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2016 (4) TMI 126 - ITAT CHENNAI

2016 (4) TMI 126 - ITAT CHENNAI - TMI - Assessment under section 153A - Held that:- The assessments of 2007-08 to 2011-12, which are not based on any incriminating and therefore the assessment framed under section 153A of the Act cannot be stand on its own leg, which are not framed on the basis of any incriminating material found during the course of search operation and they do not conform the mandate of section 153A of the Act. Accordingly, the assessments framed under section 153A r.w.s. 143( .....

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is stated so as to reduce it and treat as income from other sources. More so in the assessment year 2008-09 vide assessment order dated 06.12.2010 and for assessment year 2009-10 dated 09.12.2011, the Assessing Officer has accepted the returned agricultural income and when no incriminating material found to suggest the agricultural income is non-agricultural income and arbitrarily disallowing the same by the Assessing Officer and the ld. CIT(A) are not justified. Accordingly, the agricultural i .....

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under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3) r.w.s. 153A as held by the Tribunal in the case of ACIT v. VN. Devadoss [2013 (9) TMI 400 - ITAT CHENNAI ). The interest under section 234B is to be levied only on the additional tax levied on the enhanced income determined under section 143(3) r.w.s. 153A. Therefore, the period of charging of interest should be from the date of det .....

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MEMBER: All the above appeals of the same assessee are directed against the common order of the ld. Commissioner of Income Tax Act (Appeals) 18, Chennai dated 09.10.2015 relevant to the assessment years 2007-08, 2008- 09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14. The issues involved in all these appeals are common in nature, heard together and being disposed of by this common order for the sake brevity. 2. Brief facts of the case are that there was a search conducted under section 132 of .....

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the return filed on 11.12.2009 be treated as return filed in response to the notice under section 153A of the Act. For the assessment year 2009-10, it was stated vide her letter dated 12.04.2013 that the return filed on 15.02.2010 be treated as return filed in response to the notice under section 153A of the Act. For the assessment year 2010-11, it was stated vide her letter dated 12.04.2013 that the return filed on 01.04.2011 be treated as return filed in response to the notice under section 1 .....

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,71,63,300/-. 3. Subsequently, the Assessing Officer has issued notice under section 143(2) of the Act dated 01.08.2014 and also notice under section 143(1) of the Act on 18.11.2014 for all these assessment years. The Assessing Officer framed the assessment for each assessment year as follows: 01. Assessment year 2007-08 Total income as returned by the assessee ₹. 17,19,84,270 Disallowance of agricultural income ₹. 5,00,000 Total assessed income ₹. 17,24,84,270 02. Assessment y .....

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ear 2010-11 Total income as returned by the assessee ₹. 30,78,70,181 Disallowance of agricultural income ₹. 10,88,850 Total assessed income ₹. 30,89,59,031 05. Assessment year 2011-12 Total income as returned by the assessee ₹. 15,78,60,816 Disallowance of agricultural income ₹. 7,50,000 Total assessed income ₹. 15,86,10,816 06. Assessment year 2012-13 Total income as returned by the assessee ₹. 9,79,49,860 Disallowance of agricultural income ₹. 4, .....

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on 143(3) of the Act. Hence, the assessments, which are already completed, either under section 143(1) or under section 143(3) of the Act, cannot be reopened. In other words, it was submitted that if an order already in existence, having obviously passed prior to incision of search/requisition, the Assessing Officer, if empowered to reopen those proceedings and reassess the total income taking note to the undisclosed income, if any, unearthed during the search. According to the ld. Counsel for t .....

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s on the date of search and due to lapse of time to issue notice under section 143(2) of the Act is already over. 5. On the contrary, the ld. DR has submitted during the course of search operation, the material gathered shows that the assessee, without having no agricultural income or the assessee has inflated the agricultural income and as such, prima facie, the agricultural income was treated as non-agricultural income and brought to tax while framing assessment under section 143(3) r.w.s. 153 .....

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completed for the assessment years 2007- 08. In the course of assessment, the Assessing Officer made addition, prima facie, disallowing certain agricultural income as non-agricultural income and also disallowance under section 40(a)(iii) of the Act. Now, the contention of the ld. Counsel for the assessee is that the assessment for the assessment years 2007-08 and 2008-09 already completed either under section 143(1) or 143(3) and there is no pendency of assessment so as to abate the assessment. .....

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d under section 143(3) and the Assessing Officer accepted agricultural income in these assessment years. The time limit for issuing notice for other assessment years has already expired by this time and thereby, the assessments stated to be reached finality by operation of law for the assessment years 2007-08 to 2011-12 as on the date of search as the time limit to issue notice for these assessment years is already over. Being so, no assessment or reassessment or pending assessment at the time o .....

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under section 153A, reassessment can be made only if any incriminating material found during the course of search and item concluded in earlier assessment cannot be considered in the reassessment under section 153A of the Act. In other words, the scope of assessment under section 153A can be summarized diagrammatically as under: Image No. 1 7. Thus, as seen from the above chart, when nothing incriminating is found in the course of search or requisition, then the question of reassessment of alrea .....

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nating materials are found in the course of search. In the present case, for the assessment year 2007-08 to 2010-11, there is no reference of any incriminating material found during the course of search to frame assessment under section 153A of the Act. The Assessing Officer considered the original return already filed in normal course and reassessing the income of the assessee and observing that the assessed agricultural income is excess over there is no incriminating material to suggest that t .....

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yzing the relevant provisions of the Act, came to the following conclusion and ratio:- (a) In assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him under section 153A for which assessments shall be made for each of the six assessment years separately. (b) In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material which in the .....

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inalized. Thus, in this case, no addition can be made over and above the returned income which has become final prior to the date of search and there is no material found at the time of search. The aforesaid Mumbai Special Bench decision of the Tribunal in All Cargo Global Logistic Ltd. (supra) has also been reaffirmed and applied by the Mumbai Benches of the Tribunal in the case of Gurinder Singh Bawa v. DCIT [2012] 28 Taxman.com 328 (Mum.). The relevant observation of the Tribunal is reproduce .....

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elating to any assessment year falling within period of six assessment year if pending on the date of initiation of search shall abate. There have been divergent views regarding scope of application of section 153A in cases where no incriminating material was found indicating any undisclosed income. Some of the Tribunal Benches had taken the view that in case no incriminating material was found AO had no jurisdiction to make assessment or reassessment under section 153A while some other Benches .....

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lobal Logistics Ltd. and order of Special Bench dated 6.7.2012 has been referred. 6.1 The Special bench in the case of All Cargo Global Logistics Ltd. (supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further .....

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in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search. In the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a cas .....

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ccount of search of search or requisition then the question of reassessment of concluded assessment does not arise. If any books of account or other documents relevant to the assessment has not been produced in the course of original assessment and found in the course of search, such books of account or other documents are to be taken into consideration while assessing or reassessing the total income under the provision of section 153A of the Act. The requirement of assessment or reassessment un .....

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bated in terms of second proviso to section 153A of the Act, the Assessing Officer acts under his original jurisdiction for which assessments, have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment and reassessment can be made. 12. Thus, in our opinion, the asse .....

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ng to the assessment year 2012-13 and 2013-14, there is a time limit to issue notice under section 143(2) of the Act and the pending assessment were abated for these assessment years and framing assessment of these assessment years are valid. Further, regarding disallowance of agricultural income in 153A assessment, when there is no material to suggest that the assessee is having lesser agricultural income, what is stated so as to reduce it and treat as income from other sources. More so in the .....

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ction under section 54F, the plea of the ld. DR is that the assessee has purchased the commercial land, as such, the assessee has not entitled for claiming deduction under section 54F of the Act. The ld. DR relied on the judgment in the case of ITO vs. Rohini Reddy 122 ITD 1. 15. On the other hand, the ld. Counsel for the assessee has submitted that the assessee purchased the plot for the purpose of constructing residential building and it is in the process of the same and there is a time limit .....

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