TMI Blog2017 (2) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... account prior to the search, additions in respect of such transactions are beyond the scope of assessments to be made under section 153A of the Act and the AO is not empowered to do so. Therefore, in our view, the AO in the case on hand was not empowered by law to make the additions of LTCG treated as bogus cash credit and consequent bogus commission, in the post search assessment as the same was already admittedly disclosed in the original return of income filed for A.Y. 2006-07 which was assessed under section 143(1) of the Act on 25.09.2007 before the search took place on 13.10.2010. Thus AO did not have the power to make the impugned additions of (i) LTCG treated as unexplained cash credits and (ii) Bogus commission expenditure in the absence of any incriminating evidence, documents or material found in this regard in the course of search of this assessee and that consequently, both the aforesaid additions are beyond the scope of the provisions of section 153A of the Act. - Decided in favour of assessee - ITA No. 4962/Mum/2014, CO No. 76/Mum/2016 - - - Dated:- 23-11-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search. In that view of the matter, the learned CIT(A) annulled the additions made in the order of assessment for A.Y. 2006-07 passed under section 143(3) r.w.s. 153A of the Act; thereby allowing the assessee s appeal on ground of appeal No. 4 raised by the assessee challenging the validity of the additions in assessment made for A.Y. 2006-07 vide order dated 25.03.2013. 4.1 Aggrieved by the order of the CIT(A)-39, Mumbai dated 30.05.2014 for A.Y. 2006-07, Revenue has preferred this appeal raising the following grounds: - 1. Whether On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition of ₹ 34,49,139/- on account of unexplained cash credit u/s. 68 treating the LTCG as bogus. 2. Whether On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition of ₹ 1,72,107/- on account of unaccounted expenditure towards commission paid on bogus capital gains. 3. Whether On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred that assessment completed u/s. 143(3) r.w.s. 153A is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO in the regular assessment completed under s. 143(1) on 25-9-2007. b) It is submitted that the Legislature requires pending assessment proceedings to abate and only such years for which proceedings are abated, may be treated as normal assessment proceedings. For other years, addition can be made only on the basis of incriminating documents found as a result of search on the assessee. Section 153A refers to a pending assessment or re- assessment and not assessment order . The assessment may not be pending, even though there is no formal assessment order under section 143(1)(a). The moment the return is fled and acknowledgement or intimation is issued, the proceedings initiated by filing the return are closed, unless they are again triggered by issuing notice under section 143(2). Even in a case where notice under section 143(2) is not issued, though time period for issuing such notice is available, it cannot be said that any proceeding is pending. The notice under section 143(2) only initiates another proceeding called as regular assessment proceeding. The issuance of notice under section 143(2) is discretionary and not mandatory. Therefore, mere availability of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that completed assessments do not adate. There can not be two assessment for the same assessment year. Assessments which are not pending before the AO on the date of search but are pending before an appellate authority will survive. An assessment can be said to be 'pending only if the AO is statutorily required to do something further. If a notice u/s. 143(2) has been issued, the assessment is pending. However, the assessment in respect of a return processed u/s. 143(1) is not pending because the AO is not required to do anything further about such a return. The power given by the 1st Proviso to assess income for six assessment years has to be confined to the undisclosed income unearthed during search and cannot include items which are disclosed in the original assessment proceedings. As the returns had been processed u/s. 143(1)/assessments made u/s. 143(3), the assessment were not pending and as no material was found during the search, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the search. The law mandates that only pending assessment proceedings abate and it is only those years in which proceedings have abated that are to be treated as normal assessment proceedings. For other years, where assessment proceedings have not abated the AO is empowered to make additions only on the basis of evidence, material, information or incriminating documents found in the course of search on an assessee. If as on the date of search, no proceedings are pending for any assessment year and the concerned transactions have been disclosed in the regular books of account prior to the search, additions in respect of such transactions are beyond the scope of assessments to be made under section 153A of the Act and the AO is not empowered to do so. Therefore, in our view, the AO in the case on hand was not empowered by law to make the additions of LTCG treated as bogus cash credit and consequent bogus commission, in the post search assessment as the same was already admittedly disclosed in the original return of income filed for A.Y. 2006-07 which was assessed under section 143(1) of the Act on 25.09.2007 before the search took place on 13.10.2010. 6.3.4 The learned CIT(A), i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of All Cargo Global Logistics Ltd. Vs. DCIT 137 ITD 287 has held, on the subject matter, as under:- a) In assessments that, are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him under s. 153A for which assessments shall be made for each of the six assessment years separately; b) In other cases, in addition to the income that has already been assessed, the assessment under s. 153A will be made on the basis of incriminating material, which in the context. of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 10. In view of the above discussion, following the decision of the Special Bench (of the Hon'ble Mumbai Tribunal in the case of All Cargo Global Logistics Ltd. v. Deputy CIT 18 ITR 106(Mumbai (SB), it is held that in the instant case the Assessing Officer did not have the power to make the impugned addition in absence of any incriminating material. Therefore it follows that both the additions made by the Assessing Officer are bey ..... X X X X Extracts X X X X X X X X Extracts X X X X
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