TMI Blog2019 (11) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... statements recoded by the A.O. during the course of assessment proceedings which in our considered view do not constitute incriminating material found or seized during the course of search. Further even those statements recorded by the A.O. have not resulted any fact or material to indicate any undisclosed income or unexplained cash credits which can be added U/s 68 of the Act. Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the ld. CIT(A) in deleting the addition - Decided against revenue - ITA No. 1322/JP/2018, ITA Nos. 1324 & 1325/JP/2018, ITA Nos. 1326, 1327 & 1328/JP/2018 - - - Dated:- 15-11-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Vijay Goyal Shri Gulshan Agarwal (CAs). For the Revenue : Shri Varinder Mehta (CIT-DR) ORDER PER: BENCH These six appeals by the department are directed against the respective orders of the ld. CIT(A)-IV, Jaipur dated 10/09/2018 and 17/09/2018 respectively passed in case of three group concern for the A.Y. 2011-12 to 2013-14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady disclosed. The appellant craves, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3. This is a second search U/s 132(1) of the Act carried out on 22/07/2015 as earlier there was a search and seizure operation U/s 132(1) of the Act on 31/10/2012 in case of Motisons group and all these three assessees were covered under the earlier search dated 31/10/2012.Pursuant to the earlier search dated 31/10/2012, assessments were framed U/s 153A as well as U/s 153B (i)(b) of the Act in respect of these three group concerns for the assessments years which are again subjected to assessment framed U/s153A of the Act. In the earlier assessments made by the A.O. pursuant to the search dated 31/10/2012, an identical addition was made on account of share premium and share capital received by the assessee from various companies. The assessee challenged the said addition made by the A.O. while passing the assessment order U/s 143(3) r.w.s. 153A of the Act on 25/3/2015. The said addition was partly confirmed by the ld. CIT(A) by making a slight modification of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the financial year in which the search has been carried out then the A.O. is empowered and has jurisdiction to make these additions irrespective of the fact that an identical addition was made in the earlier proceedings pursuant to the earlier search. As regards the legal objection raised by the assessee and accepted by the ld. CIT(A) that the additions were made without any incriminating material, the ld CIT-DR has submitted that the issue is still pending before the Hon ble Supreme Court as an SLP has been filed by the department against the order of the Hon ble High Court in the case of CIT Vs. Kabul Chawla 380 ITR 573 (Del) as well as in the case of Allcargo Global Logistic Ltd., thus, the ld CIT-DR has submitted that when the A.O. has made addition based on the enquiry conducted by him, the same has to be considered on merits instead of on the basis of technical objections. He has relied upon the order of the A.O. 5. On the other hand, the ld AR of the assessee has submitted that it is admitted facts that in this case assessment u/s 153A in pursuance to search on 31-10-2012 was completed before the search over the assessee on 22/07/2015. It is a settled pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed income (after the order of Hon'ble ITAT) cannot be made dehors the incriminating material found at the time of search while completing the assessment under section 153A. This, inter-alia, means that if there is no incriminating material, then the original assessment made can he reiterated and no further addition is called for otherwise the addition can only be made on the basis of undisclosed income derived from material/documents seized as a result of search. He has relied on the following decisions: (i) Jai Steel (India) Vs ACIT (2013) 259 CTR 281 (ii) Decision of the ITAT Jaipur Bench in the case of Kota Dall Mill in ITA No. 997/JP/2018 order dated 31/12/2018. (iii) Pr.CIT, Central-2, New Delhi Vs Meeta Gutgutia (2017) 395 ITR 526 (Del). Thus, the ld AR has contended that the addition made by the A.O. in respect of the assessment years which was not pending as on the date of search and without any reference to the incriminating material are not legally tenable and liable to be quashed/deleted. The ld AR has further contended that even otherwise when the identical addition has been made by the A.O. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the ld. CIT(A) vide order dated 31/3/2017. On further appeal, this Tribunal vide order dated 30/10/2017, deleted the said addition made by the A.O. and confirmed by the ld. CIT(A). The revenue challenged the said order of the Tribunal before the Hon ble High Court, however, the appeals of the revenue were dismissed by the Hon ble High Court and the finding of the Tribunal has been confirmed. Even the SLP filed by the revenue against the judgment of the Hon ble Jurisdictional High Court were also dismissed in one group case by the Hon ble Supreme Court vide order dated 23/08/2019. These facts are not disputed by the revenue being matter of record. Thus, the question arises whether the A.O. has the jurisdiction to make the addition on account of share capital and share premium received by the assessee in the proceedings U/s 153A of the Act without any incriminating material found or seized in the course of search and seizure action dated 22/07/2015 and further when the same addition was made by the A.O. on account of share capital and share premium while framing the earlier assessment order U/s 153A of the Act in pursuant to the earlier search dated 31/10/2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A in respect of these four assessment years i.e. 2010-11 to 13-14. The proceedings under section 153A in respect of these four assessment years would be in the nature of reassessment and not in the nature of assessment as in the cases of the remaining two assessment years i.e. 2014-15 and 15-16 those were got abated by virtue of search and seizure action under section 132 of the Act on 2nd July, 2015. It is a settled proposition of law that the assessment or reassessment under section 153A in respect of the assessment years which have already been completed and assessment orders have been passed determining the assessee s total income, the addition to the income that has already been assessed can be made only on the basis of incriminating material. In the absence of any incriminating material the completed assessment can only be reiterated. The provisions of section 132 read with section 153A of the Act stipulate two types of situations one where the assessment of any assessment year falling within six assessment years is pending on the date of initiation of search under section 132 or making of requisition under section 132A of the Act. Therefore, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material 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. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incrim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order of the ITAT which requires examination. The SLP filed by the revenue against the said decision of Hon ble Delhi High Court was dismissed by the Hon ble Supreme Court vide order dated 7th December, 2015. In a subsequent decision, the Hon ble Delhi High Court in the case of Principal CIT vs. Meeta Gutgutia has again analyzed this issue in para 55 to 71 as under :- 55. On the legal aspect of invocation of Section 153A in relation to AYs 2000-01 to 2003-04, the central plank of the Revenue's submission is the decision of this Court in Smt. Dayawanti Gupta (supra). Before beginning to examine the said decision, it is necessary to revisit the legal landscape in light of the elaborate arguments advanced by the Revenue. 56. Section 153A of the Act is titled Assessment in case of search or requisition . It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two . decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search. 32. Recently by its order dated 6th July 2015 in ITA No. 369 of 2015 (Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd.), this Court declined to frame a question of law in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of proceedings under Section 153A of the Act and make an addition under Section 68 of the Act on bogus share capital gain. The order of the CIT (A), affirmed by the ITAT, deleting the addition, was not interfered with. 59. In Kabul Chawla (supra), the Court referred to the decision of the Rajasthan High Court in Jai Steel (India) v. Asstt. CIT [2013] 36 taxmann.com 523/219 Taxman 223. The said part of the decision in Kabul Chawla (supra) in paras 33 and 34 reads as under: '33. The decision of the Rajasthan High Court in Jai Steel (India), Jodhpur v. ACIT (supra) involved a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. ' 60. In Kabul Chawla (supra), the Court also took note of the decision of the Bombay High Court in CIT v. Continental Warehousing Corpn (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78/232 Taxman 270/374 ITR 645 (Bom.) which accepted the plea that if no incriminating material was found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment under Section 153A and 153C of the Act. The legal position was thereafter summarized in Kabul Chawla (supra) as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of original assessment. 61. It appears that a number of High Courts have concurred with the decision of this Court in Kabul Chawla (supra) beginning with the Gujarat High Court in Saumya Construction (P.) Ltd. (supra). There, a search and seizure operation was carried out on 7th October, 2009 and an assessment came to be framed under Section 143(3) read with Section 153A(1)(b) in determining the total income of the Assessee of ₹ 14.5 crores against declared income of ₹ 3.44 crores. The ITAT deleted the additions on the ground that it was not based on any incriminating material found during the course of the search in respect of AYs under consideration i.e., AY 2006-07. The Gujarat High Court referred to the decision in Kabul Chawla (supra), of the Rajasthan High Court in Jai Steel (India) (supra) and one earlier decision of the Gujarat High Court itself. It explained in para 15 and 16 as under: '15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153. the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should connected With something round during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years ; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.' 62. Subsequently, in Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Saumya Construction (P.) Ltd. (supra) and of this Court in Kabul Chawla(supra). As far as Karnataka High Court is concerned, it has in IBC Knowledge Park (P.) Ltd. (supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In Gurinder Singh Bawa(supra), the Bombay High Court held that: 6. . . . . . once an assessment has att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66. Further, in answer to Question No. 11, the Assessee in Smt. Dayawanti Gupta (supra) was confronted with certain documents seized during the search. The answer was categorical and reads thus: Ans:- I hereby admit that these papers also contend details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes. 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of ₹ 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of franchisee commission. 70. The above distinguishing factors in Smt. Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. The Hon ble Delhi High Court has concurred with the view as taken in case of Kabul Chawla (supra) as well as the decision of Hon ble Jurisdictional High Court in the case of M/s. Jai Steel India Ltd. vs. ACIT (supra). Even on the issue of addition made by the AO in the proceedings under section 153A in respect of the assessment year which was already completed on the date of search, the Hon ble High Court has held that in the absence of any material which was subsequently unearthed during the search and was not already available to the AO, the additions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not help the case of the assessee. The relevant extract of the said judgment reads as under:- 19. 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly 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, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a further innings for the AO and/or assessee beyond provisions of Sections 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders) of the Act. 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese (supra). 30. Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because a assessment under Section 153A of the Act in pursuance of search or requisition is required to be made. In the case in hand, the transactions of unsecured loans as well as introduction of capital by the partners were duly recorded in the books of account and available with the AO. Further, during the course of search under section 132 of the Act on 2nd July 2015 no material much less incriminating material was either found or seized to disclose any undisclosed income on account of unsecured loans or partners capital received by the assessee firm. The AO has proposed to make the addition on account of unsecured loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found or referred or is the basis of the addition made by the AO while framing the assessment under section 153A of the Act for the assessment years 2010-11 to 1314. It is appropriate to refer relevant part of the assessment order in para 12 pages 48 to 50, para 19 page 83 and para 22 page 86 as under :- 12 Submissions made on behalf of the assesee firm have been duly considered. However, even the very elaborate and case laws loaded submissions of the assessee are totally off the mark. Against the self-speaking facts of the very nature of the activities of the so called parther's providing huge partner's capital in the most uninterested manner and providing huge unsecured loans without any collateral or other security, the emphasis of the assessee firm in its submissions has been on seeking protection under various judicial decisions even without having any fact coherence. The submissions made by the assessee are completely devoid of merit in the light of the following facts and circumstances; a. The department has very sound basis to treat, the receipts of unsecured loan and partner s capital from the above mentioned companies as bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re AS-1 of Party B-1, wherein the details of year-wise LTCG earned by Shri Rajendra Agrawal and his family members, is maintained, which during search action has been accepted to be bogus by all family members in their respective statements. 19. In view of above facts of the case and in the light of above judicial decision, it is established that genuineness of the transaction has not been proved. Section 68 of the I.T. Act provides for charging to income tax on any sum credited in the books of the assessee maintained for any previous year if the assessee offers no explanation about the nature and source thereof or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory. It places no duty upon the Assessing Officer to point to the source from which the money was received by the assessee. Where an assessee fails to prove satisfactorily the source and the nature of certain amount of credit during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. Thus, the assessee is unable to discharge its burden of proof by failing to establish lender s identity, forget the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the ld. CIT (A) in para 3.2.2 and 3.2.4 at pages 35 and 36 are as under :- 3.2.2 As per the provisions of this section where a search is initiated u/s 132 of the Act, the A.O shall issue a notice requiring the person searched to furnish his return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Once such returns are filed, the AO has to assess or reassess the total income of such six assessment years.(emphasis supplied by me). (The decisive words used in the provisions are to 'assessee or reassess the total income'). The A.O. is thus duty bound to determine the 'total income' of the assessee for such six assessment years and it is obvious that 'total income' refers to the sum total of income in respect of which a person is assessable. The total income therefore will cover not only the income emanating from declared sources or any material placed before the Assessing Officer but from all sources including the undisclosed ones, or based on the unplaced material before the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue in which the SLP filed by the revenue was also dismissed by the Hon ble Supreme Court, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. We order accordingly. In the said decision, the Tribunal has considered all the relevant decisions on the point relied upon by either of the parties and finally it was held that the addition made by the A.O. without any incriminating material found or seized in the course of search and seizure action is not sustainable particularly when the relevant assessment years were not pending as on the date of search. The ld. CIT(A) has decided this issue in para 5 to 7.3 as under: 5. The appellant has raised a legal ground no. 1 challenging the validity of assessment made 143(3)/u/s 153A vide order dated 30-12-2017. This legal gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of order of AO giving effect to CIT(A) order- 1st search 27.4.2017 7. Date of Hon'ble ITAT Jaipur order- ref 1st search 30 10 2017 8. Date of order of AO giving effect to Hon'ble ITAT Jaipur order- ref 1st search 28.12.2017 9 . Date of passing of order u/s 143(3)/153A - 2nd search 30.12.2017 5.3 I have perused the order of the AO and submissions made in this regard. Perusal of assessment order passed u/s 143(3)/153A shows that the additions made by the AO are not relatable to any seized material found during the course of 2nd search. I also find that for this A.Yr the assessments stood completed on the date of search. The AO repeated merely the assessment order on the date of search and the reason for reiterating the assessment is as under: 23. The submissions of the assessee have been duly considered. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies from whom share capital and share premium have been received has hardly any business activity. Therefore, the share premium and share reserves shown by them are merely book entries and assessee has routed its undisclosed income in the grab of these companies. On the issue of share premium addition were made by then AO for AY 2012-13 treating the share premium as assessee's undisclosed income and was added u/s 56(1) of the I.T. Act. This order was challenged by the assessee before CIT(A) and then before the Hon'ble ITAT. The Hon'ble ITAT has held that the addition made earlier by then AO u/s 56(1) of the I.T. Act were not correct, so far as invoking of provisions of sec 56(1) of the I.T. Act is concerned in respect of share premium received and such addition can only be made u/s 68 of the I.T. Act. The Hon'ble ITAT has further held that the CIT(A) has no power to change the section from 56(1) to section 68 of the I.T. Act in the appellate proceedings and such addition u/s 68 can only be made by the assessing officer as per the definition of section 68 of the I.T. Act. In view of these observation the issue is decided as under. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 68 of the I.T. Act as discussed in earlier paras. Therefore, total share premium and share capital amounting to ₹ 3,68,27,500/- is hereby added to the total income of the assessee u/s 68 of the I.T. Act as undisclosed income of the assessee company. In my view, in short, the issues to be decided is: (A) Whether in case of an assessment is completed and not pending on the date of search, whether an AO is competent to travel beyond the evidence found as a result of search which does not suggest any undisclosed income? 6. For deciding issue (A) above, there cannot be better guidance than the decision of jurisdictional high court in the case of Jai Steel (India), (2013) 36 Taxmann.com 523. In the said case, die facts were that A search under Section 132(1) of die Act was conducted at various business premises of Suncity Alloys Group of Companies, Jodhpur, to which, the appellant firm belong and at the residence of directors/partners of various firms/companies on 20.02.2004. Several incriminating documents were recovered from the residential premises of such partners/directors and from business premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. 19. The underline purpose of making assessment of total income under Section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, inasmuch as, once a assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of Section 153A a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under Section 153A of the Act would be the assessment for the said year. 20. The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been 'completed' and assessment orders have been passed determining the assessee's total income and, such orders are subsisting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such search is conducted and shall assess or reassess the total income for such years. However as per second proviso, only those assessments will abate which are pending on the date of search. Thus the assessment not pending on the date of search will not abate and assessment for such non pending years will be only on the basis of incriminating material found during search. In respect of non-abated assessment, though the assessment is to be framed regarding, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and in absence of any incriminating material, the completed assessment can be reiterated. Just as the appellant cannot raise any additional claim for any exemption/deduction in respect of unabated assessment where no incriminating material is found, the powers of the AC) will be also limited to make addition/disallowances only to the extent of incriminating material for a non-abated assessment. The judgment of jurisdictional high court in the case of Jai Steel (supra) has been considered in all the judgments of Delhi High court, Karnataka High Court and Gujarat High court relied upon by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalised for those assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal, revision or rectification pending against finalised assessments/ reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A (1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). 11. In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will he only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would he brought to tax , iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide its departmental Appeal Order ITA. No. 482/JP/2017 and assessee's Appeal Order ITA No. 385/JP/2017 dated 30.10.2017 has dismissed the departmental appeal [for deletion of additions by the CIT(A)j. The Hon'ble ITAT, Jaipur has also granted relief of ₹ 19,08,447/- disallowance of which was confirmed by the C1T(A)-4, Jaipur. 7. It may by pointed here that orders of Hon'ble TEAT Jaipur were carried to Hon'ble High Court of Rajasthan by the Department. The Hon'ble High Court of Rajasthan has dismissed all the appeals filed by the Department vide order dated 31.7.2018. In other words, all the grounds of appeal raised, as a result of 1st search, have now attained finality in favour of appellant. 7.2 Thus making additions again in the order u/s 143(3)/u/s 153A passed pursuant to 2nd search is not only legally untenable ( as per discussion in pan above) but also is violation of natural justice as it raises the substantial demand against the appellant on the issues which have already been decided in its favour by the highest fact finding body, the Hon'ble ITAT Jaipur. 7.3 Considering the above I am o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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