TMI Blog2017 (9) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... re, both the appeals are taken up together for hearing and are being disposed off by way of a consolidated order. First, we take up appeal in ITA No. 710/JP/2016. The assessee has raised the following grounds of appeal :- 1. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the action of the learned Assessing Officer in passing the order u/s 153A r.w.s. 143(3) of the IT Act which is void ab-initio deserves to be quashed. 2. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of ₹ 10,00,000/- u/s 40A(3) of the Income Tax Act, 1961 on account of purchase of land in cash. 3. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of ₹ 10,00,000/- U/s 40A(3) of the Income Tax Act, 1961 on account of purchase of land in cash whereas the assessee has not claimed any deduction in computation of income. 4. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing. 2. Briefly stated the facts are that a search under section 132 was conducted on 18.07.2012 in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A only in case there was seizure of incriminating material in the hands of the assessee. The same being absent the provisions of section 153A did not trigger. The entire proceedings are vitiated and therefore deserve to be quashed. It is further submitted that the only addition made by the Learned Assessing Officer is based on the basis of perusal of the purchase deed pertaining to purchase of a plot by the assessee which is fully accounted for in the books of accounts but payment has been made in cash being in violation of section 40A(3). In view of the afore facts it is submitted when there was no material found during search warranting action u/s 153A, the Learned Assessing Officer erred in taking such action. As such the assessment proceedings so completed u/s 153A deserve to be quashed. The issue has now been decided by the Jurisdictional High Court of Rajasthan in the case of Jai Steel India Vs. ACIT 88 DTR 1. The Hon'ble High Court has held as under Section 153A cannot be read in isolation, in as much as, the same is triggered only on account of any search/requisition u/s 132 or 132A. If any books of accounts or other documents relevant to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account or documents have been referred even in the assessment order for framing assessment under S. 153C of the IT Act, 1961. Since for all these years, the returns were originally filed and processed and since no additional material is found pertaining to the assessee, which is held to be belonging to the assessee the AO does not assume jurisdiction for framing assessment under S. 153C r.w.s. 153A of the IT Act, 1961. We therefore, cancel all the assessments made for all these years. Since we have cancelled the assessments, we do not propose to deal with grounds raised by the Revenue in appeals and ground raised by the assessee in cross-objections on the merits. ( d) Uttra S. Shorewal 48 SOT 6 The intention of section 153A is not to disturb matters that have reached finality between the parties. It is true that the provisions of section apply notwithstanding anything contained in section 147 and section 148. But that only conveys the limited idea that once a search takes place, it is open to the Assessing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results:- a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment under section 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O. b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. (para no. 21) If it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the assessee to file returns for the six assessment years prior to the year in which the search took place. (para no. 22) The aforesaid para 21 clearly indicates that in their decision the Hon'ble High Court has observed that the assessment in cases which do not abate will be of income as determined earlier and the escaped income. The assessment shall be similar to orders passed in any re-assessment. It is submitted that the re-assessments are made only when s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Proviso stops the AO to proceed further, because proceedings cannot be abated and since there is no material, no further jurisdiction is embarked on him. In the aforesaid decision the Hon'ble Tribunal has analyzed at length the decisions of - ( i) The Hon'ble High Court Delhi in the case of Anil Kumar Bhatia ( ii) All Cargo Global Logistic Ltd. Vs. DCIT 137 ITD 287 ( iii) Uttra S Shorewal ( iv) Singhad Technical Education Society Vs. ACIT (2011) 57 DTR 241 and has held that Assessing Officer cannot proceed u/s 153A in a case where no proceedings are pending and no material was found during the course of search. Further the assessment was framed by invoking the provisions of section 40A(3) of the Income Tax Act, 1961 and not on the basis of any information or document found during the course of search. In the recent judgment of Delhi High Court in the case of CIT Vs. Kabul Chawla ITA No.707, 709 and 713/2014 dated 28.08.2015 (Delhi High Court) it was held that no concluded assessment can be disturbed without any material found during the course of search and in recent judgment of Damodar Das Modi and Nirmal Kumar Agarwal and anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al situation where during the pendency of 153A proceedings notice u/s 153C is issued. To further confound the situation the proceedings are purported to be continued u/s 153C but the assessments are completed u/s 153A despite consciously dropping the notice u/s 153A. We find merit in the argument of ld. Counsel that assessments u/s 153A and 153C are independent and mutually exclusive, an assessment cannot be framed in continuation of both notices and similarly cannot be concluded u/s 153A if proceedings are undertaken u/s 153C. In view of the facts, circumstances and judicial precedents cited above, we hold that impugned assessments are untenable and bad in law. Our view is fortified by Jindal Stainless Steel Ltd. and Shital Prasad Kharag Prasad (supra). The revenue has not brought any contrary material in support of its case. In the light of above, we are of the view that the assessment made under section 153A read with section 143(3) of the Act without having any incriminating document, is untenable and bad in law. Therefore, taking a consistent view in the matter, and following the decision of the Coordinate Bench (supra), ground no. 1 of the assessee is allowed. 6. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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