TMI Blog2017 (9) TMI 1866X X X X Extracts X X X X X X X X Extracts X X X X ..... ment u/s 153A of the Act will be made on the basis of incriminating material. Therefore, the argument of the Ld. D.R. lacks merit on this issue. As discussed earlier, in this appeal no addition was made on the basis of seized material and the assessment got completed - Decided in favour of assessee. - I.T.A.No.566/Vizag/2014 - - - Dated:- 27-9-2017 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member Appellant by: Shri G.V.N. Hari, AR Respondent by: Shri R. Govinda Rajan, DR ORDER D.S. Sunder Singh, This appeal filed by the assessee is directed against order of the Commissioner of Income Tax (Appeals) {CIT(A)}, Guntur vide ITA Nos.644, 647 648/CIT(A)/GNT/2007-08 dated 25.2.2014 for the assessment year 2001-02. 2. In this case the assessee filed return of income declaring total income of ₹ 3,32,697/- on 12.12.2001 for the assessment year 2000102. The assessing officer completed the assessment u/s 143(3) r.w.s. 153A of the Act on 31.12.2007 and during the assessment proceedings the assessing officer made the addition of ₹ 11,65,000/- as unexplained cash credits and the disallowance of interest of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case on 8.2.2006. The Ld. A.R. argued that the A.O. cannot proceed to make assessment u/s 153A of the Act in the case of completed assessment without the incriminating material found during the course of search and seizure operation. In the case of the assessee, the assessment was completed on the basis of entries recorded in the regular books of accounts and no addition was made on the basis of the material found during the course of search. Since there was no material on record to show that the assessment was completed on the basis of seized material, the assessing officer should not have made the additions in the assessment. Therefore, the Ld. A.R. requested to set aside the order of the lower authorities and allow the appeal of the assessee. The Ld. A.R. relied on the order of this Tribunal in the case of P. Rama Raju Vs. DCIT, Central Circle-1, Visakhapatnam in ITA Nos.424, 425 426/Vizag/2013 dated 31.7.2017. 6. On the other hand, the Ld. D.R. argued that after the introduction of provisions of section 153A 153C of the Act, the issue with regard to making assessment on the basis of seized material not in accordance with the spirit of introduction of new pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph of the order of this Tribunal cited supra as under: 10. We have heard both the parties and perused the materials available on record. In this case, search was conducted on 22.8.2008 and the assessment under the consideration is the A.Y. 2005-06. Time limit for issue of notice u/s 143(2) of the Act is expired on 31.3.2007. Since the period of limitation for issue of notice u/s 143(2) of the Act has been expired, the assessment deemed to have been completed and reached finality. As per the judicial precedents and the ruling of this Tribunal in the case law cited (supra), the coordinate bench held that where the assessment have been reached finality cannot be tinkered with unless there was a seized document indicating undisclosed income or the asset. For ready reference, we extract the relevant para of the order cited (supra): 11. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The only issue that arises for our consideration is whether on the facts and in the circumstances of the case, the A.O. is right in making additions without any seized materials in respect of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O., as per the provisions of section 153A of the Act, there is no limitation or restriction provided in the new procedure of search assessment on the powers of the A.O. for making assessment/re-assessment and the A.O. is not required to confine his assessments on the materials found during the course of search as was the case in the old procedure of block assessments. It is the contention of the assessee that the A.O. cannot disturb the completed assessment unless there was a seized material. The assessee further contended that where assessments are not pending as on the date of search and time limit for issue of notice u/s 143(2) of the Act has been expired, irrespective of the fact that those assessments have been completed u/s 143(1) or 143(3) of the Act, then the A.O. has no power to re-assess the income of those completed assessment years. We find force in the arguments of the assessee, for the reason that the coordinate bench of this Tribunal in ITA Nos.300 to 305/Vizag/2012, in case of L. Suryakantham Vs. ACIT, has considered similar issue and held that the A.O. had no jurisdiction to make additions u/s 153A of the Act, for the assessments which are not pending as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /153C of the Act for all the six assessment years immediately preceding the year in which search was conducted. According to the A.O., as per the provisions of section 153A of the Act, there is no limitation or restriction provided in the new procedure of search assessments on the powers of A.O. for making assessment/reassessment and the A.O. is not required to confine his assessments on the material found during the course of search as was the case in the old procedure of block assessments. The new procedure of block assessment was explained by way of provisions of section 153A of the Act. As per section 153A of the Act, the A.O. shall assess or reassess the total income of the specified six assessment years irrespective of the fact that the assessment of the said years were completed or pending as on the date of search. Therefore, the A.O. has reassessed the income of six assessment years and recomputed the profits afresh after considering the relevant facts available on record. It was the contention of the assessee that the A.O. cannot disturb the completed assessments unless there was a seized material. The assessee further contended that where assessments are not pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of search in respect of assessment year 2004-05 to 2007-08. Therefore, we are of the opinion that the A.O. was not correct in reassessing the total income of the assessment year 2004-05 to 2007-08 in the absence of any seized materials. Accordingly, we direct the A.O. to delete the additions made for the assessment year 2004-05, 200506 2007-08. 23. It is pertinent to discuss herein the case laws relied upon by the assessee. The assessee has relied upon the ITAT, special bench decision in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287. The coordinate bench of this Tribunal, while deciding the issue in favour of the assessee held as under: In assessments that are abated, the AO aretains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means (i) books of account, other documents, found in the course of search but not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd (supra). 23. We have earlier noticed that the Hon'ble jurisdictional Andhra Pradesh High Court has also upheld by the orders passed by the Tribunal by following the decision rendered by the Special bench in the case of All Cargo Global logistics Ltd (supra) in the following cases:- (a) Sree Lalitha Constructions (J1TA No 368 of 2014) (b) M/s. Hyderabad House Pvt Ltd (ITTA No.266 of 2013) (c) M/s. AMR India ltd (FITA No.357 /v/2014) Further we agree with the contentions of the assessee that the decision rendered by the jurisdictional High Court in the case of Gopal Das Bhadruka (supra) have been rendered on the facts prevailing in those cases, since the issue relating to concluded assessments and pending assessments was not before the I1on'ble Andhra Pradesh High Court On the contrary, the above said three decisions of the jurisdictional High Court comes to the support of the assessee's contentions with regard to the legal proposition agitated before us, besides the decisions rendered by various other High Courts. Accordingly, we are of the view that the scope of enquiry in the case of unabated assessments, i.e., the assessment years in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any incriminating materials. Hence, we delete the additions made by the A.O. for the assessment year 2004-05, 2005-06 2007-08. Accordingly, the ground raised by the assessee is allowed. 14. In this view of the matter and considering facts and circumstances of this case and also respectfully following the decision of co-ordinate bench of Visakhapatnam, in the case of L. Suryakantham Vs. ACIT, in ITA Nos.300 to 305/Vizag/2012, we are of the view that the A.O. has made reassessment u/s 153A/153C of the Act, on the basis of information/material available in the return of income, without referring to any seized material. Therefore, following the special bench decision (supra) we hold that the A.O. had no jurisdiction to make additions u/s 153A of the Act, for the assessments which are not pending as on the date of search. The assessment for the assessment years 2005-06 to 2009-10 were not pending as on the date of search. The time limit for issue of notice under sec. 143(2) has been expired. Therefore, the A.O. has no jurisdiction to reassess the income for the assessment year 2005-06 to 2009-10 in the absence of any incriminating materials. The CIT(A) has rightly delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the scope of the proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of the Act, that the assessment will have to be confined to only incriminating material found as a result of search. The next aspect to be considered is as to when returns of income filed u/s.139 of the Act are shown to have been accepted without an intimation u/s.143(1) of the Act or without any notice issued u/s.143(2) of the Act within the time limit contemplated by the proviso thereto, can be said to be assessment proceedings concluded that have not abated u/s.153A of the Act. Section 153A of the Act, uses the expressing pending assessment or reassessment . When a return is filed and when neither an acknowledgement or intimation u/s.143(1)of the Act is issued nor a notice u/s.143(2) of the Act is issued within the time limit laid down in the proviso to Secc.143(2) of the Act, the proceedings initiated by filing the return are closed. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search seizure operation relating to unsecured loans is not acceptable since in the assessment order, the assessing officer has not brought on record any evidence found during the course of search relating to the additions made. On verification of the assessment order, it is evident that the addition was made on the basis of the entries made in the regular books of accounts but there was no reference with regard to the seized material. Hence, the reliance of the Ld. D.R. on statement of facts that the assessment was made on the basis of seized material is not correct. Ld. D.R. further argued the legal position subsequent to the introduction of provisions u/s 153A of the Act and 153C of the Act for search assessments the incriminating material not necessary is not tenable. This issue has been considered by the special bench in the case of All Cargo Logistics Limited cited (supra) and answered that the assessment u/s 153A of the Act will be made on the basis of incriminating material. Therefore, the argument of the Ld. D.R. lacks merit on this issue. As discussed earlier, in this appeal no addition was made on the basis of seized material and the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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