TMI Blog2017 (10) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Murarilal Agarwal who is one of the Directors of the company recorded under section 132(4) - Held that:- The issue involved is duly covered by the decision of the Hon'ble Kerala High Court in the case of CIT vs. St. Francis Clay Decor Tiles [2016 (6) TMI 378 - KERALA HIGH COURT] wherein held that the statement recorded during the course of search is a valuable piece of evidence while interpreting the phraseology ‘incriminating’ is used by the Parliament. They have also clarified that neither under section 132 or under section 153A the phraseology ‘incriminating’ is used by the Parliament. Since the Hon'ble Kerala High Court has taken the recorded statement as a valuable piece of evidence and no contrary evidence was brought to our notice by the learned A.R. we, therefore, during the A.Y. 2007-08 upheld the addition of ₹ 9,57,372/- incurred by way of commission on purchases and ₹ 9,57,372/- incurred by way of commission on sales - ITA Nos.1313, 1314, 1601 & 1602/Mum/2014, ITA Nos.1672 & 1673 /Mum/2014 - - - Dated:- 10-10-2017 - Shri P K Bansal, Vice President And Shri Pawan Singh, Judicial Member Assessee by : Shri Dharmesh Shah Dhaval S. Shah Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Return for assessment years 2004-05 to 2006-07 were processed under section 143(1) while assessment for A.Y. 2007-08 has been completed under section 143(3) on 09.03.2009 at and income of ₹ 3,80,73,480/-. After the search notice under section 153A was issued to the assessee for assessment years 2004-05 to 2009-10 dated 12.04.2010. In response to this the assessee has filed return for each of the impugned assessment year before us by showing the income as detailed below against which the AO completed the assessment at an income shown hereunder: - A.Y. Returned Income (Rs. ) u/s. 115JB (Rs. ) Assessed Income (Rs. ) u/s. 115JB (Rs. ) 2004-05 14,14,250 - 22,73,730 - 2005-06 46,07,490 3,13,23,636 69,05,342 3,13,23,636 2006-07 1,33,26,542 9,82,41,542 6,05,03,680 9,82,41,542 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Bench of this Tribunal in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 (SB) (Mum). On the basis of this decision it was contended that since the assessments for assessment years 2004-05 to 2007-08 were completed and were not pending when the search was taken place, therefore, the assessments remain unabated. When an assessment has not been abated in view of the decision of the Hon'ble Jurisdictional High Court addition for disallowance can be made by the AO only on the basis of the material found/seized during the course of the search not otherwise. In the case of the assessee in each of the assessment year none of the addition has been made on the basis of the material found/seized during the course of search. Thus, it was contended that the addition so made are invalid and the assessment completed without any incriminating material being brought on record is bad in law. 6. The learned D.R., on the other hand, supported the order of the tax authorities below and drawn our attention towards the assessment order of A.Y. 2007-08 and on that basis it was contended that so far the addition made for the commission on bogus purchases and sales are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the years for which incriminating material is found during the search. Ultimately, in respect of question referred to the Special Bench, the Special Bench in para 58 of its order held as under: 8. Thus, question No. 1 before us is answered as under: a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately. b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and; (ii) undisclosed income or property discovered in the course of search . 33. In view of the decision of Special Bench in the case of All Cargo Global Logistics Ltd. (supra), no doubt the addition in the case of the assessee can be made by the A.O. only on the basis of incriminating material found during the course of search. The decision of the Special Bench has duly been appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A search was carried out on its premises and a notice under section 153A was issued to the assessee. The assessee declared a total income of ₹ 5,54,63,220 while claiming the deduction under section 80-IA(4) of ₹ 1,25,77,637. The Assessing Officer held that the assessee was not entitled to the deduction under section 80-IA. The Commissioner (Appeals) upheld the order of the Assessing Officer. The Special Bench of the Tribunal held that by the clear language of section 153A together with its provisos, pending assessments abated and that the Assessing Officer was required to make one assessment for each of the six years on the basis of the search and any other material existing or brought on record by the Assessing Officer, that in other cases assessments would be made on the basis of the books of account and other documents found during the search and not produced during assessment and also on any other undisclosed income or property found during the search. On the issue of deduction under section 80-IA(4) the Tribunal held that the container freight station was an inland port and its income was entitled to deduction under section 80-IA(4). On appeals: Held, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2006-07 PF ESIC ₹ 10,77,878/- Disallowance u/s. 35D ₹ 10,44,188/- Disallowance u/s. 35DD ₹ 39,512/- Disallowance @5% of Expenses ₹ 40,73,198/- Depreciation on Goodwill Brand Value ₹ 1,37,50,000/- ₹ 1,99,84,776/- Assessment Year 2007-08 PF ESIC ₹ 23,23,217/- Disallowance u/s. 35D ₹ 1,62,43,558/- Disallowance u/s. 35DD ₹ 39,512/- Disallowance @5% of Expenses ₹ 59,60,470/- Depreciation on Goodwill Brand Value ₹ 1,58,95,519/- Commission on Purchases ₹ 9,57,372/- Commission on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the facts and in the circumstances of the case and when the Assessing Officer is empowered to assess and reassess income for six prior period assessment years notwithstanding the provisions in sections 139, 147, 148, 149, 151 and 153 is not the above approach of the Tribunal one putting an artificial cap on section 153A ? The Hon'ble High Court in para 18 of this judgement held that the statement recorded during the course of search is a valuable piece of evidence while interpreting the phraseology incriminating is used by the Parliament. They have also clarified that neither under section 132 or under section 153A the phraseology incriminating is used by the Parliament. Since the Hon'ble Kerala High Court has taken the recorded statement as a valuable piece of evidence and no contrary evidence was brought to our notice by the learned A.R. we, therefore, during the A.Y. 2007-08 upheld the addition of ₹ 9,57,372/- incurred by way of commission on purchases and ₹ 9,57,372/- incurred by way of commission on sales. In view of the aforesaid finding we allow the appeal of the assessee for assessment years 2004-05, 2005-06 and 2006-07 while the appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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