TMI Blog2019 (9) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... was offered in the other years from A.Y. 2010-11 to 2016-17- HELD THAT:- From perusal of the record, it is noted that the assessee has explained the difference of ₹ 3,839/- on FDR interest being the excess amount was offered to tax in the other years and there is no suppression of any income. From perusal of the details, find that this is only a calculation mistake while preparing the statement of affairs and overall interest income was offered by the assessee which is more than the actual interest on FDR. As regards the addition made on account of opening balance, it is clear from the cash book that there was no opening balance as on 01/4/2009. Thus, this addition is contrary to the facts and records, hence, even on merits, these additions are not sustainable and the same are deleted. - ITA No. 1034/JP/2018 - - - Dated:- 27-9-2019 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER For the Appellant : Shri P.C. Parwal (CA) For the Respondent : Shri A.K. Mahla (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 22/06/2018 of ld. CIT(A)-2, Udaipur for the A.Y. 2010-11. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on the ground that the Hon ble supreme Court has admitted the SLP filed by the department in the case of Kabul Chawla and M/s All Cargo Global Logistics whereby the A.O. has made addition of ₹ 3,839/- on account of difference between FDR interest disclosed in the statement of affairs and declared in the return of income as well as addition of ₹ 98,000/- on account of unexplained opening cash balance. 3. Before the Tribunal, the ld AR of the assessee has submitted that the original assessment for the year under consideration was not pending as on the date of search but it was concluded prior to the search and therefore, when no incriminating material was found and seized during the course of search indicating any undisclosed income or excess claim of agricultural income then the addition made by the A.O. by treating the agricultural income as income from other sources is not sustainable in law. In support of his contention, he has relied upon the various decisions as under: (i) Jai Steel (India) Vs ACIT (2013) 88 DTR 1 (ii) Saumya Construction Pvt. Ltd. (2016 387 ITR 529 (Guj) (iii) PCIT Vs Meeta Gutgutia (2017) 395 ITR 526 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. The return of income for the assessment year 2010-11 was processed U/s 143(1) and the return of income for the assessment year 20111-12 subjected to scrutiny assessment year U/s 143(3) of the Act vide order dated 25.03.2014. There was a search U/s 132 of the Act on 10.10.2014 in the case of the assessee. There is no dispute that as on the date of search the proceeding for the assessment years 2010-11 2011-12 were not pending and therefore, the assessment for these two years were not got abated by virtue of search and seizure action U/s 132 of the IT Act. It is also not in dispute that in the return of income filed U/s 139(1) of the Act the assessee declared the long term capital gain of ₹ 11,31,564/- and ₹ 8,53,677/- for the assessment years 2010-11 2011-12 respectively though the same was claimed as exempt U/s 10(38) of the Act. Thus, the facts emerged from the record clearly manifest that the assessee declared these transactions of purchase and sale of shares and consequential long term capital gain in the original return of income filed U/s 139(1) of the Act for these two assessment years. Since, the assessment years 2010-11 2011-12 were not pending a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) has also dismissed the SLP filed by the Revenue against the decision of Hon ble of Delhi High Court wherein the decision in case of Kabul Chawla was followed. There are series of decisions on this point by various Hon ble High Courts including the jurisdictional High Court and therefore, the decisions which have not been reversed by the Hon ble Supreme Court are binding precedent for this Tribunal as well as for the ld. CIT(A). Though the Assessing Officer can make the addition to keep the issue alive as the Revenue has challenged the same of the decisions before the Hon ble Supreme Court. The Coordinate Bench of this Tribunal in case of DCIT vs. M/s A.M. Exports (supra) while considering an identical issue has held in para 8 as under:- 8. We have considered the rival submissions as well as relevant material on record. The first aspect involved in the matter is sustainability of the addition made by the Assessing Officer without any incriminating material found or seized during the course of search and seizure action. There is no dispute that the original return of income filed by the assessee U/s 139(1) of the Act on 11/10/2010 was not pending assessment as on the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, for understanding of the issue, all the relevant questions put to the assessee and answered to them are to be read conjointly. Hence, we quote question No. 34 to 36 and question No. 39 of assessee s statement recorded U/s 132(4) dated 04/4/2013 and question No. 77 of statement recorded U/s 132(4) on 05/4/2013 and question No. 12 and reply of the statement of the assessee recorded U/s 131 of the Act in post search investigation by the ADIT as under:- (i) Interlink saving finance Pvt. Ltd. 57 Adarsh Nagar, Rishikesh, dehradun, Uttranchal. (ii) Parmatma Developers Pvt. Ltd., 101, Balaram Dey Street, Gr Floor, Kolkata (iii) Rameshwar Finvest Pvt. Ltd., 101 Balaram Dey Street, Kolkata (iv) Sri Ram Tie Up Pvt. Ltd., 2, Banarashi Ghosh, 2nd Bye Lane, Kolkata (v) ________________________do _________________________ (vi) Tara Vinimay Pvt. Ltd., 101, Balaram Dey Street, G. Floor, Kolkata (vii) Victor Project Pvt. Ltd., 2 Mullick Street, Ist Floor, Kolkata (viii) Yatan Traders Pvt. Ltd., 62/1, Hriday Krishna Banerjee Lane, Howrah. * * * * * In reply to the question No. 34, the assessee has clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the Act and therefore, there was no admission on the part of the assessee. Except the statement of partner of the assessee, there was nothing incriminating found or seized during the course of search and seizure action, therefore, the statement of the assessee recorded during the search and post search enquiry has to be read together and the outcome of the said statement is that the assessee has never admitted any bogus transaction except the misunderstanding due to continuous grilling by the Investigation Wing and due to mentally exhausted, the assessee given some inconsistent reply to question No. 77 which was subsequently clarified in question No. 12 of the statement recorded by the investigation Wing in the post search enquiry U/s 131 of the Act. Even otherwise, all these statements are only regarding one transaction of loan that cannot be applied to the entire transactions of loan taken from 12 parties. Therefore, except the statement of the assessee to question No. 77, which was subsequently clarified in question No. 12, there was nothing in the shape of any material or document much less incriminating material with the Assessing Officer to make the addition to the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs (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 incriminating material was unearthed during the search, no additions could have been made to the income already assessed. Thus, the Hon'ble High Court has rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er this Section only on the basis of seized material. 58. In Kabul Chawla (supra), the Court discussed the decision in Filatex India Ltd. (supra) as well as the above two decisions and observed as under: 31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra), and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the said 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 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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 Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court In the case of CIT v. Jayaben Ratilal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the regular books of accounts maintained by our firms. 65. Therefore, there was a clear admission by the Assessees in Smt. Dayawanti Gupta (supra) there that they were not maintaining regular books of accounts and the transactions were not recorded therein. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lous books or records for long. These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions 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. Conclusion 72. To conclude: (i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the facts and circumstances, the Revenue was not justified in invoking Section 153A of the Act against the Assessee in relation to AYs 2000-01 to AYs 2003-04? (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also 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 separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed 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, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long 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 just In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or 13 D.B. INCOME TAX APPEAL NO.53/2011 Jai Steel (India), Jodhpur vs. Assistant Commissioner of income Tax, Jodhpur (Along with other 16 similar matters) reassessment can be made. 7.5 Similar view point was expressed by the Hon ble Delhi High court in the case of Kabul Chawla vs. ACIT 380 ITR 573 (Del HC). The relevant observation of Hon ble court could be seen in para 37 38 of order, same is reproduced below: Para 37. On a conspectus of Section 153A (1) of the Act, read with the provisos thereto, and in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 2006-07.0n the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 7.6 The issue of additions made by the AO while framing the assessment u/s 143(3)/153A, if no incriminating material is found during the course of search was considered by Hon ble Gujarat High court in the case of Soumya construction PL Vs CIT 387 ITR 529. In its order dated 14/03/2016 Hon ble court has categorically stated that, in cases of completed assessment, if no incriminating material is found then no additions can be made in the assessment framed u/s 153A of the act. The relevant para no. 18 8s 19 of the court order can be referred to. Similar view of also taken in the following judgments, including by Hon'ble Jaipur ITAT Hon'ble ITAT Jaipur in many cases: a. Conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest was offered in the other years from A.Y. 2010-11 to 2016-17. As regards the addition on account of opening cash balance, the ld AR has referred to the cash book and submitted that there is no opening cash balance and the A.O. has made this addition which is contrary to the fact. 7. On the other hand, the ld DR has relied on the orders of the authorities below. 8. Having considered the rival submissions and carefully perused the record. From perusal of the record, it is noted that the assessee has explained the difference of ₹ 3,839/- on FDR interest being the excess amount was offered to tax in the other years and there is no suppression of any income. From perusal of the details, I find that this is only a calculation mistake while preparing the statement of affairs and overall interest income was offered by the assessee which is more than the actual interest on FDR. As regards the addition made on account of opening balance, it is clear from the cash book that there was no opening balance as on 01/4/2009. Thus, this addition is contrary to the facts and records, hence, even on merits, these additions are not sustainable and the same are deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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