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2016 (1) TMI 987 - ITAT KOLKATA

2016 (1) TMI 987 - ITAT KOLKATA - TMI - Assessment u/s 153A - Deduction u/s 80IB denied - Held that:- It is an admitted fact that no incriminating materials were found during the course of search by the revenue in order to disturb the claim of deduction u/s 80IB of the Act which is given by way of a categorical finding by the Learned CIT(A) in his appellate order and which is also not controverted by the revenue before us. In the instant case, no incriminating materials are found relating to Ass .....

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his regard for the assessment years 2003-04 and 2004-05 are dismissed. - Decided in favour of assessee.

Also no disallowance u/s 14A of the Act could be made for the Asst Year 2004-05 by the Learned AO in the assessment framed u/s 153A of the Act in the absence of any incriminating materials found during the course of search with regard to the relevant assessment year and with regard to the relevant issue.- Decided in favour of assessee. - ITA No. 725/Kol/2011 - Dated:- 9-12-2015 - .....

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; Appeal No. 84/CC-XXVII/CIT(A)-C-II/KOL./10-11 dated 28.2.2011 for Asst Year 2008-09 against the order of assessment framed by the Learned AO on 3.8.2009 u/s 153A/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') for the assessment years 2003-04 and 2004-05 and orders framed on 3.8.2009 and 21.10.2010 u/s 143(3) of the Act for the assessment years 2007-08 and 2008-09 respectively. 2. From the identical grounds raised by the revenue for the various assessment year .....

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d AO is justified in rejecting the claim of deduction u/s 80IB of the Act for the Asst Years 2007-08 nd 2008-09 when the eligibility conditions u/s 80IB of the Act are to be seen only in the initial assessment year and thereafter it is automatic and only academic in nature. c) Whether the Learned AO is justified in making disallowance u/s 14A of the Act in the assessments framed u/s 153A of the Act in respect of Asst Year 2004-05 without any incriminating material found during the course of sear .....

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r the Asst Years 2003-04 to 2006-07. In response to such notice, the assessee filed return for the Asst Years 2003-04 to 2006-07. In respect of Asst Years 2007-08 & 2008-09, the returns were filed u/s 139(1) of the Act, being the year of search and the year subsequent to the search. The assessment u/s 153A/143(3) of the Act was completed for the Asst Years 2003-04 & 2004-05 and u/s 143(3) of the Act for the Asst Years 2007-08 and 2008-09, wherein deduction claimed u/s 80IB of the Act was .....

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sment year. On first appeal, the Learned CITA categorically held that since there was no search materials found during the course of search, deduction u/s 80IB of the Act which has already been granted u/s 143(3) proceedings for the Asst Years 2003-04 & 2004-05 cannot be disturbed and accordingly decided this ground in favour of the assessee. However on merits of the claim of the deduction u/s 80IB of the Act, he held that the assessee is not entitled for deduction u/s 80IB of the Act. Again .....

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at Kumar Kureel, JCIT, Sr.(DR), will not be able to represent the above mentioned cases since he is going on a visit to Burdwan for official work on 23rd November 2015. Accordingly, I am directed to request that the case may kindly be adjourned for a later date as per the convenience of the Hon'ble Bench. Signed by CIT, ITAT-5, Kolkata" We find that the revenue had sought adjournment in 20 cases out of total 23 cases listed before the Bench for hearing and in view of this behavior of th .....

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ssee. He argued that once this deduction is granted in the initial assessment year, thereafter in later years, the grant of deduction is automatic . He further argued that in any case, no incriminating materials were found by the department during the course of search with respect to the Asst Year 2003-04 in respect of this issue to enable the department to disturb the claim of deduction u/s 80IB of the Act and accordingly he argued that the Learned CITA had rightly granted relief to the assesse .....

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ue with regard to claim of deduction u/s 80IB of the Act. He further stated that the deduction once granted in the initial assessment year, the assessee becomes automatically entitled in the subsequent assessment years. He pleaded before the Bench that the observation made by the Learned CIT(A) for the Asst Year 2007-08 in para 4 of his order is unwarranted. Later he filed a letter dated 23.11.2015 stating that the cross objections preferred by the assessee may be treated as withdrawn. 6. We hav .....

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of Assessing Officer to assess any income u/s 153A is ever reversed by superior courts then on facts my order for Assessment Year 2003-04 on facts would be in favour of revenue." We find that this observation of the Learned CIT(A) is unwarranted as the appeal has been allowed by him on jurisdiction of Learned AO to assess any income u/s 153A for want of incriminating materials found during the course of search. When the assessment is struck down on jurisdiction issue, we hold that there is .....

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u/s 80IB of the Act for the assessee in the initial Assessment Year 2003-04 vide his appellate order dated 31.3.2010 in Appeal No. 99A/CC-XXVII/CIT(A)-C-II/KOL./09-10 and accordingly, the deduction u/s 80IB of the Act would be applicable for subsequent years also. It is well settled that the eligibility conditions for granting deduction u/s 80IB of the Act needs to be looked into only in the initial assessment year and thereafter it is automatic and hence becomes academic in nature. 6.2. We fin .....

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the case of a person79 where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescri .....

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espect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : [Provided also that the Central Government may by rules made by it and published in the Official Gazette (ex .....

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been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the [Principal Commissioner or]Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation .....

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following manner pursuant to the search conducted u/s 132 of the Act :- a) Notice u/s 153A of the Act would be issued on the person on whom the warrant of authorization u/s 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s 153A of the Act for those six assessment years. b) In respect of the year of search, notice u/s 143(2) of the Act would be issued and assessment thereon would be completed u/s 143(3) of the Act. .....

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. The concluded assessments for the purpose of section 153A of the Act shall be - (i) assessment years where assessments are already completed u/s 143(1) and time limit for issuance of notice u/s 143(2) of the Act has expired or; (ii) assessment years where assessments are already completed u/s 143(3) of the Act ; unless they are reopened u/s 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2. The scheme of assessment proceedings contemplated u/s 153A of the Act are .....

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earch with respect to relevant assessment years; 'reassess' means assessments to be framed in respect of concluded assessment years where incriminating materials were found during the course of search in respect of the relevant assessment year. 6.5. Now let us see how the aforesaid provisions of section 153A of the Act and the scheme of assessment proceedings stated hereinabove fit into the facts of the instant case. For this purpose, the following tabulation would be relevant :- Date of .....

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No No No No 'N.A' denotes not applicable * represents the date of completion of assessment u/s 143(3) of the Act after the search on 28.3.2007 + represents the date of completion of assessment u/s 143(3) of the Act succeeding the year of search 6.5.1. Hence from the above table, the following conclusions could be reached as on the date of search :- Concluded assessment years - Asst Years 2003-04 and 2004-05 ( i.e the first two assessment years under appeal before us) Asst. Year 2007-08- .....

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f search by the revenue in order to disturb the claim of deduction u/s 80IB of the Act which is given by way of a categorical finding by the Learned CIT(A) in his appellate order and which is also not controverted by the revenue before us. In the instant case, no incriminating materials are found relating to Asst Years 2003-04 and 2004-05 and hence the action of the Learned AO in disturbing the claim of deduction u/s 80IB of the Act cannot be appreciated. 6.7. We find that our understanding of t .....

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isition, assessment in furtherance thereof is contemplated. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the p .....

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ay be. 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 assessment or reassessm .....

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issioner (Appeals) confirmed the view of the Assessing Officer. The Tribunal held in favour of the assessee. A search was carried out on its premises and a notice under section 153A was issued to the assessee. The assessee declared a total income of ₹ 5,54,63,220 while claiming the deduction under section 80-IA(4) of ₹ 1,25, 77,637. The Assessing Officer held that the assessee was not entitled to the deduction under section 80-IA. The Commissioner (Appeals) upheld the order of the As .....

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ing assessment and also on any other undisclosed income or property found during the search. On the issue of deduction under section BO-IA(4) the Tribunal held that the container freight station was an inland port and its income was entitled to deduction under section 80-IA(4) . On appeals: Held, dismissing the appeals, (i) that the notice under section 153A was founded on search. If there was no incriminating material found during the search then the Tribunal was right in holding that the power .....

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