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2017 (2) TMI 724 - GUJARAT HIGH COURT

2017 (2) TMI 724 - GUJARAT HIGH COURT - [2017] 394 ITR 184 - Addition made under Section 153 A - validity of assessment - Held that:- The search conducted was on 10.02.2006. The assessment for AY 200405 was framed on the basis of material already on record much prior to the search conducted on 10.02.2006. It was a scrutiny assessment under Section 153 A of the Act and on the basis of the material on record, the assessment was framed for AY 200405. On the basis of some incriminating material foun .....

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: Mr. S. N. Soparkar, Ld. Counsel with MR B S SOPARKAR, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. As common question of law and facts arise in this group of appeals, they are disposed of by this common judgment and order. 2.0. Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal, C Bench, Ahmedabad, passed in IT (SS) A Nos. 138 to 141/AHD/2011 for AY 200102 to 200405, by which, the learned Tr .....

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rch could be brought to tax ? B. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the scope of Section 153 A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income that comes to the notice of the Assessing Officer ? C. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in limiting the scope of Section 153 A only to undiscl .....

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s initiated by the Assessing Officer by issuing notice under Section 153(A)(a) of the Act. That on the basis of the incriminating material seized by the department for the period of AY 200405 onwards, the Assessing Officer made the addition for AY 200001 to 200405. On the basis of the material collected during the search conducted on 10.02.2016, the Assessing Officer denied the capital gain claimed by the assessee and directed to made addition treating the income as business income. Feeling aggr .....

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0 ITR 573 (Delhi) and having observed that no incriminating material was found with respect to the AY 200001 to 200405, at the time of search, which was conducted on 10.02.2006 and therefore, the Assessing Officer was not justified in making the addition and by holding that only undisclosed income and undisclosed assets deducted during the search could be brought to tax and consequently has directed the AO to delete the addition made while passing the assessment order under Section 153 A of the .....

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ssessments by holding that only undisclosed income and undisclosed assets detected during the search could be brought to tax ? B. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the scope of Section 153 A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income that comes to the notice of the Assessing Officer ? C. Whether on the facts and in the circumstances of .....

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learned counsel for the Revenue and Shri S.N. Soparkar, learned counsel for the Assessee. At the outset, it is required to be noted that dispute is with respect to block assessment under Section 153 A of the Act for the AY 200001 to 200405. It is required to be noted that search was conducted on 10.02.2006. On the basis of the search conducted on 10.02.2006, some incriminating material was detected / found for the period of AY 200405 onwards for the assessment block period under Section 153 A we .....

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osed assets detected during the search could be brought to tax. Therefore, the short question which is posed for consideration of this Court is whether the learned Tribunal is justified in holding so ? 4.0. Identical question came to be considered by the Division Bench of this Court in the case of Principal Commissioner of Income Tax2 vs. Jay Infrastructure and Properties Pvt Ltd rendered in Tax Appeal No. 740 of 2016 and considering the earlier decision of the Division Bench in the case of Prin .....

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n a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year re .....

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sclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment .....

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iso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessmen .....

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e heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, w .....

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rial is found, as held by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed duri .....

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is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to .....

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pondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of Incometax1 v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions .....

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