TMI Blog2016 (8) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... dy 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. Sh Goyal admitted that certain incriminating documents relating to various investment companies, excess cash and jewellery was found at his residence. Admittedly there is no reference in the statement to any document found, which revealed that the assessee had wrongly claimed interest on loan taken for his house property, which was the only disallowance made in the assessment order passed u/s 153A for the impugned year. Moreover we find that the disallowance was made for want of evidence and not on the basis of any incriminating material found during search. Further we find that the statement is general with no reference to any specific document or asset found during search and the assessee has admittedly surrendered ₹ 11 crore on account of the same and paid taxes thereon. The statement therefore cannot be stated to be incriminating material for the purpose of disallowing interest on housing loan. In view of the above the stand of the Revenue that the statement of Sh. Kishan Kumar Goyal const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder rule 11 of the Income Tax Appellate Tribunal Rules. We find that the ground raised before us is a legal ground which can be decided on the basis of material and facts available on record and therefore in view of the decision of the Apex Court in NTPC Ltd. Vs CIT (1998) 229 ITR 383, the same is admitted for adjudication. 4. We shall now proceed to adjudicate the common ground raised before us. For the sake of convenience, the case of Mala Builders Pvt. Ltd. Vs. ACIT, Central Circle-II, Chandigarh in ITA No.433/Chd/2014 pertaining to assessment year 2004-05, is being taken as the lead case. 5. At the outset, it may be stated that this case was earlier dismissed for non-prosecution but was recalled on a Miscellaneous Application filed by the assessee vide order dated 18.09.2015 and re-fixed for hearing. In pursuance to the same, the present case was heard. The facts relating to the case are that the assessee filed its return of income under section 139 of the Income Tax Act, 1961 (in short 'the Act') on 29.6.2004, declaring an income of ₹ 2,89,220/-. The returned income was accepted under section 143(1) of the Act as no notice under section 143(2) of the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating material relating to the impugned years was found, no addition could be made to the income of the assessee u/s 153A of the Act. Reliance was placed on the following decisions by the learned counsel for the assessee : 1. CIT Vs. M/s Murli Agro Products Ltd. ITA No. 36 of 2009 (Bom). 2. CIT Vs. Continental Warehousing Corporation, (2015)374 ITR 645(Bom). 3. CIT Vs. Kabul Chawla, 61 Taxmann.com 412 (Delhi). 4. Jai Steel (India) Vs. ACIT, (2013) 259 CTR 281 (Raj). 5. M/s Times Finvest Commerce Ltd., ITA No.541/Chd/2014, dated 08.12.2015 10. Shri Sudhir Sehgal, learned counsel for the assessee belonging to the Heera Moti Group, in his arguments, reiterated the above contentions and further drew our attention to several other judgments of High Courts and I.T.A.T. on this issue. The learned counsel for the assessee also placed reliance on the decision of the Hon'ble Punjab Haryana High Court in the case of CIT (Central), Gurgaon Vs. M/s Brinsar Foods Pvt. Ltd. In ITA NO.192-204-224-225-2015 Dt.03-08-2015 11. The learned Departmental Representative, Shri Manjit Singh, on the other hand, argued at length drawing our attention to several aspects of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d discussed primarily for the reason that the conclusion therein was against all principles of statutory interpretation. That clause (iv) of the judgment stating it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of seized material was borrowed from the judgment in the case of CIT Vs Chetan Dass Lachman Dass, 254 CTR 392, which was clarified in Filatex India Ltd., 49 Taxmann.com 461, as being merely clarificatory that the assessment under section 153A emanates and starts on the foundation of search. 10) That wherever the Legislature deemed fit, it carried an exception to the rigours of section 153A as in the third proviso to the section and therefore there was no scope to read/interpret the section in the likewise manner in the absence of clear language to this effect. 11) That even on facts there was incriminating material, being statement recorded undersection 132(4) by the Assessing Officer of Shri Krishan Kumar Goyal of Modern Group of cases, wherein he had admitted that incriminating documents were found and, in pursuance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 before the High Court of Bombay in the case of CIT Vs. M/s Murli Agro Products Ltd. (supra), wherein on the issue of exercise of revisionary powers by the Commissioner of Income Tax u/s 263 of the Act, on the order passed by the Assessing Officer under section 153A, it was contended by the Revenue that the impugned order was erroneous and prejudicial to the interest of the Revenue since the Assessing Officer had only determined the undisclosed income and not the total income which is the mandate of section 153A .The Hon'ble High Court, while adjudicating the issue, dealt at length with the purpose of introduction of the new search assessment procedures, as against the earlier block assessment procedures and then went on to interpret the proviso to section 153A(1) , and held that it is only pending proceedings which are abated on initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alized 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 applicability of the provision. The Court upheld the understanding of the legal provision of section 153A by the Special Bench in the I.T.A.T. in this case and further held that the Delhi High Court had in the case of Anil Kumar Bhatia also reached to the same conclusion. It also referred to the judgment of the Karnataka High Court in the case of Canara Housing Development Co. Vs. DCIT (2014) 49 TAxmann 98 and stated that even as per that judgment, the scope of enquiry in search carried under section 153A had to essentially revolve around search or requisition under section 132A of the Act. 20. In the case of Kabul Chawla (supra), the Delhi High Court after considering various decisions of High Courts, summarized the legal position in paragraph 37, which is reproduced below : 37. On a conspectus of Section 153A(1) of the Act, read with the provisos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Securities, 380 ITR 612 and Pr. CIT Vs. Lata Jain in ITA No.274/2016 dt.29-04-2016. 22. On going through the above judgments, we find that the reason for upholding the proposition that addition u/s 153A, in case of earlier completed assessments, can be made only on the basis of incriminating material found during search or requisition is that: 1. Assessment u/s 153A can be framed only in cases where a search is initiated u/s 132 or Books of Accounts, other documents or any assets are requisitioned u/s 132A of the Act. Moreover notices u/s 153A(1)(a) can be issued and income assessed or reassessed of six years preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Thus the crucial words search and requisition appear in the substantive provision and the proviso, which throws light on the issue of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be governed by the normal provisions of the Act. In case it is an assessment made for the first time, all provisions of assessment which are applicable to assessments made u/s 143(3) shall apply and in case it is a reassessment being made all principles of reassessment which are applicable in case of proceedings u/s 147/148 shall become applicable. Thus in cases where assessments have already been made addition to be made in proceedings u/s 153A is to be restricted to incriminating material found if any. 24. It is amply evident from the above that the issue is settled, with a number of decisions of the High Courts holding that in the case of completed assessments, no addition can be made in the absence of any incriminating material. Though we do agree that there are decisions of High courts which hold otherwise and state that u/s 153A , addition in case of completed assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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/s153A/B/C/D of the Act. Moreover, by prescribing one assessment for each of the six years, covered under search, the Legislature has done away with the requirement of making assessment only of undisclosed income prescribed in the earlier block assessment requirement, and thus doing away with consequent litigation regarding the same. 29. The learned D.R. further argued that even the Circular outlying the objective behind bringing the present search assessment procedures stated that the assessee shall assess/reassess total income for each of the six years. The learned D.R. stated that the mandate of the current requirement was to assess the total income, hence, it cannot be restricted to the extent of incriminating material only. 30. We find that the meaning of the word total income in the context of completed assessment was interpreted by the Delhi High Court in the case of Anil Bhatia(supra), wherein in para 21, the Court held that in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 the statement of Sh. Kishan Kumar Goyal which was recorded during the course of search conducted on the Modern Group, constituted incriminating material. As per the Ld. DR, in the statement, Sh. Kishan Kumar Goyal admitted that incriminating documents relating to various investment companies, excess cash and jewellery were found. The assessee in consequence thereof had surrendered additional income of ₹ 11 crores . 34. The statement referred to by the Ld. DR is reproduced as under: Q.3 Do you want to say anything else further? Ans. During the course of search operation certain incriminating documents relating to various investment companies, excess cash jewellery were found at my residence. In this connection I would like to offer additional income to the tune of ₹ 11 crore (Rupees eleven crore only) to avoid litigation with the departments, over and above the income of my family and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A 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 addition u/s 153A of the Act. 38. This ground of appeal of the assessee is therefore allowed. The additions made in the order u/s 153A/143(3) are accordingly deleted. 39. Since the jurisdiction of the Assessing Officer to make addition under section 153A has been held to be not as per law, we do not find any need to decide the other grounds raised by the assessee on merits. 40. The appeal of the assessee is therefore allowed. 41. Since the issue involved and facts being identical in all the remaining appeals and Cross objections which were heard together, the decision rendered hereinabove will apply to all the appeals and Cross objections with equal force. Hence, all the appeals Cross objections of the assessee are, therefore, allowed and all the additions are deleted. 42. In some years, the Departmental appeals are also filed. In view of findings that no addition can be made in assessment orders u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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