TMI Blog2017 (11) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant Member For The Revenue : Ms. Rachna Singh, CIT/DR For The Assessee : Sh. Anil Jain, C.A. ORDER Per L.P. Sahu, A.M.: The appeal at the instance of Revenue and Cross-objection at the instance of the assessee arise out of the order of the Ld. CIT(A)-III, New Delhi dated 7.6.2011 pertaining to assessment year 2003-04 on the following grounds : Grounds in Revenue s appeal: 1. On the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in holding that proceedings initiated u/s 153C of the Income tax Act, 1961 are barred by limitation. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in not appreciating that there was no physical handover of seized material in this case as the Assessing Officer of the main party and the Assessing Officer of the other person in this case are the same. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in holding that in the absence of any material found during search, no addition/ disallowance can be made in the assessment u/s 153 A or 153C of the Act in a case where the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elonging to the assessee were found and accordingly, proceedings u/s 153C of the Act were initiated in the case of the assessee company. In response to the notice u/s 153C, the assessee filed its return of income on 11.11.2009 declaring income of ₹ 60,268/- as was declared in the original return of income filed on 24.11.2003. Assessment years 2002-03 to 2007-08 were covered u/s 153C of the Income Tax Act and the assessment for assessment year 2003-04 i.e. the year under consideration was completed at ₹ 28,35,120/- u/s 143(3) r/w section 153C of the Act. 2.1 In appeal before the ld. CIT(A), the assessee challenged the validity of the proceedings initiated u/s 153C as well as the assessment on merits. The assessee also took an additional ground before the Ld. CIT (A) that the initiation of proceedings for the year under consideration was time-barred. The Ld. CIT (A) allowed the additional ground of the assessee and held that the initiation of proceedings for assessment year 2003-04 were barred by limitation and, therefore, the assessment order passed u/s 153C was a nullity and the Assessing Officer was directed to delete the additions. Now aggrieved, the department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the Assessing Officer having jurisdiction over such other person shall abate. 3.2 It was further submitted that as per explanatory notes, the date has to be reckoned from the date on which the Assessing Officer having jurisdiction over such other person receives the books of accounts or documents and since in the present case, the Assessing Officer of the searched person as well as the assessee was the same, the date of search will be the date on which the documents/books of accounts were seized. The Ld. CIT DR also submitted that the Circulars issued by the CBDT as well as the Finance Minister s speech before the Parliament while introducing a bill can be relied upon to throw light on the object and purpose of a particular provision. It was submitted that in the light of the explanatory notes as referred to by her, jurisdiction u/s 153C was not time barred for the year under consideration, as was held erroneously by the Ld. CIT (A). Ld. CIT D.R. also placed reliance on the following judicial precedents in support of her submissions:- i) Apoorva Extrusion Pvt. Ltd. in I.T.A. 3308/D/2010 (ITAT Delhi) ii) Anil Kumar Bhatia 24 Taxmann.com 98 (Delhi High Court) iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 153C is that the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisition: to a person other than the person referred to in section 153A. If the A.O is so satisfied he shall assess and reassess such income. In such a case the A.O shall assess or reassess r assessment years immediately preceding the assessment year in which such search is conducted or requisition made: So the A.O is empowered by the Income Tax Act and its provisions under Section: - 153A to assess the 'total income' of the assessee which includes undisclosed income. The Revenue's claim that assessment u/s 153A/153C need not necessarily be based on incriminating material finds support from various decisions of Hon'ble Jurisdictional High Court of Delhi/ other High Courts and Hon'ble ITAT Delhi. Highlights of the case of Anil Kumar Bhatia 24 Taxmann.com 98 dated 07.08.2012 of Hon'ble Delhi High Court Jurisdiction of Assessing Officer u/s 153A and procedure thereon A perusal of Section 153A shows that it starts with a non obstante clause relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the Assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the 'total income' of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. (Para 19) Assessing Officer is empowered to reopen the proceedings u/s 143(l)(a) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the Assessee, but also the 'total income' of the Assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the Assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the Assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the Assessee which would include both the income declared in the returns, if any, fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2014 of Hon'ble Delhi High Court The decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia has been followed recently in another case of Filatex India Ltd. (269/2014 and CM No. 10077/2014) by Hon'ble Delhi High Court vide order dated 14-07-2014. The Question of law referred before Hon'ble Delhi High Court in this case is as under:- Whether the Tribunal erred on facts and in law in not holding that reITA No. 4018/Del/2011 CO 207Del./2012 13 computation of book profit, de-hors any material found during the course of search, in the order passed under section 153A of the Act was without jurisdiction, being outside the scope of proceedings under that Section The Hon'ble Delhi High Court has decided in Para 2 that The contention raised by the appellant-Assessee is that the addition, which is the subject matter of questions No.(ii) and (Hi), was/is not justified in the assessment order under Section 153A, as no incriminating material was found concerning the addition under Section 115 JB of the Act. The said argument has no substance and has to be rejected. Under Section 153A of the Act, the additions need not be restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 153A the submission/contention of the appellant has no merit. Highlights of the case of Raj Kumar Arora, ITA No. 56/2011 dated of Hon'ble Allahabad High Court The decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia has been followed recently in another case of Raj Kumar Arora, ITA No. 56/2011 by Hon'ble Allahabad High Court vide order dated 11-07-2014. The Question of law referred before Hon'ble Allahabad High Court in this case is as under:- Whether ITAT has erred in law in dismissing the appeal of the department and holding that no addition can be made for gift in assessment completed under section 153A unless some incriminating material was found during the course of search, thus ignoring the provisions of law as contained in section 153A which required the Assessing Officer to Assessee or reassess the total income as defined in section 2(45) of the income Tax Act; 1961. Whether the order of the ITAT is perverse in as much as it has ignored the provisions of law as contained in proviso (c) of sub-sec(l) 153A which required the Assessing Officer to Assessee or reassess the total income. Hon'ble Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has also observed that the decision of Hon'ble special bench in the case of All Cargo Global Logistic Ltd. dated 06/07/2012 is not correct. The Question of law referred before Hon'ble Karnataka High Court in this case is as under:- When once the proceedings under Section 153A of the Act is initiated, whether the Commissioner of Income Tax can invoke the power under Section 263 of the Act to review the order of assessment passed by the Assessing Authority? At the end the Hon'ble Court has decided in Para 11 that the Tribunal has proceeded on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry under Section 153A is to be confirmed only to the undisclosed income unearthed during search and if there is any other income which is not the subject matter of search, the same cannot be taken into consideration. Therefore, the revisional authority can exercise the power under Section 263. In the entire scheme of 153A of the Act, there is no prohibition for the assessing authority to take note of such income. On the contrary, it is expressly provided under section 153A of the Act the Assessing Officer shall assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, the effect of subsection (1) of section 153C is that where all the necessary ingredients of this sub-section are satisfied, the matter of making assessment or reassessment goes back to section 153A. Since the assessment or reassessment of such other person has to be done in accordance with the provisions of section 153A, let us examine the prescription of the relevant parts of section 153A(1), which is as under 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 assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonging to the other person, then, the assessment or reassessment of such other person is to be necessarily completed in terms of section 153A. which in no uncertain terms refers to six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Further, the use of the word 'shall' in section 153A immediately before clause (a) has left nothing to doubt that the assessment is required to be made for all the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. As the legislature has not made the making of such assessment or reassessment for all the six assessment years subject to any condition of finding of any incriminating material or otherwise, we are unable to accept such contention of the Ld. AR which, if accepted, would lead to legislating a proposition which is obviously not tenable. 8. We can reject the contention of the Assessee from another angle as well. It is relevant to note that the expression books of account or documents' employed in section 153C (1) is accompanied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court of Andhra Pradesh in the case of Gopal Lai Bhadruka vs. DCIT 346 ITR 106 dated 15.12.2011, where Hon'ble High court has held as under (page no.17 to 21 of Paper Book no. 3): The question of law agitated before the Tribunal was whether, for the purpose of computing income under section 153A/153C, the Assessing Officer was required to confine himself only to the material found during the course of search operations. The Tribunal held against the Assessees. Held that by virtue of section 158B-I the various provisions of Chapter XIVB are made inapplicable to proceedings under section 153A/153C. The effect of this is that while the provisions of Chapter XIV-B limit the inquiry by the Assessing Officer to those materials found during the search and seizure operation, no such limitation is found insofar as section 153A/153C is concerned. Therefore, it follows that for the purposes of section 153A/153C the Assessing Officer can taken into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the Assessee. Recently Hon'ble ITAT Hyderabad Bench in the case of Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f handing over of the assets/documents to the Assessing Officer of the assessee. Ld. AR also submitted that as in the present appeal, in the case of RRJ Securities also, the Assessing Officer of the searched person as well as the other person were the same and, therefore, the assessee s case is identical to the facts of the case in RRJ Securities. It was also submitted that the case of SSP Aviation Limited, relied upon by the department, has also been considered by Hon'ble Delhi High Court in the case of RRJ Securities wherein the Hon'ble Delhi High Court has held that the decision in SSP Aviation cannot be understood to mean that the Assessing Officer has jurisdiction to make a reassessment in every case where seized assets or documents are handed over to the Assessing Officer. The Ld. AR also referred to the satisfaction note and submitted that as per the satisfaction note, there is no clear finding that the documents seized belonged to the assessee and, as such, even on this count, the jurisdiction u/s 153C could not be assumed. 4.1 The Ld. AR also placed reliance on the order of the ITAT Delhi Bench in the case of Goverdhan Financial Services Ltd. in I.T.A. No. 1720 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/docume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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