it is shown at ₹ 13,33,69,665/-. The filed copy of account of banks in the books of assessee does not explain the difference and the source of payment of ₹ 11,85,71,079/- (43,25,53,096 - 31,39,82,017/- ) is not explainable from the bank statements. 6.3 Comparison of three statement of affairs for assessment year 2007-08 shown following discrepancies.: (a) Originally, the statement of affairs for AY 2007-08 showed balance of loan received of .....

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377; 52,45,95,954/- in SOA originally filed which stood reduced to ₹ 1,33,75,858/-. Now in the statement of affairs filed on 28/03/2014, it has been increased to ₹ 54,71,54,871/-. No explanation is filed by the assessee for such difference and sources of investment (c) On 11/04/2006, there is a deposit of ₹ 5,21,898/-. The assessee has credit it as 'other income' but it is not reflected from the statement of taxable income. This amount has escaped assessment. Similarly, .....

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arison is given hereunder:- Details for Loans Received As per old SOA filed alongwith return u/s.139(1) As per New SOA filed Balances as on 31.03.2007 1 A.Koteewaran Loan 500000 2 A. Kuberan Loan 1000000 3 Appu Hotels Ltd 2813000 4 Baba Enterprises Loan 5552000 5 Karnataka Breweries & Distilleries P. Ltd 8700000 8700000 6 MBDL Loand 500000 7 N. Neelavathi Loan 500000 8 Poovaiammal Loan 132243 9 Sapthagiri Enterprises loan 3000000 20000000 10 S. Lakshmi Narayani Ammal Loan 450000 11 S. Pushap .....

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N. Chandrasekar 212410 27 P. Yasodha 3000000 3000000 28 Raghava Enterprises Pl Ltd 25300000 29 Ravikumar Industries 5000000 30 R.Gandhi 500000 31 R.G.Narendran 400000 32 Salem Basha 14806341 13806341 33 Salem KMB Constructions 10000000 10000000 34 Shri. Ramdhas Estates P.Ltd 11800000 11800000 35 Sundaram Finance Ltd 130000000 1300000000 36 Sundaram Home Fiance Ltd 700000000 70000000 37 Swasti Chem Pvt. Ltd 4000000 4000000 38 Trident Granities 2000000 39 V. Kannan 15000000 40 D.K. audikeshvulu 2 .....

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amy loan 100000 10 A.V.M . Productions 15000000 15000000 11 C.M.K. Reddy loan 300000 12 Cosy Realtors P. Ltd 1080000 1371302 13 Diamond District 405000 14 Freezing products 165600 15 G. Babu loan 300000 300000 16 G. Hemadri babu 50000000 50000000 17 G. Sulochana loan 1500000 1500000 18 Indira M. Kameswaran loan 1000000 1000000 19 Jayshree holdings pvt. ltd 17000000 21297064 20 J.K. Puri loan 500000 21 Karur Manoharan loan 500000 22 K.M. Ameenuddin loan 500000 23 Master Hari Venkataraman 350000 2 .....

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raj associates loan 2489885 38 R. Kalalam loan 2022894 2022894 39 Sabari Steels loan 900000 40 Samyuktha loan 320000 5820000 41 Sengutuvan loan 2077502 21577502 42 Sri Ramachandra Educational and health trust 3817238 3817238 43 Sterling computer loan 2000000 44 Sunil Yunus Zia 10000000 10000000 45 S. K. Varatharaj loan 1000000 46 Swadesamitran Ltd Loan 2785000 47 T. Amudha loan 5130758 48 Tanchem imports & Exports p. Ltd 10052263 10052263 49 Thiruballa Realtors P. Ltd 6600000 62638850 50 Thi .....

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5519 Total 524595954 547154871 (f) The assessee vide his letter dated 26.03.2014 has submitted that the is not able to furnish evidences for sources of fund invested in shares of M/s. Thiruvalluvaar Textiles Private Ltd. For this, he has offered ₹ 1,26,000/- for taxation. This addition has not been made. (g) There is no reason for exclusion of certain parties from the lists mentioned above and inclusion of new entries. There is also no reason mentioned by the assessee to deviate from the f .....

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me were revised during the course of proceedings u/s.143(3) and later 153A on 28.03.2014. However, the assessee could not explain the discrepancies among the three statement of affairs filed during the proceedings u/s.153A. According to Commissioner of Income Tax even though, it was stated that the books of accounts seized on 29.1.1985, 18.12.1985, 17.08.1990 and 25.11.1999 were not yet returned to the assessee, it was not clear as to why copies of the same were not taken by the assessee. This c .....

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. Thus, according to Commissioner of Income Tax it was essential that the three Statement of Affairs filed at different times shall be properly reconciled and a finality be brought to tax. 8. The Commissioner of Income Tax further observed that the Assessing Officer should have merged all the three Statements of Affairs filed and constructed a tentative Trial Balance from the balances under each account. After balancing the Trial balance, the Assessing Officer should have independently verified .....

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see has borrowed the monies, the Statement of Accounts should be obtained from the creditors along with the interest paid. It was also to be ascertained whether the assessee was following Cash method of accounting or Mercantile method of accounting to arrive at the correct balances and correct incomes /expenditures from each of the assets as well as loans However, this is a very elaborate exercise involving not only the assessment years 2006-07 and 2007-08 but also subsequent assessment years an .....

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the assessment year 2006-07 and the same will have a cascading effect on the subsequent assessment year, the assessment year 2007-08 to 2012-13 were also set aside for carrying out the same exercise in the Statement of Affairs. Further, a true picture on Statement of Affairs was also essential to ascertain the sources and nature of use of properties purchased, for determining the Wealth Tax liability. When this proposition was put forth to the Authorized Representative for assessee, he has also .....

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g from the Asst.Year 2006-07. The assessee has claimed ₹ 1,20,000/- has been withdrawn by him and coupled with the drawings by the other family members who are also assessed to tax, it was claimed that the total drawings were adequate for making their personal and family needs. 9.1 The Commissioner of Income Tax observed that the assessee claimed that the companies and firms in which the assessee was a Director or Partner have been meeting the expenditure on transportation, telephones etc. .....

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rch 18.11.2011 stands at ₹ 4,60,000/-. It was contention of the Assessing Officer that if the assessee has spent ₹ 4,60,000/- from April to 18.11.2011, the date of search i.e. seven and half months, the expenditure could have been much more than the withdrawals of the assessee in the earlier years too, than what have been shown in books. Hence, he has interpolated the probable expenditure incurred by the assessee in the earlier years by applying the Cost Inflation Index method invers .....

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ses is not reflected with the cash book. The expenditure on house hold expenses although not reflected from the cash account was estimated by assessee. The cash withdrawal for financial year 2006-07 to 2011-12 (upto date of search) have been claimed to be ₹ 1,80,000/-, ₹ 2,40,000/-, ₹ 3,00,000/-, ₹ 3,60,000/-,Rs.4,20,000/- and ₹ 4,60,000/-(upto DOS) respectively. The cash withdrawal from 01/04/2011 to 18/11/2011 (for 7.5 month) has been claimed to be ₹ 4,60,00 .....

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0 * upto date of search Total 4010028 * 4,60,000 X12/7.5 11. The Commissioner of Income Tax observed that the Assessing Officer as well as the explanations furnished by the ld. Authorised Representative for assessee with reference to the inadequacy or adequacy of the drawings. The Commissioner of Income Tax did not approve the methodology adopted by the Assessing Officer for arriving at the expenditure of the earlier years with reference to the expenditure of the current year. The reverse interp .....

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ure in the Asst.Year 2011-12 and come to a reasonable conclusion about the amount of personal expenses incurred. Thereon, he may decide the justification and explanation for the cash found during search at ₹ 14,78,000/- and the same may be decided on independent merits in the relevant Assessment year. Similar is the position in other assessment years. Against this, the assessee is in appeal before us. 12. The ld. Authorised Representative for assessee submitted that the assessee was engage .....

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(net). There were no other material, books or other documents found/seized during the said search operations. A sworn statement was recorded from the assessee on the date of search questioning the source of the cash and the jewellery seized. The assessee gave an impromptu statement that he possessed about ₹ 15 to 20 lakhs of which ₹ 10 lakhs were collected from his friends and well wishers for the construction activity of the Pollachi Narasimhar Temple and the same had to be handed o .....

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the assessments were completed u/s. 153A r.w.s.143(3) of the act on 28th March, 2014 accepting the original returned/ assessed income, without making any additions. Later the Commissioner of Income Tax- Central-I invoked Sec 263 stating that the assessment was held to be erroneous and prejudicial to the interest of revenue. It was also stated in the notice u/s 263 that the Assessing Officer, due to paucity of time, had not verified the loan balances and hence the assessment was treated as errone .....

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arious details and the same were filed, of which, among others was the Statement of Affairs and the bank statements. (iii) The assessee had filed statements of affairs pertaining to the money lending business, along with the original return of income on 26/10/2006 for AY 2006-07 and on 31/10/2007 for AY 2007-08. These returns (ie., AY 2006-07 and AY 2007-08) were duly subjected to scrutiny vide orders u/s 143(3) dated 28/11/2008 and 31/12/2009 and AY 2007-08) were duly subjected to scrutiny vide .....

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Later a combined statement of affairs was filed before the Assessing Officer as per his directions during the course of search assessment proceedings on 26th March 2014. (v) The Assessing Officer completed the 153A proceedings for the AYs 2006-07 to AY 2011-12 without making additions as he was apparently and admittedly convinced that the assessments for the Asst Years 2006-07 and 2007-08 were duly completed u/s 143(3) after thorough verification of loan balances, among others, and by giving du .....

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y members was ₹ 30 lakhs (approx). Later on, when the Assessing Officer asked for the drawings for his personal expenditure, the assessee had stated that expenses like telephone, electricity etc., were taken care by the company in which he is the managing director and the same was included in the Form 16 as perquisite. The personal expenses like food and clothing were met by the assessee from the cash balance. The assessee filed a combined cash book of himself and his family members consid .....

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34,028/- and concluded that the assessee is not left with any cash as on the date of search as per books of accounts and accordingly the assessee did not have any source to explain the cash seized in the sum of ₹ 14,50,000/- thereby leading to an addition u/s.69A of the act for the AY 2012-13. A copy of the scrutiny assessment order u/ s 143(3) of the Act for the Asst Year 2012-13 (i.e the year of search) is enclosed in Page Nos.25- 30 of the Paper Book. Hence it was submitted that effecti .....

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e Asst Year 2012-13 with a show cause notice as to why the Jewellery found during the course of search should not be added as undisclosed income of the assessee for the Asst Year 2012- 13. On going through the detailed replies given by the assessee in this regard, no addition was made by the Assessing Officer for the Asst Year 2012-2013. 14. According to ld. Authorised Representative for assessee:- (i) there was no incriminating material found during the course of search operations other than th .....

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l for the Asst Years 2006-07 and 2007-08 during scrutiny assessment proceedings and more so in view of the fact that, admittedly, there was no incriminating material found during the course of search relatable to Asst Years 2006-07 to 2011-12 for making any addition in any manner whatsoever loan balances reflected in the statement of affairs were duly examined in detail for the Asst Years 2006-07 and 2007-08 during scrutiny assessment proceedings and more so in view of the fact that, admittedly, .....

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of the Mumbai Bench rendered in the case of CIT vs All Cargo Global Logistics Ltd in ITA Nos. 5018 to 5022 & 5059/M/2010 which was recently affirmed by the Bombay High Court in the case of CIT vs Continental warehousing Corporation in ITA no. 523 of 2013, dated 21st April, 2015. The operative portion of the judgement of Bombay High Court is as follows:- "a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for whi .....

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horised Representative for assessee further submitted that as per the provisions of Sec 263 of the Income Tax Act, 1961, the orders can be revised by the Commissioner of Income Tax if the Commissioner of Income Tax considers that the order passed by the AO is erroneous and prejudicial to the interests of the revenue. The bare reading of the section makes it clear that for an order to be revised, there should be satisfaction of dual conditions i.e (i) the order should be erroneous and (ii) it sho .....

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6-07 to 2011-12. The ld. Authorised Representative for assessee submitted that the Assessing Officer had taken one possible view in the eyes of law and accordingly made a decision not to make any addition. Hence, it cannot be construed that the order is erroneous within the meaning of section 263 of the Act and accordingly invoking of jurisdiction u/s 263 of the Act by the CIT was null and void. Reliance was placed in this regard on the decision of Supreme Court in the case of Malabar Industrial .....

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ests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to Sec. 263(1) of the act . 15.2 Moreover, the notice u/s 263 of the Income Tax Act, 1961 received by the assessee from the office of the Commissioner of Income Tax-Central I, it was stated that there was no adequate inquiry made by the Assessing Officer on the Statement of Af .....

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or assessee humbly submitted that the issues raised by the CIT in the show cause notice can be stated as "not considered by the Assessing Officer" only on the assessment which was completed u/s.143(3).The CIT cannot invoke the provisions of section 263 on the assessment completed u/s 153A r.w.s 143(3) dated 28/03/2014 for the assessment years 2006-07 and 2007-08 since the same was barred by limitation. 15.4 The ld. Authorised Representative for assessee further relied to the decision o .....

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of reduction of deduction u/s.80-IA, therefore the revision was barred by limitation. 15.5 The ld. Authorised Representative for assessee relied on the above decisions, it can be construed that the CIT can invoke the provisions of Sec 263 for assessment year 2006-07 and assessment year 2007-08 for the assessments completed on 28/11/2008 and 31/12/2009 for assessment year 2006-07 and assessment year 2007-08 respectively and not for assessments completed on 28/03/2014 for the said years. Hence it .....

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Representative for assessee before the Commissioner of Income Tax has also fairly conceded that the statement of affairs needs to be examined in detail. For this reason, the assessment was set aside for fresh examination of the statement of affairs by the Assessing Officer and also to arrive at the interest incomes from all the loans given and also, the interest paid on the loans borrowed. 17. We have heard both the sides and perused the material on record. In this case for the assessment year .....

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the returned income consequent to search action. However, as evident from the para one of order passed by the Commissioner of Income Tax passed u/s.263 of the Act, the Assessing Officer could not examine certain issues relating to the investments made by the assessee in various companies and firms and interest incomes received/ receivable from some of the debtors. It was also noticed that the opening capital balance for the year 2006-07 and the capital account for the subsequent years was not p .....

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rawings at a higher level and thus add back the cash found during search as unexplained cash since not supported by the Cash Flow Statement filed. For all these deficiencies, the Assessing Officer has proposed that the assessment completed u/s.153A be reviewed u/s.263 by Commissioner of Income Tax as he could not examine the issues due to paucity of time as the information was filed before him only on 28.03.2014. 18. Thus based on the above proposition, the assessment recorded was called for and .....

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course of the proceedings u/s 143(3) finalized on 31.12.2009, the Assessing Officer has analyzed the Statement of Affairs for the assessment years 2006-07 and 2007-08 and has made additions in the Asst.Year 2007-08 as below:- The assessee s business is money lending and filed a statement of affairs as on 31.03.2007 Opening Balance of capital i.e as on 31.03.2006 : 13,16,06,077/- Net profit for the financial year 2006-07 was : 1,87,00,173/- 15,03,06,250/- Closing balance of capital as on 31.03.20 .....

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o tax. The assessee's representative contention was not be accepted by Commissioner of Income Tax as the assessee's business in money lending, and the assessee has not charging interest from the person to whom money has been lent. According to the Commissioner of Income tax it can't not be distinguished whether that particular loan was interest bearing or not. Hence, the difference of ₹ 22,90,232/- was added to the returned income. Thus, it was also on record that original asse .....

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dated 28.03.2014. First of all u/s.263 of the Act, the Commissioner of Income Tax must call for examining the records of the proceedings under Act and after examining the same if he came to a conclusion that the order passed by the Assessing Officer to be erroneous in so far as it is prejudicial to the interest of revenue, then he can revise the assessment order u/s.263 of the Act and issue notice. There should be independent application of mind by Commissioner of Income Tax himself. He cannot s .....

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ome Tax is subject matter of appeal in respect of original assessment passed u/s.143(3) of the Act before the Tribunal for the assessment year 2007-08. The original assessment order passed u/s.143(3) was set aside by the Tribunal and remitted back to the file of the Assessing Officer to re-examine vide Tribunal order in ITA No.986/Mds/2012, dated 12.09.2012. So there is no doubt whatsoever as regards the matter covered by the assessment order which have been perused by the assessee in appeal on .....

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on the order of the Tribunal so as to decide what is right or wrong. In other words, in respect of any issue which was subject matter of the appeal before the Tribunal and the Tribunal decided it one way or other, the Commissioner of Income Tax would not take up the same issue in proceedings u/s.263 of the Act as held by jurisdictional High Court in the case of CIT vs. Farida Prime Tannery, 259 ITR 342 (Mad). The Commissioner of Income Tax observed in its order at para 5 that while re-examining, .....

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e was substantial discrepancies in the three Statements of Affairs which could not be examined properly by the Assessing Officer during the proceedings u/s 153A finalized on 28.3.2014. Thus, the acceptance of the Revised Statement of Affairs was suffering from defects resulting in a assessment erroneous and prejudicial to the interests of revenue. The Commissioner of Income Tax in its order u/s.263 wanted to review the giving effect order to Tribunal order by Assessing Officer which is not possi .....

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the part of the Assessing Officer 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. 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 o .....

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e of search. On the other hand, it has been argued by the revenue 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 under section 153A. In other words these two assessments merge 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 .....

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cause any absurd etc. results. There is no casus omisus 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 are manifold, the foremost being that the provision under section. 153A should be read in conjunction with the provision contained in section 132(1), the reason being that the later deals with search and seizure and the former deals with assessment in c .....

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ooting 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, it is found 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 assessee, though not specifically stated, would be that on .....

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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, ea lied as undisclosed income or property. The provision in section 132(1) does .....

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ssment has a vital link with the initiation and conduct of the search. A search can be authorized 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, one proceeds to literally interpret to provision in section 153A as it exists and read it alongside the provision contained in section 132(1) of the Act. 24. The provision comes into operation if .....

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icer 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 under section 153(1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the .....

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der section I53A(1)(b) and the first proviso? 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, 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 provision. Similar position will obtain in a case w .....

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sessing Officer, (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. 26. The interpretation is to be made considering the principles of literal interpretation and reading the relevant provisions together. This interpretation does not in any manner give results w .....

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n the context of relevant provisions means - books of account,, other document, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search. 28. The above view was taken by Special Bench, Mumbai in the case of CIT vs. All Cargo Global Logistics Ltd (supra). 28.1 Further, it is to be noted that for the assessment year 2006- 2007 assessment was completed u/s.143(3) of the Act on 31.12.2009 and later on a .....

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ax wanted to bring difference between these statements for taxation. Thus, it means that there was no incriminating material found during the course of search action u/s.132 of the Act. 28.2. In view of the above, the original assessment order for the assessment year 2006-2007 was already completed u/s.143(3) of the Act. Hence the assessment u/s.153A to be made on the basis of incriminating material, which means books of account, other documents, found in the course of search but not produced in .....

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by him due to paucity of time and the Assessing Officer proposed the Commissioner of Income Tax to review the order u/s.153A of the Act. 29. In our opinion, the Commissioner of Income Tax wanted to do the things indirectly which cannot be done directly. Further, he mentioned in the order that the Assessing Officer examined the statement of affairs for the assessment years 2006-07 and 2007-08 during the course of assessment u/s.143(3) of the Act finalised on 31.12.2009 and he wanted to review th .....

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racted. In the present case there is no incorrect assumption of facts or an incorrect application of law by the Assessing Officer. The Assessing Officer has applied his mind to the seized material while framing assessment for the year 2006-07 u/s.153A of the Act. The Commissioner of Income Tax cannot expect to correct the assessment order passed u/s.153A of the Act duly considered the seized material and in the present case the Commissioner of Income Tax wanted to consider the statement of affai .....

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erved whatever statements on record were already produced by the assessee both in the course of original assessment u/s.143(3) and also in assessment proceedings u/s.153A of the Act. The Assessing Officer adopted one of the course permissible under law and he has taken one view that the Commissioner of Income Tax does not agree which cannot be treated as error unless the view taken by the Assessing Officer is unsustainable under law. Moreover, while making assessment the Assessing Officer examin .....

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ed to be erroneous simply because the Commissioner of Income Tax wanted to do further enquiry as he has not satisfied with the enquiry made by the Assessing Officer. In the present case, the Assessing Officer made enquiry both in the course of original assessment u/s.143(3) for the assessment year 2006-07 and also during the course of assessment u/s.153A of the Act and the assessee has given a detailed explanation to Assessing Officer to consider the same after being satisfied by the explanation .....

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