TMI Blog2017 (4) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... s 153A of the Act. Consequently, the said various additions made in the orders of Assessment ought not to have or could not be made by the AO. Gr.No.1 raised by the Assessee in both the appeals are accordingly allowed. - I.T.(SS)A Nos. 97 & 98/Kol/2015 - - - Dated:- 19-4-2017 - Dr. Arjun Lal Saini (Accountant Member) And N. V. Vasudevan (Judicial Member) For the Appellant : Sajjan Kumar Tulsiyan, Advocate For the Respondent : Niraj Kumar, CIT(DR) ORDER N. V. Vasudevan (Judicial Member) These are appeals by the Assessee against two orders both dated 12.05.2015 of C.I.T.(A)-21, Kolkata relating to A.Y.2006-07 2007-08. 2. First we shall take up for consideration the preliminary issue raised by the assessee with regard to the jurisdiction of the AO to make the impugned addition in assessment completed u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 (Act), in the light of the admitted fact that no incriminating documents whatsoever was found/seized during the search operation u/s 132 of the Act. 3. The grievance of the assessee in this regard are projected in ground no.1 raised by the assessee in both the appeals. The grounds raised in this regard a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and also denied having deposit any amount therein. The Assessee requested the AO to provide her with a copy of the records based on which the AO claimed that the said bank account and deposit therein belonged to and was made by the Assessee. The AO issued summon U/S 131 of the Act to the Assessee. The Assessee was examined by the AO. The AO also provided to the Assessee copies of the documents of the alleged bank account which according to the Assessee consisted of two sheets of non certified/unattested paper. According to the Assessee though the covering letter enclosing the bank statement was signed by the AO, the two sheets of enclosures being the detail of the alleged bank account was neither signed nor certified by the Income Tax Department or the AO. The Assessee insisted for authentication of the documents for her to proceed with the matter. Further the Assessee also informed the AO that since the contents of the documents were in a foreign language not known to the Assessee or her family members or immediate relatives, a translated copy of the same in Hindi or English be provided to her. According to the Assessee, she thought it fit not to get the document translated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of this order. 11. The ld. Counsel for the assessee pointed out that with reference to the return of income filed by the assessee for A.Y.2006-07 and 2007-08 u/s 139 of the Act on 12.12.2006 and 27.02.2008 respectively the AO did not issue any notice u/s 143(2) of the Act within the time required under the proviso u/s 143(2) of the Act namely 30.09.2007 for AY.2006-07 and 30.09.2008 for A.Y.2007-08. It was the submission that on the expiry of the aforesaid period for issue of notice u/s 143(2) of the Act, the assessment for A.Y.2006-07 and 2007-08 are deemed to have been concluded. It was further brought to our notice that the search was conducted in the case of the assessee on 28.07.2011 and 23.09.2011 and in the course of such search no incriminating documents whatsoever was found with regard to HSBC account in Switzerland. It was submitted by the ld. Counsel for the assessee that the scope of the assessment proceedings u/s 153A of the Act in respect of an assessment which has already been completed is restricted only to making an assessment of income which are based on incriminating material found during the course of search. In other words, it was submitted that the AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment or reassessment out of the said six years is pending on the date of initiation of the search, the same would abate, i.e. pending proceeding qua the said assessment year would not proceed thereafter and the assessment has to be made under section 153A(1)(b) of the Act read with the 1st Proviso thereunder. As regards the other years for which assessments have already been completed and the assessment orders determining the assessee's total income are subsisting at the time when the search or requisition is made, the scope of assessment under section 153A is limited to reassess the income of the assessee on the basis of incriminating material found during the course of search. 10. At the time of hearing before us, the Id. D.R. has contended that the Processing of returns of income filed by the assessee as made by the Assessing Officer under section 143(1) could not be regarded as assessment and it is, therefore, not a case where the assessments for both the years under consideration could be said to have been completed. He has also contended that the conclusion of such alone is sufficient to give jurisdiction to the Assessing Officer to proceed against the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reached finality, assessment under section 143(3) read with section 153(3) has to be made as was originally made and in a case certain incriminating documents were found indicating undisclosed income, then addition shall only be restricted to those documents/incriminating material. 11. Keeping in view the discussion made above, we hold that the additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to' support and substantiate the said addition. The said additions made for both the years under consideration are, therefore, deleted allowing the relevant grounds of the assessee's appeals. 12. It was pointed out that in the aforesaid decision which are identical to the facts of the assessee s case this tribunal took the view that the additions made to the total income of the assessee on account of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments are shown as completed assessments on the date of initiation of action u/s 132. Further and very importantly, in relation to the years whose assessment is completed, it has been laid down in several judicial pronouncements that in such situation of completed assessments, assessment u/s 153A of the Act however shall be to the extent of income escaping assessment which comes to the knowledge of the AO during the course of search with reference to the valuable articles or things found or documents seized during the search which are not disclosed in the original assessment. 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. When nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. Items of regular assessment cannot be added back in the proceedings U/S 153A of the Act when no incriminating documents were found in respect of the disallowed amounts in the search proceedings. A search assessment under section 153A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon ble Karnataka High Court in the case of Canara Housing Development Company Vs. DCIT (2014) 114 DTR 162 (Karn) wherein the Hon ble Karnataka High Court held that even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. He drew our attention to the following observations of the Hon ble Karnataka High Court: ..The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-6-2003. Sec.153A of the Act lays down that in respect of searches carried out under section 132 of the Act or requisition of books and other documents made under section 132A of the Act after 31-5-2003, the Assessing Officer shall issue a notice calling upon assessee to furnish return of income in respect of six assessment years immediately preceding assessment year relevant to the assessment year in which search is conducted or requisition is made. The Assessing Officer is empowered to re- assess the total income in respect of each assessment year falling with such six assessment years.Sec.153A of the Act reads thus: 153A. Assessment in case of search or requisition. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal return of income as well as materials found in the course of search. The assessment proceedings which have been completed as on the date of search u/s.132 of the Act will however continue to remain valid. Thus the former proceedings are referred to as abated assessment proceedings and the latter proceedings are referred to as unabated assessment proceedings . 20. The Special Bench ITAT Mumbai, in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (Mumbai)(SB) had to deal with the scope of proceedings u/s.153A of the Act. The following question was determined by the Special Bench:- 1. Whether, on the facts and in law, the scope of assessment u/s 153A encompasses additions, not based on any incriminating material found, during the course of search ? The Special Bench held as follows: 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A(1)(b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, 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. v. In absence of any incriminating material, the complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) of the Act within the period laid down in the proviso to section 143 (2) of the Act namely 30.09.2008. Therefore, assessment proceedings stood completed and that in any case on the date of search i.e. on 28.07.2011 and 23.09.2011, the assessment for the impugned assessment years 2006-07 2007-08 were not pending. Therefore the acceptance of the return of income amounts to an assessment and such assessment did not abate in terms of the Second Proviso to section 153A(1) of the Act. It is the plea of the learned counsel for the Assessee that the impugned additions made by the Assessing Officer could not have been made in the impugned assessment proceedings as they are not based on any material seized or found during the course of search at the business premises of the assessee. 24. We are of the view that the proposition canvassed by the learned counsel for the Assessee finds support from the various decisions cited by him. The proposition canvassed by the learned DR is supported by the decision of the Hon ble Karnataka High Court in the case of Canara Housing (supra) in which the ruling of the Special Bench in the case of Alcargo logistics (supra) has not been accepted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by absence of issue of intimation under section 143(1) of the Act or by not issuing notice u/s.143(2) of the Act within the time limit laid down in the proviso to Sec.143(2) of the Act, results in an assessment proceedings and where such assessment proceedings are completed prior to the date of search then they do not abate in terms of the Second Proviso to section 153A(1) of the Act. The decision of the ITAT Kolkata Bench rendered in the case of Shri Bishwanath Garodia (supra) on identical facts of the case as that of the Assessee in the present case, clearly supports our conclusions as above. 26. In the light of the discussion above, our conclusion is that in the present case, the issue dealt with by the AO in the assessment order u/s.153A of the Act, could not and ought not to have been examined by the AO in the assessment proceedings u/s.153A of the Act as the said issue stood concluded with the assessee s return of income being accepted prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section. Such assessment did not abate on the date of search which took place on 28.3.2008. In respect of assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
