TMI Blog2012 (10) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... sdom concisely omitted. Such an exercise is undertaken by the court may amount to amending or altering statutory provisions. The courts have to decide what the law is and not what it should be. - ITA No. 1074/PN/2007, ITA No. 5182/Mum/2007 - - - Dated:- 3-10-2012 - SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) Appellant by : Shri Durgesh Nadkarni Respondent by : Shri Girija Dayal ORDER PER DINESH KUMAR AGARWAL, J.M. These cross appeals by the assessee and the Revenue are directed against the order dtd. 15-5-2007 passed by the ld. CIT(A), Kolhapur for the A.Y. 2004-05. Both these appeals are disposed of by this common order for the sake of convenience. 2. Briefly stated facts of the case are that the assessee company is engaged in the manufacturing of bakers' yeast and carries on trading activity of bakery related ingredients. The return of income was filed declaring total income of ₹ 1,62,08,636/- along with tax audit report, other audit reports, P L account and balance sheet. The A.O. after processing the return u/s 143(1) of the Income Tax Act, 1961 (the Act) on the same income as disclosed, selected the case for scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search the assessment for the A.Y. 2004-05 was pending. However, the A.O. passed the assessment order u/s. 143(3) on 27.12.2006 which had already abated as per the second proviso to Section 153A of the Act. It was further submitted that after the search, the A.O. issued notices under Section 153A for six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place and accordingly the A.O. passed the order u/s. 153A read with Section 143(3) for all these six assessment years on 27.11.2008 including the year of the search and seizure i.e. assessment year 2007-08. It was further submitted that the assessee filed an appeal against the order u/s.153A read with Section 143(3) before the C.I.T. (Appeals) which is pending. It was further submitted that since the assessment order for the A.Y. 2004-05 has been passed after the search operation on 30.11.2006 in pursuance to the pending assessment on that date, the same will not have any legal validity and it is to be quashed. The reliance was also placed in Abhay Kumar Shroff vs CIT and Ors reported in (2007) 210 CTR (Jharkhand) 602 : (2007) 290 ITR 114 (Jharkhand). In the light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following CBDT Circular and decisions:- (i) Para No. 65.2 to 62.5 of CBDT Circular No. 7 of 2003 dtd. 5.9.2003, (ii) Abhay Kumar Shroff Vs. CIT (2007) 210 CTR (Jharkhand) 602 : (2007) 290 ITR 114 (Jharkhand) : (2007) 162 TAXMAN 429 (Jharkhand) [para 12 to 16). (iii) All Cargo Global Logistics Ltd. Ors. Vs. DCIT (2012) 147 TTJ (Mumbai)(SB) 513 : (2012) 137 ITD 287 (Mum) (SB) [para 52 and 53] (iv) CIT Vs. Anil Kumar Bhatia (2012) 24 taxmann.com 98(Delhi) [para 21] (v) CIT (Central) Kanpur Vs. Smt. Shaila Agarwal (2011) 16 taxmann.com 232 (All.) : (2012) 346 ITR 130 (All.) In the light of the above, he submits that the impugned regular assessment passed by the A.O. is a nullity and, hence, the same may be quashed. 9. On the other hand, the ld. D.R. while agreeing that the facts are available on record, did not object to the admission of legal ground of appeal. He further submits that in the subsequent assessment order passed by the A.O. u/s 153A r.w.s. 143(3) of the Act, dtd. 27-11-2008, the A.O. has made similar disallowance u/s 80IA, 80IB, distribution expenses, foreign travelling expense to the extent as confirmed by the ld. CIT(A) and disallowance of staff welf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was observed that : An appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. There may be several factors justifying the raising of such a new plea in an appeal, and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bonafide and that the same could not have been raised earlier for good reasons. Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also . 15. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has 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 revised with effect from the date of receipt of the order of such annulment by the Commissioner. Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.- For the removal of doubts, it is hereby declared that- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from June 1, 2003. 18. A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV- B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as block assessment because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the undisclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee s total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term is used in the U. S. A. to describe the cancellation in whole or in part of a Government levy (business term and international accounting). 15. Coming back to the instant case, as noticed above, the search and seizure was initiated by the respondents on August 24, 2006, which was carried out by various authorised officials. Thereafter, as admitted by the respondents in their counter affidavit, no notice as required under section 153A was issued to the petitioner for the six assessment years, i.e., from 2001-02 to 2006-07. It has not been disputed by the respondents that the date on which the search was initiated the assessment proceeding was pending on the basis of the return furnished by the petitioner. Consequently, therefore, the pending assessment proceeding stood abated by virtue of the second proviso to section 153A of the said Act. Instead of complying with the requirements of section 153A of the Act, the respondents proceeded with the pending assessment proceeding for the assessment year 2004-05 and passed an assessment order during the pendency of the instant writ application. The said impugned order has also been challenged by the petitioner by filing amendment pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal against the order of assessment against which an appeal has been decided by the Commissioner (Appeals) is not a continuation of the proceedings of assessment. An appeal under the Income-tax Act lies to the Appellate Tribunal on a question of law. Even f it is pending on the date of search the reassessment proceedings will not abate. The abatement of any proceedings has serious effect inasmuch as it takes away all the consequences that arise thereafter. The material found in the search may be a ground for notice and assessment under section 153A of the Act but that would not efface or terminate all the consequences, which arise out of the regular assessment or reassessment resulting in a demand or proceedings for penalty. The assessee filed a return for the assessment year 2002-03. She was required to produce evidence regarding gifts. He was unable to do so and hence an addition was made to her income. The Commissioner (Appeals) confirmed the addition. After the decision of the Commissioner (Appeals) search proceedings were initiated against the assessee. A notice under section 153A was issued to the assessee as a result of search and seizure, calling upon the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that 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 in our humble opinion 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. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O. b) in respect of non-abated assessments, the assessment will be made on the basis of books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of section 153A of the Act, the A.O. proceeded with the pending assessment proceeding for the A.Y.and passed the impugned assessment order during the pendency of the assessment u/s 153A of the Act which is a nullity and as such the assessment order dtd. 27-12-2006 passed u/s 143(3) of the Act is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed. 21. As regards the plea of the ld. D.R. that in the assessment order passed u/s 153A of the Act, the A.O. has made the additions/disallowances on the basis of the impugned assessment order passed u/s 143(3) of the Act, therefore, on equitable ground, the said additions may remain to be considered as made in the assessment order passed u/s 153A of the Act, we find that it is a settled law that where there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to undertake any exercise to read something into the provisions which the legislature in its wisdom concisely omitted. Such an exercise is undertaken by the court may amount to amending or altering statutory provisions. The courts have to decide what the law is and not what it should be. For this pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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