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TMI Blog2016 (9) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income was filed by the assessee on 30-09-2008 for assessment year 2008-09 declaring loss at Rs. 104,17,70,752/- u/s 139(1) of the Act. The case was selected for scrutiny u/s 143(2) of the Act on 03-09-2009. A search was conducted u/s 132 of the Act on ISPAT Group of cases on 30-11-2010; at that point of time assessment for the relevant assessment year was pending. In response to notice u/s 153A of the Act the assessee filed return of income declaring total loss at Rs. 419,48,90,102/- on 29-03-2012. The assessee made a new claim for treating "gain on pre-payment of deferred VAT/sales tax" on Net Present Value (NPV) basis for an amount of Rs. 318,10,93,993/- as capital receipts.. The AO while completing assessment u/s 143(3) r. w. s. 153A of the Act disallowed this claim by considering the same as revenue receipt. According to the AO the assessee has availed of sales tax deferral scheme but, state government permitted premature re-payment of deferred sales tax liability at the NPV basis. According to the AO, the assessee treated this as capital receipt though credited to the P & L account being difference between the deferred sales tax and its NPV. The AO first decided the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has made the fresh claim in the return of income filed on 29-03-2012 u/s 153A of the Act in consequence to search action, whereas in the original return of income filed u/s 139(1) of the Act on 30-09-2008, the assessee treated these receipts as capital receipts. The original return filed u/s 139(1) of the Act was processed u/s 143(1) of the Act but, notice u/s 143(2) of the Act for scrutinizing the return of income was pending as on the date of search conducted on the assessee. The AO did not allow carry forward of total loss so assessed, together with claim on account of unabsorbed depreciation/business loss and unabsorbed long term capital loss of earlier years. Aggrieved, assessee preferred appeal before the CIT (A). 5. The CIT (A) confirmed the action of the AO with a detailed order vide Para 6 to 6.3 as under:- "6. I have very carefully considered the facts of the case, findings of the A.O., and the submissions made by the appellant. I have also considered the orders/ decisions cited and relied on by the appellant. The initial submission of the appellant is that there is no embargo or restriction on the assessee to claim any deduction which was not allowed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as prescribed under s. 153A is a code in itself enabling the A.O. to make additions in the context of search and Seizure carried out; section 153A clothes the A.O. with jurisdiction to make addition, other than what has already been assessed, on the basis of incriminating materials unearthed during search, facts discovered in the course of search assessment proceedings. Once the A.O. assumes jurisdiction under s. 153A, the assessment would be made under s. 143(3) but that does not tantamount to mean that the search assessment is akin to normal assessment proceedings. The enabling provision to make assessment is sec. 143(3) but the same is subject to express provisions of sec. 153A in cases of search and seizure. It has been held by the Hon‟ble Jodhpur ITAT in the case of Suncit3r Alloys P. Ltd. vs. ACIT, that the expression 'assessment or reassessment' used in sec. 153A of the Act connotes determination of total income pursuant to return required to be filed in the case of a person where a search is initiated under s. 132 or requisition is made under s. 132A of the Act To such assessment or reassessment made all other provisions of this Act shall also apply as is spel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty in such cases. This all goes to show that the assessment or reassessment made pursuant to notice under section 153A of the Act are not de novo assessments It has been held by the 1TAT that there is no merit in the ground raised in appeal to make a new claim of deduction or allowance as such where admittedly the regular assessments are shown as completed assessment on the date of initiation of action under section 132 of the Act. 6.2 The appellant has placed emphasis on the order of the Hon'ble ITAT in the case of DCIT Vs Eversmile Construction Co. P. Ltd. reported in 65 DTR 39 to assert that the assessee is entitled to lodge a fresh claim. The appellant has placed reliance on the said decision on the ground that the facts are identical. The said decision has been perused. It is observed that in the said case, in the assessment completed under s. 143(3), the A.O. had made disallowance of interest .The assessment attained finality with no appeal filed. Subsequently, the said assessee was searched and in the return filed in pursuance to notice under s. 153A, the assessee suo moto added back the interest disallowed but appended a note stating that the disallowance of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The facts of the case are undisputed that the assessee has shown these gains as capital receipts in the original return of income filed u/s 139(1) on 30-09-2008. This return was processed u/s 143(1) of the Act but, scrutiny assessment was pending as notice u/s 143(2) of the Act was issued on 03-09-2009. A search was conducted u/s 132 of the Act on assessee on 30-11-2010 and at that point of time assessment was pending. The assessee treated these as capital receipts filing return of income u/s 153A of the Act in consequence to search u/s 132 of the Act. The objection of the Revenue, i. e. of the AO as well as of the CIT (A) is that this claim was not made in the original return of income nor revised return was filed u/s 139 (5) of the Act and hence, it is not open to the assessee to use the proceedings initiated u/s 153A of the Act to lodge a fresh claim. It is a concurrent view of the authorities below that the proceedings u/s 153A of the Act cannot be used by the assessee to seek benefit by making a fresh claim of deduction not made in the original/revised return. Now before us, learned Counsel for the assessee argued that, in the given facts and circumstances, in view of the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made.]" From the reading of section 153 A of the Act, it is observed that this section provides for the procedure for assessment in search cases. Section 153A (1) starts with non-obstante clause stating that it is, "notwithstanding anything contained in section 147, 148 and 149". Sub-section (a) of Section 153A (1) provides for issuance of notice to the persons searched u/s 132 of the Act to furnish a return of income but it nowhere prescribes issuance of notice u/s 143(2) of the Act. The second proviso to section 153A of the Act makes it clear that the assessment relating to any assessment year filed within the period of sixth assessment year pending on the date of search u/s 132 of the Act shall abate. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he powers which are conferred by virtue of section 153A in the Assessing Officer. However, the exercise of power under that provision is where search is initiated under section 132 or books of account or other documents or assets are requisitioned under section 132A of the Act after 31st May, 2003. Then the Assessing Officer shall 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) of sub-section (1) of section 153A and clause (b) postulates assessment or reassessment of the total income of six years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The first proviso mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso, according to Mr. Dastur, is important because the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of section 153A need to be answered against the Revenue and in favour of the assessee". This judgment of the Hon‟ble High Court also explains that the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate and this means that the assessment pending on the date of initiation of search shall cease to exist and no further action qua that assessment shall be taken by the AO. The pending assessment in that case may be undertaken u/s 153A of the Act. The abatement of pending assessment is for the purpose of avoiding two assessments for the same year i.e. one being regular assessment and the other being search assessment u/s 153A of the Act. In other words, these two assessments merge into one assessment. It means that completed assessments stand on different footing from the pending assessments. Hence, in so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A of the Act merge into one and in that case only one assessment for the remaining set of years, where assessment is pending, is to be made separately on the basis of search materials and the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Co-ordinate Bench of the Tribunal in the case of Jay Bharat Co-operative Housing Society Ltd. Vs ITO [2010] 125 ITD 90 (Mum.) wherein the Tribunal vide Para 13 and 14 has rejected the claim of the assessee for admissibility of new claim by observing as under:- 13. We have also examined the other order of the Tribunal, but they all were "rendered on different facts. Turing to the facts of the case, we find that AO has passed an order following the judgment of the apex Court in the case of Goetze (India) Ltd. vs. CIT (supra). Now, the question arises; can the Tribunal pass any order and direct the AO to adjudicate the claim of the assessee which was not entertained by the AO in the light of the judgment of the apex Court? The answer is certainly 'No'. If the Tribunal passes such order, it would certainly be against the spirit of the judgment of the apex Court. More so, it is a settled position of law that when a particular act or a power cannot be exercised directly by an authority, that act cannot be done indirectly under the garb of directions of the appellate authority. We, therefore, are of the view that since the AO has passed an order pursuant to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax, (2006) 157 Taxman 1. We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs. Commissioner of Income-tax (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Company Limited contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above discussion and precedence, the scheme of assessment u/s 153A of the Act in case of search, the AO shall issue notice to searched 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) of sub-section (1) of section 153A and clause (b) postulates assessment or reassessment of the total income of six years immediately preceding the assessment year relevant to the previous year in which such search is conducted. The first proviso mandates that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso postulates that the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in sub-section (1) is pending on the date of initiation of the search u/s 132 of the Act shall abate. In the present case before us, however, though the second proviso to sub-section (1) of section 153A would not apply in the first three years of this case, yet, as far as the second three year period is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not following the ratio laid by Hon‟ble Special Bench of the Jurisdictional Appellate Tribunal which has since been confirmed by the Hon‟ble Jurisdictional High Court". 16. The facts relating to this issue are that the assessee treated "gain on pre-payment of deferred VAT/sales tax" on Net Present Value (NPV) basis amounting to Rs. 318,10,93,993/- as capital receipt. The AO while completingassessment u/s 143(3) r. w. s. 153A of the Act treated this as revenue receipt. According to the AO, the assessee has availed of sales tax deferral scheme but, state government permitted premature re-payment of deferred sales tax liability at the NPV basis. According to the AO, the assessee treated this as capital receipt though credited to the P & L account, which in the view of the AO, were revenue receipts. 17. The AO as well as the CIT (A) has not examined this claim by observing that the fresh claim cannot be made after initiation of proceedings u/s 153A of the Act as the assessee has not made the claim in the original return of income filed u/s 139(1) of the Act. The AO noticed that the assessee in its computation of income filed along with the return of income in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court was rendered. We do not find that the observations and conclusions at pages 346 and 347 of the report, which are relied upon heavily by Mr. Gupta, would have any application in the facts and circumstances of the present case. The Judgment of the Hon‟ble Supreme Court is therefore distinguishable on facts. 52. We are of the opinion that the Revenue‟s argument really misses the point. The Incentive to establish a unit or factory in a industrially backward or hilly area is the core of the Sales Tax Deferral Scheme. Some time has to be given to the unit to establish itself before it starts giving corresponding benefit to the state. That opportunity is granted by deferring the remittance of the Sales Tax collected by the unit like the Assessee. In that regard, we have perused the compilation of admitted documents placed on record by Shri Dastur. From a perusal thereof, it is apparent that the Government Resolution dated 4th May, 1983 evolves a package of incentives to disperse the industries from Bombay - Thane - Pune belt and to attract them to underdeveloped and developing areas of the Stat4e of Maharashtra. This package evolves several measures to achieve thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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