TMI Blog2017 (9) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... of income as evidence by the audited accounts and which has not been abated, the amount of loan cannot be added. Accordingly, we reverse the orders of CIT(A) as well as that of the AO and delete the addition made by the AO. This jurisdictional issue of the assessee’s appeal is allowed. - ITA No. 4309/Mum/2014 - - - Dated:- 13-9-2017 - SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Shri JP Bairagra, AR For The Revenue : Shri Ravjit Singh Arneja, DR ORDER PER MAHAVIR SINGH, JM : This appeal by the assessee is arising out of the order of CIT(A)-38 Mumbai, in appeal No. CIT(A)-38/IT-572/2011-12, dated 27-03-2014. The Assessment was framed by DCIT Circle-47, Mumbai for the A.Y. 2006-07 vide order dated 29-12-2011 under section 153C r.w.s.143(3) of the Income Tax Act, 1961(hereinafter the Act ). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in issuing notice under section 153C and completing assessment u/s 153C r.w.s. 143(3) of the Act and not holding the same as bad in law even though the assessment framed is not based on any incriminating material/document. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of AO making addition of unexplained cash credits. The assessee before CIT(A) also raised the issue of jurisdiction under section 153C of the Act, he also confirmed the assumption of jurisdiction by the AO vide Para 7, 7.1, 7.2, 7.3 as under: - 7 . 0 I have carefully examined the facts of the case, the stand taken by the A . O in the assessment order and in the remand report, the grounds of appeal, the written submissions filed by the appellant during the hearing proceedings and the rejoinder to the remand report . In this group of cases, a search seizure action u / s . 132 ( 1 ) of the Act was carried out on 31 . 10 . 2009 and Shri Viren Ahuja who is the promoter director of the group had admitted undisclosed income u / s . 132 ( 4 ) of the Act . Appellant is a closely connected case wherein the affairs of the appellant are also controlled and managed by Shri Viren Ahuja . Since the case of the appellant was also centralized along with the other group of cases of Flemingo I Bermaco which included the case of Shri Viren Ahula, the same A . O exercised jurisdiction in respect of all the cases of the group . It is envisaged uls . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whereas in this case, seized material such as trial balance, profit and loss account, balance sheet, details of unsecured loan, ledger account in the books of account of MJs . Bermaco Energy Ltd . etc . cannot be said to be only pertaining and not belonging to the appellant The appellant is the owner of the books of account and the document seized and therefore, the said books of account and the document belong to it . The appellant's books of account and document and the loose sheets belonging to the appellant ( 16 loose papers of seized material exhibited as Annexure A - iS and page nos . 1 to 5 of seized material exhibited as Annexure A - 21 containing trail balance, profit and loss account and balance sheet of the appellant, ledger in the books of appellant, details of unsecured loan taken by the appellant from IFSL Ltd . etc .) are found in the premises of M / s . Flemingo / Bermaco Group ( joint warrant of authorization ) while conducting search operation u / s . 132 of the Act and the same have been seized and are handed over to the A . O In this case, the A . O of 153A person and the A of 153C person are one and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by Section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person . If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed . If the returns filed by the other person for the period of six years does not show that the income reflected in the document has been accounted for, additions will be accordingly made after following the procedure prescribed by law and after giving adequate opportunity of being heard to such other person . That, in sum and substance, is the position . It will be seen that whereas section 1588D refers to the satisfaction of the Assessing Officer that any gundisclosed income belongs to any person other than the searched person . section 153C ( 1 ) in contrast refers merely to the satisfaction of the Assessing Officer that the valuable article or books of account or document belongf t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under section 132, some valuable article or books of account or document is seized, which does not belong to the searched person but is seen to belong to any other person, the procedure stated therein should be followed . Therefore, nothing is to be gained from saying that the pre - conditions mentioned in clauses ( a ) , ( b ) and ( c ) of subsection ( 1 ) of section 132 have not been satisfied vis - a - vis the petitioner so as to confer legality upon the seizure of the documents in question . In our opinion, it is not necessary for the Revenue authorities to have masons to believe that the petitioner would not produce any books of account or document or that the petitioner is in possession of any money, bullion, jeweler,' or other valuable article or thing which it had not or will not disclose for the purpose of the assessment proceedings . The petitioner was not searched . Search was on a third person and the validity of the seizure has to be examined with reference to the said person searched . At the time when the Assessing Officer having jurisdiction over the searched person reaches the satisfaction that the document bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of section 153C of the Act in respect of the appellant are valid . Accordingly, the ground nos . 1 3 are hereby dismissed . Aggrieved, assessee came in second appeal before Tribunal. 4. Before us, the learned Counsel for the assessee narrated the facts that the assessee has filed original return of income for AY 2006-07 on 14-11-2006 and no assessment for assessment year 2006-07 was pending as on the date of search i.e. 31-10-2009. The learned Counsel for the assessee stated that from the assessment order it can be gathered that only addition made by AO while completing assessment under section 153C r.w.s.143(3) of the Act was unexplained cash credit of ₹ 1.50 crores and that information was also noted by the AO from the audited accounts of the assessee and the addition is not based on any incriminating material found during the course of search. The learned Counsel for the assessee stated that the assessment for AY 2006-07 was completed and no assessment has been abated as the period for issuance of notice under section 143(2) elapsed on 30-09-2007 whereas, search took place on 31-10-2009. The learned Counsel for the assessee drew our attention to pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments found at the premises of assessee covered u / s . 153A belongs to person other than the person referred in section 153C the above assessee becomes liable to be governed by section 153C and hence it is proposed to assess the case as per the provisions of section 153C . Sd / ( Vinod Kumar ) Dy . Commissioner of Income Tax CC - 9, Mumbai 6. The learned Counsel for the assessee after reading these documents referred to page 82 to 104 wherein 16 loose papers was seized by the departments and which pertains to AY 2009-10 but this particular loan of IFSL Limited of ₹ 1.50 crores pertain to AY 2006-07. Actually, according to the learned Counsel, this loan is carry forward from AY 2006-07 and no seized document relating to AY 2006-07 was seized by the Revenue. According to him, it means that no seized material pertain to AY 2006-07. Further, the learned Counsel for the assessee stated that allegations of Revenue that IFSL limited is existent, is without any basis. He stated that IFSL is very much functioning as it can be seen from the records available with the Registrar of Companies (ROC). Assessee s Counsel drew our attention to the docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the basis of incriminating material even during the course of search, he argued. 8. We have heard the rival contentions and gone through the facts and circumstances of the case. The above facts are undisputed that the Revenue has seized the alleged incriminating material containing Annexure No. A-15, 16 loose papers vide Panchnama dtd. 02-11-2009 and Annexure No.A-21 pages No. 1 to 5 of the Ledger Accounts in the books of accounts of the assessee. We have gone through these pages consisting of pages 1 to 16 and pages 1 to 5 of Annexure A-15 and Annexure A-21 respectively. We find from these papers seized during the course of search that these are copies of balance sheet, trial balance, Profit and Loss account for the FY 2008-09. Further the 16 loose papers are the papers of trial balance including copy of accounts of various parties for the AY 2008-09. These papers are actually tallied and compared with the books of account by the assessee and by the AO and found nothing incriminating in the same, rather the addition is based on the audited accounts of the assessee which is already enclosed in the regular return of income of the assessee and assessment for the same has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. The relevant portion of the judgment reads as under: - 31 . We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record . The Special Bench in that regard held as under :- The provision under section 153A is applicable where a search or requisition is initiated after 31 . 5 . 2003 . In such a case the AO is obliged to issue notice u / s 153A in respect of 6 preceding years, preceding the year in which search etc . has been initiated . Thereafter he has to assess or reassess the total income of these six years . It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A ( 1 )( b ) and reiterated in the 1st proviso to this section . The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate . We find that there is no divergence of views in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we may now examine the provision contained in sub - section ( 2 ) of section 153, which has been dealt with by Ld . Counsel . It provides that if any assessment made under subsection ( 1 ) is annulled in appeal etc . , then the abated assessment revives . However, if such annulment is further nullified, the assessment again abates . The case of the Ld . Counsel is that this provision further shows that completed assessments stand on a different footing from the pending assessments because appeals etc . proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal . On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come . The interpretation of the Ld . Counsel, though not specifically stated, would be that on annulment of the assessment made u / s 153 ( 1 ) , the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no option but to assess or reassess the total income of these six years . The pending proceedings shall abate . This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate . In other words pending proceedings will not be proceeded with thereafter . The assessment has now to be made u / s 153A ( 1 )( b ) and the first proviso . It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i . e . assessment or reassessment proceedings and proceedings under this provision merge into one . If assessment made under sub - section ( 1 ) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive . This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
