TMI Blog2014 (1) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... ifts cannot be considered in the assessment completed under Section 153A, since the returns were filed and assessments were completed thereon, well before the search - Decided in favour of assessee - ITA Nos.1691, 1692 & 1693(Mds)/2013, ITA Nos.1694 & 1695(Mds)/2013 - - - Dated:- 24-1-2014 - Dr. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER Appellants by : Shri G. Baskar, Advocate Respondent by : Shri Anirudh Rai, IRS, CIT ORDER PER Dr.O.K.NARAYANAN, VICE-PRESIDENT This is a bunch of five appeals filed by two assessees, Shri A.B.S. Sanjjay and Shri A.B. Sudarsanam. Shri A.B.S. Sanjjay has filed appeals for three assessment years 2003-04, 2004-05 and 2005-06 and Shri A.B. Sudarsanam has filed appeals for two assessment years 2004-05 and 2005-06. Altogether these appeals relate to assessment years 2003-04, 2004-05 and 2005-06. 2. All these appeals are directed against the orders of the Commissioner of Income Tax (Appeals) at Salem, passed on 29.7.2013. These appeals arise out of the assessments completed under Section 143(3) read with Section 153A of the Income-tax Act, 1961. 3. The assessees, Shri A.B.S. Sanjjay and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees have jointly constructed a commercial building, which was completed during the previous year relevant to assessment year 2005-06. The assessees have declared the cost of construction at ` 2,12,20,060/-. The assessments in the case of both the assessees, for the assessment year 2005-06, were completed under Section 143(3) through orders dated 31.12.2007. In the course of those scrutiny assessments, the issue of cost of construction of the commercial property was referred by the Assessing Officer to the Departmental Valuation Officer (DVO). But, the report of the DVO was not made available to the assessing authority when those scrutiny assessments were concluded. The report of the DVO was made available to the Assessing Officer only after the assessments were completed. As per the report of the DVO, the cost of construction of the building has been determined at ` 3,75,00,000/-. This has given rise to a difference of ` 1,62,79,940/-. The assessing authority, in the course of the search assessments, added this differential amount in the hands of the assessees at one-half each. Accordingly, an addition of ` 81,39,970/- has been made in the hands of both Shri A.B.S. Sanjjay and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2005-06 were taken up for scrutiny and assessments were completed under Section 143(3). All the assessments were completed either under Section 143(1) or under Section 143(3) before the search were carried out on 29.1.2009. 15. In the light of the above facts, the learned counsel submitted that it was not possible for the Assessing Officer to take out the figures already filed by the assessees and assessed by the Department, and add those amounts in a proceedings u. 153A. The learned counsel has explained that no incriminating material was collected in the course of search, which was not disclosed in the original returns filed by the assessees. The receipt of gifts and their particulars were disclosed in the original returns of income filed by the assessees, well before the search. They were all part of assessments already completed in the case of the assessees. Therefore, in the absence of any incriminating material in the course of search, it was not possible for the Assessing Officer to reopen the issue of gifts concluded in the original assessments and make additions of those amounts in the assessments completed under Section 153A. 16. In support of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. Therefore, the cost of construction returned by the assessees was accepted by the Assessing Officer and the assessments were completed. Therefore, the question of cost of construction of the commercial building was also a subject matter of scrutiny assessments completed under Section 143(3) before the search was carried out. In such circumstances, considering the report of the DVO in the course of assessment under Section 153A is not permissible in law as it amounts to reassessment. 19. The learned counsel has relied on the decision of Special Bench, ITAT, Mumbai, rendered in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax reported in (2012) 137 ITD 287 (Mumbai) (SB). In the case before the said Special Bench also, the Tribunal has considered the scope of Section 153A assessment or reassessment in a case of pending assessment and in the case of concluded assessment. After considering the law on the subject in a detailed manner, the Special Bench has held that whether in a case where pursuant to issue of notice under Section 153A assessments are abated, Assessing Officer retains original jurisdiction and jurisdiction confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees and estimate made by the DVO cannot be a ground for reassessment. 23. The learned counsel therefore contended that on facts also the claims of the assessees have been proved and therefore, the lower authorities are not justified in sustaining the additions made in these appeals. 24. Shri Anirudh Rai, the learned Commissioner of Income Tax appearing for the Revenue, argued the case at length. 25. The learned Commissioner of Income Tax explained that the scheme of Section 153A assessment is to assess or reassess the total income of the assessee and there is no concept of undisclosed income as such in making assessment under Section 153A. When a search was carried out under Section 132, it is mandatory upon the assessing authority to issue notice under Section 153A and thereafter to examine the returns on the details furnished by the assessee and complete the assessment determining the total income of the assessee. When the assessing authority is destined to determine the total income of the assessee, every aspect of the assessment, whether came to light in the course of search or already available in the returns filed by the assessee earlier, has to be examined; ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench and as such, the ratio of the decision of Special Bench in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax reported in (2012) 137 ITD 287 (Mumbai) (SB) is not applicable to the present cases. 27. In support of his argument, the learned Commissioner of Income Tax has relied on the following decisions:- 1. Ms. Shyam Lata Kaushik v. Assistant Commissioner of Income Tax (2008) 114 ITD 305 (Del) 2. Shivnath Rai Harnarain (India) Ltd. v. Deputy Commissioner of Income Tax (2009) 117 ITD 74 (Del) 3. Dr. Mansukh Kanjibhai Shah v. Assistant Commissioner of Income Tax (2011) 129 ITD 376 (Ahd.) 4. Gopal Lal Bhadruka v. Deputy Commissioner of Income Tax (2012) 346 ITR 106 (AP) 5. Commissioner of Income Tax v. Anil Kumar Bhatia (2013) 352 ITR 493 (Delhi) 6. Commissioner of Income Tax v. Chetan Das Lachman Das (2012) 211 Taxman 61 (Delhi) 28. The learned Commissioner of Income Tax also argued at length on merits of the case. He has taken us to the detailed questionnaire issued by the Assessing Officer to elicit information regarding the genuineness of the donations received by the assessees and reply given by the assessees to the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch alone and therefore, it should be treated as incriminating material justifying reassessment under Section 153A. 32. We heard both sides in detail, pursued the records of the cases and the paper-books filed before us. We have also gone through various decisions cited before us by both the sides. 33. As a matter of fact, we have to state that when the search was conducted on 29.1.2009, the assessees herein had already filed the returns of income for the impugned assessment years 2003-04, 2004-05 and 2005-06. The assessments for the assessment years 2003-04 and 2004-05 had already been completed under Section 143(1) and intimations were served on the assessees. The assessment for assessment year 2005-06 was concluded under Section 143(3). Therefore, it is to be seen that the search has been conducted after the assessees had filed returns for the impugned assessment years and respective assessments were completed. 34. Therefore, the crucial fact to be recorded in the present case is that no assessment or reassessment was pending at the time of search carried out on 29.1.2009 or in the course of assessment proceedings initiated under Section 153A. When this crucial fact is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifts received from their friends in the respective previous years. Therefore, there is no case that the factum of gifts was not disclosed by the assessees. The details of the gifts were furnished by the assessees along with returns of income filed before the assessing authority. Therefore, these gifts, already disclosed in the returns filed before search upon which assessments have also been completed, cannot be treated as incriminating materials found in the course of search. Gifts were fairly disclosed before the Department. The factum of gifts has not come out from any incriminating materials found in the course of search. They were already available in the returns filed before the assessing authority. 37. We find that no incriminating material was found in the course of search and particulars/details were filed along with returns of income whose assessments were already completed. Therefore, there is no justification for the Assessing Officer to reconsider those issues in the assessments passed under Section 153A. In fact, the Assessing Officer is contemplating a review of the assessments already made by him prior to the date of search. A review is not permissible under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of ITAT, Delhi Bench D in the case of Shivnath Rai Harnarain (India) Ltd. v. Deputy Commissioner of Income Tax (2009) 117 ITD 74 (Delhi) is not relevant in the light of the Special Bench decision of Tribunal and also in the light of the decision of Hon ble Rajasthan High Court. 42. Therefore, in short, to summarize our finding, no incriminating materials were found in the course of search and as such, the question of gifts cannot be considered in the assessment completed under Section 153A, since the returns were filed and assessments were completed thereon, well before the search. This finding is arrived at in the light of the Special Bench decision reported in (2012) 137 ITD 287 (Mumbai) (SB) and the decision of the Hon ble High Court of Rajasthan in the case of Jai Steel (India) v. Assistant Commissioner of Income Tax (2013) 88 DTR (Raj). 43. Accordingly, we direct the assessing authority to delete all the additions made in the hands of the assessees against the gifts. 44. The same reasoning applies to the addition made on account of cost of construction of the commercial building as well. When the assessment was completed under Section 143(3), the report o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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