TMI Blog2016 (10) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... ue stood concluded with the assessee’s return of income being accepted u/s.143(1) of the Act prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section which time limit as per the law prevailing on the date when the Assessee filed return of income i.e., 30.10.2007, would expire on 31.12.2008. Such assessment u/s.143(1) of the Act did not abate on the date of search which took place on 15.1.2009. In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings u/s.153A of the Act has to be confined only to material found in the course of search. Since no material whatsoever was found in the course of search, the question of allowing additional depreciation or not could not have been subject matter of proceedings u/s 153A of the Act. Consequently, the CIT in exercise of his powers u/s.263 of the Act ought not to have or could not have directed examination of the said issue afresh by the AO. - Decided in favour of assessee. - ITA (SS) No. 58/Kol/2013 - - - Dated:- 19-10-2016 - Shri N. V. Vasudevan, J.M. And Shri M. Balaganesh, A.M. Assessee by : A. K. Tibrewal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed with the A/R at length. It is emphasized that dumpers, tippers etc. which are used by the assessee firm are to be considered as Heavy Vehicles or Earth Moving Machinery instead of considering it as Plant Machinery. A copy of relevant part of the submission is reproduced hereunder:- With regard to your query of claim of higher rate of depreciation on Dumpers, Tippers etc instead of prescribed depreciation rate on plant Machinery- At the very outset reference be drawn to nature of business activities of the assessee and nature of transportation used. As a matter of fact the machinery and vehicles involved are either heavy vehicles or earth moving machinery. The case is fully covered by following cases decided by various courts wherein upon similar facts it was held by courts that the assessee is eligible for higher rates of depreciation. Commissioner of Income-tax, Cochin v. Gaylord Construction s(2010) 190 Taxman 406(Ker.) Commissioner of Income-Tax v. Devi Enterprises [2001] 118 Taxman 158 (Mad.) Commissioner of Income-tax v. Popular borewell Service [1992] 194 ITR 12 [Mad.] It is stated that the assessee has claimed proper deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation Schedule for the present year furnished along with Form No.3CD, reveals that depreciation on Dumpers, Tippers etc which are brought forward from earlier years and are put to use prior to 1st day of April 1999 are claimed @ 30%, by treating them as Commercial Vehicle on the ratio as laid down in the decisions of Appellate Authorities mentioned in their submission. Depreciation on the said assets has been claimed @ 30% in subsequent years also kipping parity of the claim as per schedule. However, the assessee has itself claimed depreciation on dumpers and trippers @ 15% by considering it as plant Machinery in respect of additions made on such items during the current year. It is seen during the year the assessee firm has claimed additional depreciation @ 20% and question was put to explain the reason for such additional depreciation. The A/R has drawn attention to the submission given in the A.Y 2009-2010 in this respect, wherein the claim of additional depreciation on the newly purchased assets has been explained. Therefore, in light of the facts as narrated above and considering the documents filed by the assessee in support of its claim as also the settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.10.2007 duly self assessed u/s. 140A by the assessee. This was processed u/s.143(1)(a) checking only arithmetical errors and claims in respect of incomes and taxes and 143(1) (a) assessment by the AO as he is precluded from any application of mind as per law. This can be done only u/s.143(2) /142(1). Therefore, what was on record was only self assessment of income done by the assessee u/s.140A of the Act. The premises of the assessee were searched on 15.01.2009 with seizure of books and documents for various years,including for this A. Y. 2007-08 and notices u/s.153A were issued. For this year, the assessee filed a letter that the original e-return may be treates as return u/s.153A. Therefore, till stage there existed only returns filed u/s.139(1)/153A duly self assessed u/s.140A by the assessee himself. Within the meaning of section 153A the AO had not made any assessment or re-assessment in this case till the date of search u/s.132. The first assessment proceedings were commenced for this year by issue of notice u/s.143(2)/142(1) r.w.s. 153A, resulting in the first and only assessment order u/s.143(3)/ 153A dated 31.12.2010. The said assessment order become final as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to additional depreciation. In this regard our attention was drawn to a decision of the Hon ble Kolkata High Court in the case of CIT vs. G.S Atwal reported at 128 Taxman 520(KOL) in the aforesaid decision the Hon ble High Court after considering the decision of the Hon ble Supreme Court in the case of Lucky Minmat reported at 245 ITR 830(SC) held that activity of mining coal is an activity of production of coal and the assessee is entitled to investment allowance. Ld. Counsel also placed reliance on the decision of the Hon ble Delhi High Court in the case of Anil Kr. Bhatia (infra) for the proposition that without incriminating material no addition can be made in assessment u/s. 153A of the Act. 9. Ld. DR placed reliance on the order of the CIT and submitted that since the return of income originally filed by the Assessee u/s.139(1) of the Act were accepted in proceedings u/s 143(1) of the Act, there was no occasion for the AO to investigate the question regarding grant of additional depreciation. Therefore, in proceedings u/s.153A of the Act, the AO could go into the question regarding grant of additional depreciation. Since, the AO has jurisdiction to decide the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which a search was conducted and, therefore, under these circumstances the Assessing Officer was duty bound to assess or reassess total income of such assessment years, and, therefore, the impugned additions were justifiably made in the assessment made under section 143(3) r.w.s. 153A(1) of the Act. 11. We shall first examine the scope of the proceedings u/s.153A of the Act. The Hon ble Delhi High Court in the case of CIT Vs. ANIL KUMAR BHATIA [2013] 352 ITR 493 (Delhi).The Honourable Delhi High Court in the case of Anil Kumar Bhatia (supra) after examining the scheme of Sec.153A of the Act explained the provisions as follows: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would 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 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid sub-section on the date of initiation of the search under Section 132, the said proceeding shall abate. If such proceedings are already concluded by the assessing officer by initiation of proceedings under Section 153A, the legal effect is the assessment gets reopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. 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. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search 14. In the light of the above ruling of the Special Bench, if an assessment is completed prior to initiation of search u/s.132 of the Act and therefore does not abate under the second proviso to Sec.153(1) of the Act and if in the course of search of the Assessee initiation after the completion of the Assessment, no incriminating material is found regarding a particular item of income, then in the assessment to be done u/s.153A of the Act, the AO cannot make an assessment of such income. 15. It is no doubt true that the Hon ble Karnataka High Court in the case of Canara Housing (supra) has not accepted the ruling of the Special Bench in the case of Alcargo logistics (supra). The Hon ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation ITA No.523/2013 judgment dated 21.4.2015 after referring to the decision of the Hon ble Delhi High Court in the case of Anil Kumar Bhatia (supra) and of the Hon ble Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X
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