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Deputy Commissioner of Income-Tax Versus Lingam Tulsi Prasad (And Vice Versa)

2016 (8) TMI 725 - ITAT HYDERABAD

Addition on material or return of income filed by the assessee prior to the date of search - Held that:- As where assessments are not pending, there cannot be any abatement of the assessments and, hence, the Assessing Officer has no power to bring to tax any income on the basis of the material or return of income filed by the assessee prior to the date of search - Decided in favour of assessee. - I. T. A. Nos. 1221, 1161, 1162, 1166, 1167 and 1168, 1170, 1171, 1172 and 1173, 1130 and 1131/Hyd/20 .....

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als are heard together and are being disposed of by this common and consolidated order. ITA. No. 1221/Hyd/2013-Revenue appeal-Assessment year 2003-04 2. Brief facts of the case are that the assessee is an individual deriving income from business and salary. There was a search and seizure operation under section 132 of the Income-tax Act, 1961, in the group cases of AMR Constructions on December 16, 2008. Consequent to the finding of incriminating evidence during the course of search operation in .....

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notices under section 143(2)/142(1) of the Act requiring the assessee to file details/information, etc. However, the assessee did not furnish any information as called for nor was there any response from him. Therefore, the Assessing Officer proceeded to complete the assessment under section 144 of the Income-tax Act, 1961, for all the assessment years, i.e., the assessment years 2003-04 to 2006-07 making additions on account of (1) disallowance of interest claimed under the head "Business& .....

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inst the additions confirmed by the Commissioner of Income-tax (Appeals). Subsequently, the assessee, vide letter dated November 11, 2013, has filed revised Form 36A and has also filed the modified cross-objection No. 3 challenging the validity of the assessment under section 153A of the Act in the absence of any incriminating material found during the course of search and seizure operation. 3. At the time of hearing, the learned counsel for the assessee submitted that all the relevant facts are .....

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aise a legal ground at any stage of the proceedings including the appellate proceedings and the Tribunal is empowered to admit and adjudicate such ground, if and when it is raised before the Tribunal. 4. The learned Departmental representative, however, opposed admission of the additional ground and submitted that the assessee had not raised such ground either before the Assessing Officer who has initiated the proceedings or before the Commissioner of Income-tax (Appeals) and, therefore, the val .....

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. 3 and proceed to adjudicate the same as under. 5.1. We have perused the assessment order as well as the order of the Commissioner of Income-tax (Appeals) and we find that there is no recording by the Assessing Officer that any incriminating material has been found from the possession of the assessee during the course of search. Further, we also find that the additions made by the Assessing Officer are not on the basis of any incriminating material found during the course of search but are base .....

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s were not pending and had not abated, and that for all the years, time for issuance of notice under section 143(2) of the Act had also lapsed, the assessments cannot be made under section 153A of the Act. In support of his contention, the learned counsel for the assessee placed reliance upon the following judgments : (i) CIT v. All Cargo Global Logistics Ltd. reported in [2015] 374 ITR 645 (Bom) ; (ii) Ideal Appliances Co. P. Ltd. v. Deputy CIT (ITA. No. 173/Mum/2015, dated December 31, 2015) ; .....

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r section 153A of the Act on the basis of the material available before him at the time of assessments. In support of this contention, he has placed reliance upon the judgment of the hon'ble Supreme Court in the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2016] 380 ITR (St.) 80 (SC) ; [2015] 64 taxmann.com 34 (SC) ; (2) CIT v. Raj Kumar Arora [2014] 367 ITR 517 (All) and Gopal Lal Bhadruka v. Deputy CIT [2012] 346 ITR 106 (AP). 7. The learned counsel for the assess .....

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sions relied upon by the learned Departmental representative. In the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2016] 380 ITR (St.) 80 (SC), the hon'ble Supreme Court has only granted special leave petition against the ruling of the hon'ble Bombay High Court's finding that no addition can be made in respect of assessments which have become final if no incriminating material is found during search or during section 153A proceedings. It is seen that the hon& .....

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ng material was found and it was in these circumstances that the hon'ble High Court held that under section 153A of the Act, the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment. In the case of Gopal Lal Bhadruka v. Deputy CIT [2012] 346 ITR 106 (AP), the question before the hon'ble High Cour .....

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the above decisions are distinguishable from the assessee's case on facts. 8.2. As regards the decisions relied upon by the assessee, we find that the decision of the hon'ble Bombay High Court in the case of CIT v. All Cargo Global Logistics Ltd. [2015] 374 ITR 645 (Bom), is with regard to the correctness of the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. v. Deputy CIT reported in [2012] 18 ITR (Trib) 106 (Mum) [SB] and the hon'ble Bom .....

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f 2014, dated August 28, 2015) has summarised the legal position on the issue as under (page 589) : "Summary of the legal position On a conspectus of section 153A(1) of the Act read with the provisos thereto and in the light of the law explained in the afore mentioned decisions, the legal position that emerges is as under : (i) Once a search takes place under section 132 of the Act notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file r .....

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ce. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six assessment years 'in which both the disclosed and the undisclosed income would be brought to tax'. (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of th .....

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can be made. The word 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other mate .....

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