TMI Blog2017 (7) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri Sudhir Sehgal For The Respondent : Shri Ravi Sarangal, CIT DR ORDER PER BENCH. : This bunch of 12 appeals filed by different assesses is directed against the separate/consolidated orders of learned Commissioner of Income Tax (Appeals)(Central), Gurgaon all dated 28.08.2014 relating to assessment years 2005-06, 2006-07, 2007-08 and 2008-09. 2. Since the issues involved in all the appeals were common, the same were heard together and are being disposed off by this common order for the sake of convenience. 3. We shall be dealing with the facts in the case of ITA No. 927/Chd/2014. Briefly stated, search and seizure operations were conducted in the VTC group of cases, which included the above assessees, on 30.06.2010. Assessment under section 153A of the Income Tax Act, 1961 (in short the Act ) was framed making addition on account of deemed dividend under section 2(22)(e) of the Act. In appeal, the addition made was upheld by the Ld. CIT (Appeals). 4. Aggrieved by the same, the assessee filed the present appeal before us. 5. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs were pending and assessment had been made under section 143(1)/143(3) of the Act. We find that identical issue has been decided by the I.T.A.T., Chandigarh Bench in the case of M/s Mala Builders Pvt. Ltd. (supra) wherein it was held at paras 15 to 40 as under : 15. The issue before us is, whether in case of assessments framed under section 1 53A of the Act, addition could be made in the absence of any incriminating material in those years where no assessment proceedings were pending and assessment had been made u/s 143(1)/ 143(3) of the Act. 16. We are in complete agreement with the contention of the Ld. AR that the issue is no longer res integra in view of various decisions of the High Courts holding that completed assessments can be interfered with by the Assessing Officer while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 17. We find,that the issue first came up for consideration b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 153A/B/C of the Act and, therefore, where assessments were pending they would abate to enable the Assessing officer to assess the total income including undisclosed income, and where assessments or reassessments had been completed, they would not abate and the Assessing Officer would only reopen the completed assessments and include therein undisclosed income. The High Court went on to hold that such determination would be similar to orders passed in any re-assessment where the total income determined in the original assessment order and income that escaped assessment are clubbed together and assessed as total income. 19. The Bombay High Court in the case of CIT Vs. Continental Warehousing (supra) upheld the interpretation of the section by the Division Bench of the same Court in the case of Murli Agro (supra) and held that finalized assessments cannot be touched by resorting to the provision of section 153A and addition was to be made only on the basis of material unearthed during search, since 'search' and 'requisition' are the crucial words appearing in the substantive provision and proviso and they would throw light on the issue of applicabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as 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 AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 21. The Delhi High Court further reiterated the proposition laid down in Kabul Chawla (supra) in the case of CIT Vs. RRJ Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of the entire provision would lead to the conclusion that the word assess has been used in the context of abated proceedings and reassess has been used for completed proceedings which would not abate as they are not pending on the date of initiation of search or making of requisition. 23. We may add that that the requirement of the section is limited to opening or reopening of the cases for the purpose of making assessment or reassessment of the total income of preceding six assessment years prior to the year of search. It does not contain any provision regarding the concept of making assessment of undisclosed income as was there in the earlier Block assessment regime under chapter XIVB. It does not specifically contain any provision regarding the nature of addition which can be made under this section. The section has provided, for the removal of doubts, by way of insertion of Explanation at the end of the section that save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to assessment made under this section. This implies that nature of assessment or reassessment made under this section shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upholding the proposition that no addition can be made in the absence of incriminating material in the case of completed assessments under section 153A of the Act. 28. The next argument of the learned D.R. was that if addition under section 153A of the Act is to be restricted to the extent of incriminating material found/undisclosed income (term used by the learned D.R.) there would be no difference between the procedures prescribed under the Block assessment regime prescribed in chapter XIV and the current search assessment proceedings under section 153A and the very purpose of introducing the new procedure to do away with controversies relating to undisclosed income, would be defeated. We find no merit in this contention of the learned D.R. also since, the restriction of addition under section 153A of the Act to the extent of incriminating material found, is to be made only in the case of completed assessments or re-assessments, which do not abate under section 153A of the Act. There is therefore no similarity between the assessment procedures prescribed under Block assessment regime and the current procedures u/s 153A/B/C/D of the Act. Moreover, by prescribing one assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3)/ 143(1) of the Act, the total income , is not assessed is misplaced. What section 153A of the Act prescribes is that where assessments are completed, they shall be reopened, incomes relating to incriminating material found during the search determined and added to the already assessed income and thus total income computed. Thus, restricting the addition made to the extent of incriminating material would not mean, that total income is not determined. 32. As for the reliance placed by the learned D.R. on the decisions against the proposition, we agree that there are divergent views of the High Courts on this issue, but as stated above we uphold the view favouring the assessee in view of the apex court decision in case of Vegetable Products Ltd.(supra). Further we may add that the Hon ble Delhi High Court, in its decision rendered in the case of Kabul Chawla (supra),has dealt and distinguished most of these decisions primarily by finding that those decisions dealt with the fact situation where material had been unearthed during search and therefore could not apply in situations where no material was found during search. 33. The Ld. DR further contented that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial discovered during search be treated as evidence found during search . The relevant findings of the coordinate Bench at para 23 (ii) is as follows: (ii) Any statement recorded during the course of search cannot on a standalone basis without reference to any other material discovered during search and seizure operation would empower the Assessing Officer to make the addition. The words evidence found as a result of search would not take within its sweep statement recorded during search and seizure operations. Therefore, the Revenue's stand that the addition u/s 153A can be made in respect of share capital on account of statement of Shri Tarun Goyal and Shri Anu Aggarwal cannot be accepted. 36. In view of the above the stand of the Revenue that the statement of Sh. Kishan Kumar Goyal constituted incriminating material for the purpose of making disallowance of interest on housing loan u/s 153A cannot be accepted. 37. In view of the above we hold that in the absence of any incriminating material found during the course of search and the assessment proceedings having not abated at the time of search, the assessing officer has no jurisdiction to make the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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