TMI Blog2013 (12) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... management, the assessee company became the person other then the person searched. In these circumstances, issue of notice u/s 153C and assessment to be framed under this provision is imperative, as the provision is non obstante. In these circumstances, we hold that the additions made u/s 153C are sustainable. - ITAs No. : 4174 to 4177/Mum/2013 - - - Dated:- 6-12-2013 - SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER Appellant by : Shri Vijay Mehta and Shri Anuj Kishmadwala Respondent by : Shri A.C. Tejpal ORDER PER VIVEK VARMA, JM: The appeals are filed by the assessee against the orders of CIT(A) 41, Mumbai, dated 03.04.2013. Since the issues in the captioned years are identical, we are disposing off the appeals by passing a consolidated order, pertaining to the captioned assessment years for the sake of convenience and brevity. Assessment year 2004- 05 being the first year in the bunch of appeals, we are taking up this appeal as the lead year and the other three years are followed as per the decision taken in the ITA No. 4174/Mum/2013 in assessment year 2004-05. ITA No.: 4174 of 2013, AY 2004-05; Assessee s appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of any incriminating document, the issuance of notice u/s. 153C itself was bad in law and the AO did not get any jurisdiction as there was no seized material. The assessee has, however, been fair enough to submit that it was aware of the latest judgment post the above decision of the Hon ble Special Bench delivered by the Hon ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia which was contrary to the findings in the judgment of All Cargo Global Logistics Ltd. (supra). 2.2 I have considered the contentions of the assessee. I find that search and seizure action u/s. 132 of the LT. Act, 1961 was carried out in the case of M/s. Bombay Rayon Fashions Ltd. and the associated persons of the group. In the course of the search, it was found, that the assessee had earned long term capital gains for the assessment year 2008-09 which had not been disclosed by it as no return of income was filed. The documents relating to the transactions leading to the unearthing of the above facts and belonging to the company were seized from the premises of M/s. Bombay Rayon Fashions Ltd. Thereafter, notice u/s. 153C was issued to the assessee after recording reasons for the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act limit the inquiry by the Assessing Officer to those material found during the search and seizure operation, no such limitation is found in so far as sections 153A/153C of the Act are concerned. Therefore, it follows that for the purposes of sections 153A/153C of the Act the Assessing Officer can take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee 2.4 To my knowledge, this is the only decision of an Hon ble High Court on identical issue. This decision, being a decision of a High Court, will be required to be followed in preference to the decision of the Special Bench of the Hon ble Tribunal on identical issue. It is also important to note that the Hon ble Special Bench has not taken into note the above decision of the Hon ble Andhra Pradesh High Court, possibly due to the reason that the said judgment was not brought to its kind notice in the course of the hearing. It is well established that the wisdom of the Court below has to yield to the higher wisdom of the Court above. In the case of Piyush C. Mehta vs. The ACIT 25(3), Mumbai in ITA No. 1321/Mum/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied. Both the decisions are under section 115JA with which we are concerned. One is of a Special Bench of the Tribunal, Ahmedabad and the other is of a High Court, though not the jurisdictional High Court. A simple answer would be that the judgment of a High Court, though not of the jurisdictional High Court, prevails over an order of the Special Bench even though it is from the jurisdictional Bench (of the Tribunal) on the basis of the view that the High Court is above the Tribunal in the judicial hierarchy. But this simple view is subject to some exceptions. It can work efficiently when there is only one judgment of a High Court on the issue and no contrary view has been expressed by any other High Court. But when there are several decisions of non-jurisdictional High Courts expressing contrary views, it has been recognized that the Tribunal is free to choose to adopt that view which appeals to it. In kishiroop Chemicals Co. (P.) Ltd. V. ITO (1991) 36 ITD 35(SB) (Delhi), it was held by the Special Bench, Delhi that if there were conflicting decisions of the High Courts, other than the jurisdictional High Court, the Benches of the Tribunal were free to adopt the view whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oving to the merits of the additions made by the AO and sustained by the CIT(A). 10. Before the revenue authorities and before us, the assessee/AR pleaded that assessment under Chapter XIV can only be made, if there are any incriminating material found in the search, pointing out certain income, not disclosed before the revenue authorities. The AR submitted that in case of the assessee, the assessment for assessment year 2004-05 to 2007-08 were framed u/s 143(1) and on the date of search, i.e. 12.08.2009, neither any notice for reopening was there nor any notice to validate the assessment proceedings was issued by the department and hence, the same were completed and finalized and hence the assessment for assessment year 2004-05 to 2007-08 cannot be revived. Before us, the AR accepted that in so far as applicability of Chapter XIV is concerned, there would be no hindrance. The AR further submitted that in view of the Special Bench decision in All Cargo Global Logistics Ltd. vs DCIT, ITAs no. 5018 to 5022/Mum/2010, no addition could be made until and unless there are any incriminating material. The AR, to defend his arguments, relied on a number of decisions. 11. The AR submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or initiation of proceedings u/s 153C, is the discovery of income from incriminating material pertaining to third person, found from the person searched. Once the AO is satisfied on discovery of incriminating material pertaining to the third person, the AO can proceed to initiate proceedings u/s 153C and accordingly, frame the assessment. 18. When we examine the relevant provisions of law, three aspects come to light: a) issue of notice on the person searched or the corrected person b) frame as assessment on the assessment year which is pending on the date of search c) all proceedings which are pending on such date shall abate. 19. In the case before us, search took place on the new management and admittedly no document as such was found which indicated that there was certain income belonging to the assessee, which had not been disclosed to the department in the impugned assessment years. Since the search was on the new management, the assessee company became the person other then the person searched. In these circumstances, issue of notice u/s 153C and assessment to be framed under this provision is imperative, as the provision is non obstante. In these circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirming the action of the AO in making the following additions under Sec. 143(3) r.w.s. 153C of the Act in absence of any incriminating seized material found during the course of search and the additions are bad in law: a) ₹ 4,53,382/- being Other Income in addition to 5% of the Sales b) ₹ 42,94,452/- being Capitalization of Building . 26. The above additional grounds are, in effect the concise grounds of appeal. Since the basis of Additional Grounds has already been decided by us in ITA No. 4174/Mum/2013, we shall follow the same order and hold that the additions made u/s 153C are sustainable. As there are no indications of any incriminating material having been found in the course of search to be used against the assessee, the same are deleted, as per our observations in para 21 above. 27. On both the counts, i.e. on legality as well as on merits, the case developed by the department cannot be sustained. 28. In the result, the appeal filed by the assessee is allowed. ITA No.: 4176 of 2013, AY 2006-07; Assessee s appeal: 28. The assessee has filed Additional Grounds of appeal, which are as follows: 1. On the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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