TMI Blog2016 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai for the assessment year 2001-02 passed against the assessment framed by the AO u/s 143(3) r.w.s. 153A of the Income Tax Act (hereinafter called the Act). 2. The grounds raised by the assessee are as under:- On the facts and in the circumstances of the case he ld. CIT(A) has erred in law in confirming the addition of ₹ 2,25,00,000/- made by the AO on disbelieving gift received by the appellant 3. The assessee has also taken additional ground as under : ADDITIONAL GROUND OF APPEAL 3.1 The assessing officer ( the A.O ) erred in initiating reassessment proceedings and framing assessment of the Appellant by invoking the provisions of Section 143(3) r.w.s.153A of the Income tax Act, 1961 [ the Act ]. 3.2 While doing so, the A.O. failed to appreciate that the addition made was beyond the scope of assessment under section 153A of the Act. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, the initiation as well as completion of the assessment proceedings were bad, illegal and void. 4. At the outset, the ld.AR for the assessee drew our attention to the application dated 18.11.2011 filed by the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me returned by the assessee was assessed and attained finality. Thereafter a search and seizure action was carried out under section 132 of the Income Tax Act, 1961 on Sumer Group of cases including the assessee on 6.1.2006. Accordingly, notice u/s 153A was issued on assessee on 20.8.2007 to file returns for six assessment years prior to the year of search including the year under consideration which was complied by the assessee by filing return on 27.11.2007 declaring a total income of ₹ 7,17,610/- the same income as filed in the original return of income. During the course of assessment in search proceedings, the AO, on perusal of the capital of the assessee for the financial year 2000-01 found that the assessee had received a sum of ₹ 2,25,00,000/- from Mr N. K. Rajgharia and asked the assessee to prove the identity and creditworthiness of the donor and genuineness of the transaction. Disbelieving the explanation of the assessee the AO added the same to the total income of the assessee as income from other sources u/s 68 of the Act while framing the assessment u/s 143(3) read with section 153A of the Act vide order dated 3.10.2008 by assessing the total income at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Shri N. K. Rajgharia on 6.6.2000 which the assessee could not prove to be genuine and identity of the creditor could not be proved and genuineness of the transaction could not be established and therefore the AO rightly added the same u/s 68 of the Act and there was no need of any incriminating document or material in order to make said addition. The ld. DR heavily relied on the decision in the case of Satish L Babladi V/s DCIT in ITA No.1732 and 2109/Mum/2010 Assessment Years: 2004-05 2006-07 order dated 19.3.2013 and prayed that the orders of authorities below be confirmed by dismissing the appeal of the assessee. 10. In the rebuttal, the ld.AR argued that the case law relied upon by the ld. DR, of Satish L Babladi (supra) has been considered and distinguished by the decision of the Co-ordinate Bench of the Tribunal in the case of Jignesh P Shah (supra) as referred to and relied upon by the assessee and therefore need not be taken into consideration for adjudicating the issue as the issue is covered by the jurisdictional High Court and by the Hon‟ble Apex Court. 11. We have considered the rival submissions and perused the material placed before us including the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where it effects a search and seizure. That search and seizure is effected and after the same is effected, books of account, other documents, money, bullion, jewellery or other valuable article or thing is found as a result thereof that notwithstanding anything and within the meaning of the above provisions having been concluded, it is open for the revenue to make an assessment. It is also open to the revenue to make a reassessment in cases where it exercises the powers to requisition books of account etc. This is because it is of the view that the books of account are required to be summoned or taken into custody. It, therefore, issues a summons in that regard. It may also requisition the books of account or other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income-tax Act, 1922 or the Income-tax Act of 1961 by any person from whose possession or control they have been taken into custody. This is when the authorities have reason to believe that such powers need to be exercised. Therefore, the fetters and which are to be found in other provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the independent assessment order under section 153A read with section 143 (3) could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under section 153A establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. If there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings, the Assessing Officer while passing order under section 153A read with section 143(3) cannot disturb the assessment order [Para 28] The stand of revenue that these observations are made in passing or that they are not binding on instant Court is not agreeable because the essential controversy before the Bench was somewhat different. Revenue urged that was only in relation to the legality and validity of the order of the Commissioner under section 263. Had that been the case, the Division Bench was not required to trace out the history of section 153A and the power that is conferred thereunder. When the revenue argued before the Division Bench that the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record.[Para 31] Further, revenue would submit that the above observations and conclusions of the Special Bench are specifically disapproved in CIT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453 (Delhi). However, this argument is not found to be accurate. Upon reading of the observations of the Delhi High Court as a whole and in entirety, it is not possible to agree with revenue that the High Court of Delhi reached a conclusion different than the view taken by the Division Bench.[Para 35] In this case the revenue has filed Special Leave Petition before the hon‟ble Supreme Court [2015] 64 taxmann.com 34 (SC), dated 12.10.2015, which has been granted as under : Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Infrastructure facility) - High Court by impugned order held that ICDs and CFSs are infrastructural facility entitled to deduction under sub-section (4) of section 80-IA - Whether Special Leave Petition filed against impugned order was to be granted - Held, yes [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 13. In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80HHC was erroneous. In such a case, the A.O. while passing the assessment order under Section 153A read with Section 143(3) could not have disturbed the assessment order finalised on 29.12.2000 relating to Section 80HHC deduction and consequently the C.I.T. could not have invoked jurisdiction under Section 263 of the Act. In the case of Jignesh P Shah (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within 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 .. 8. From the perusal of the aforesaid provision, it is evident that, where search has been initiated u/s 132 or requisition has been made under section 132A, it is incumbent upon the assessing officer to issue notices requiring the person searched to file return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year in which search is conducted. The assessing officer has to assess or reassess the total income in respect of each assessment year falling within six assessment years. Thus, it is statutory mandate upon the assessment officer to assess or reassess the total income on which a person can be said to be assessable under the provisions of the act. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal, revision or rectification pending against finalised assessments/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A,the aassessments/ reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). 11. In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for the assessment year 1998-99 was finalised on 29-12-2000 and search was conducted thereafter on 3-12-2003. Therefore, in the facts of the present case, ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment orders determining the total income of the assessee for the said assessment year and therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under s.153A of the Act that would be the assessment for the said year. 23. The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which 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 such cases, where the assessment already stands completed, the AO can reopen the assessments or reassessment already made without following the provisions of ss. 147, 148 and 151 of the Act and determine the total income of the assessee. 24. The argument raised by the counsel for the appellant to the effect that once a notice under s. 153A of the Act is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. 25. In the firm opinion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Accordingly, the addition on account of deemed dividend of ₹ 1,69,68,750/- in the A.Y. 2002-03 and addition of ₹ 4,62,91,123/- on account of deemed dividend u/s 2(22)(e) is deleted as same is beyond the scope of assessment u/s 153A. The additional ground thus raised by the assessee is allowed. In view of the finding given here-inabove, we are not going into the merits of the addition as discussed by the AO as well as Ld. CIT(A), as they have become purely academic. 12. In the result, appeal filed by the assessee for both the assessment years are allowed. 12. Respectfully following the ratio laid down by the jurisdictional High Courts we hold that the addition made qua the gift received by the assessee de hors any material found during the course of search, cannot be roped in the assessment made under section 143(3) r.w.s. 153A of the Act by the AO. The decision of Mumbai Tribunal in the case of Satish L Babladi (supra) has been examined by us and it is seen that the Tribunal has strongly relied upon the decision of Hon‟ble Delhi High Court in the case of CIT V/s Anil Kumar Bhatia reported in (2013) ITR 493 (Delhi), the Hon‟ble High Court with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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