TMI Blog2018 (1) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... See KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA No. 597 to 599/JP/2017 - - - Dated:- 24-1-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Manish Agrawal (C.A.) For The Revenue : Shri Varinder Mehta (CIT) ORDER PER: VIJAY PAL RAO, J.M. These appeals by the assessee are directed against three separate orders of the ld. CIT(A) dated 26.05.2017, 09.05.2017 26.05.2017 for the assessment year 2009- 10 to 2011-12 respectively. The assessee has raised the common grounds in these appeals as under:- 1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming assessment completed u/s 143(3) r.w.s. 153A of the Income Act Act, 1961 when no incriminating paper whatsoever was found as a result of search pertaining to the year under appeal, and the additions were made by Ld. AO without referring to any single material found during search thus the consequent order passed deserves to be quashed. 1.1 On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in sustaining the additions made to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me would not result any addition and the assessment made earlier may have to be reiterated. Harmonious construction of the provisions of section 153A of the Act would lead to an irresistible conclusion that the word assess has been used in the context of abated proceedings and reassess has been used for completed assessment proceedings which do not abate as they are not pending on the date of initiation of search or making of requisition and can be tinkered with only on the basis of incriminating material found during the course of search or requisition of documents. Therefore, the Hon ble High Court has held that it is not open to the assessee to seek deduction or claim relief not claimed by it in the original assessment which already stands completed in an assessment u/s 153A in pursuant to search or requisition. Hence, the ld. AR has submitted that in view of the various decisions on this point and when no proceedings in respect of the assessment years under considerations were pending before the AO then, the AO did not have jurisdiction to make an addition without referring to any incriminating material seized during the course of search. 4. On the other hand, ld DR has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized during the course of search or requisition as case may be indicating undisclosed income of the assessee. Therefore, the scope and jurisdiction of the AO to reassesse the total income of the assessee u/s 153A is limited only to the extent of the income disclosed by the incriminating material found and seized during the search and seizure action. The Assessing Officer has reassessed the income of the assessee by making the disallowance u/s 40(a)(ia) as well as u/s 36(1)(va) of the Act without making any reference to any incriminating material found. Therefore, the disallowance/addition made by the AO for these 3 assessment years completed u/s 153A is undisputedly not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act. Once, the Assessing Officer has completed the reassessment u/s 153A without any reference to the incriminating material found then, no addition cannot be made to the returned income of the assessee. The Hon ble Jurisdiction Delhi High Court in case of CIT v. Kabul Chawla (supra) vide while considering an identical issue has held in para 37 and 39 as under:- 37. On a conspectus of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. A similar view has been taken by the Hon ble jurisdiction High Court in case of Jai Steel India v ACIT (supra) as held in para 22 to 30 as under:- 22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: ( a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; ( b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and ( c) in absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings and reassess the total income, taking note to the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined 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. (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate any such interpretation, that wherever the appeal against such assessment or reassessment is pending, the same along with assessment or reassessment proceedings is liable to be abated. The principles of interpretation of taxing statutes do not permit the Court to interpret the Second Proviso to Section 153A in a manner that where the assessment or reassessment proceedings are complete, and the matter is pending in appeal in the Tribunal, the entire proceedings will abate. 20. There is another aspect to the matter, namely that the abatement of any proceedings has serious causes and effect in as much as the abatement of the proceedings, takes away all the consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271(1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty. (Emphasis supplied) The said judgment wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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