TMI Blog2017 (4) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue by the decision of Continental Warehousing Corporation (Nhava Sheva) Ltd.[ 2015 (5) TMI 656 - BOMBAY HIGH COURT] . Respectfully, following the same and in the given said of facts, we are of the view that this principal amount waived by the lender could not be added. Accordingly, we confirm the order of CIT(A) deleting the addition and dismiss this issue of Revenue s appeal. - ITA No.1166/Mum/2015 (A.Y:2006-07), ITA No.621/Mum/2015 (A.Y:2005-06) - - - Dated:- 7-4-2017 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM Assessee by : Shri D.V. Lakhani, AR Revenue by : Shri K. Ravi Kiran, DR O R D E R PER MAHAVIR SINGH, JM: These two cross appeals, and one by the assessee, are arising out of the order of CIT(A)-51 CIT(A)-39, Mumbai, in appeal Nos. CIT(A)-51/IT-26/2013-14 CIT(A)-39/AC.CC22/IT-40/2013-14 dated 25-04-2013 10-10-2014. The Assessments were framed by DCIT Circle-18 19, Mumbai for the A.Ys. 2005-06 2006-07 vide order dated 31-03-2013 under section 153A read with section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in Revenue s appeal in ITA No. 667/Mum/2015 for AY 2005-06 is as regards to the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity charges payable and also rejected the claim of set off of unabsorbed depreciation pertaining to AY 1995-96 already allowed under section 143(3) of the Act originally framed assessment on 22-03-2007. Aggrieved, assessee challenged the jurisdictional issue before CIT(A) that no assessment can be framed under section 153A of the Act and wherein no seized materials relatable to additions were found. The CIT(A) decided the issue by observing in Para 5.2 to 5.3 as under: - 5.2 I have very carefully considered the matter. in the instant case, there was an action under s. 132(1) of the Income Tax Act on 30.11.2010. The regular assessment under s. 143(3) of the income Tax Act had been completed as per order dated 22.03.2007. Therefore, it follows that as on the date of search, there was an assessment completed on the appellant tinder s. 143(3). In the said order there is no addition/ disallowance regarding the remission of foreign currency term loan. Subsequently, the A.O. initiated proceedings under s. 153A and in the assessment completed under s. 143(3) r.w.s. 153A, the A.O. has brought to tax a sum of ₹ 39,04,49,429/- being the principal amount of loan waived by the lende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MUM). While dealing with a similar issue in the case of Gurinder Singh Bawa Vs. DCIT [1TA No. 2075/Mum/2010 dated 16.11.2012], the Hon'ble Tribunal had held that in cases where assessment has been completed, and where there was no proceedings pending as on the date of search, the addition could be made only on the basis of incriminating material found during search. In this context, it is relevant to take note of the judgement of the Karnataka High Court in the case of Canara Housing Development Co. vs. DCIT [ITA No. 38/2014]. In the said case, the Karnataka High Court was dealing with the question of law- 'When once the proceedings under s. 153A of Act is initiated, whether the Commissioner of Income tax can invoke the power under s. 263 of the Act to review the order of assessment passed by the Assessing Authority? While answering the said substantial question of law the Court has examined the provisions of Sec. 153A of the Act and the scope of powers of the A.O. once an assessment is reopened consequent upon search being initiated. The relevant portion of the observations of the court as can be found in paragraph 10 of the judgment dated 25.07.2014 is reproduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the jurisdictional High Court in the case of CIT vs. Mmii Agro Products (ITA No. 36/2009 per order dated 29.10.2010). Moreover, it is a settled legal position that the decision of the jurisdictional High Court is the binding precedent even if the same is contrary to the decisions of the other High Courts. In the said case, the Hon'ble High Court was dealing with the question of whether the ITAT was justified in cancelling the order of the CIT passed under s. 263 of the Income Tax Act. In the case before the Bombay High Court, assessment was completed before the date of search. The Court in paras 12 and 13 of its order observed as follows- 12) Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section SOHHC of the Income Tax Act as well as the loss computed under the assessment dated 29.12.2000 would attain finality. In such a case, the A. 0. while passing the independent assessment order under Section 153A read with Section 743(3) of the Income Tax Act could not have disturbed the assessment /reassessment order which has attained finality, unless the materials gathered iri the course of the proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench could not produce any seized material pertaining to this AY relatable to assessee in regards to the additions made by AO. Once this is the position, the issue is squarely covered in favour of assessee by the decision of the Hon'ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom). 5. We find that this issue now stands covered in favour of assessee and against the Revenue by the decision of Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein considering the judgment of the Special Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics 137 ITD 287(SB) (Mum), considered this issue that, whether there is scope of assessment u/s. 153A of the Act in respect to completed assessment which is limited only to undisclosed income and undisclosed assets found during the course of search or not? Hon'ble High Court held that on a plain reading of section 153 of the Act it becomes clear that on initiation of the proceedings u/s. 153A of the Act, it is only the assessment/reassessment proceedings that are pending on the date of cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall be made in respect of a completed assessment. The language is clear in this behalf and therefore literal interpretation should be followed. Such interpretation does not produce manifestly absur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word incriminating document . Clauses (a) and (b) of section 132(1) employ the words books of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorised on satisfaction of one of the three conditions enume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. In other words, harmonious interpretation will produce the following results: - a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 6. We have examined the details and noticed that the the regular assessment under s. 143(3) of the Act had been completed as per order dated 22.03.2007 of the AO. Therefore, it follows that as on the date of search, there was an assessment completed on the assessee under section 143(3) of the Act and in the said order there is no addition/ disallowance regarding the remission of foreign currency term loan, subsequently, the A.O. initiated proceedings under s. 153A and in the assessment comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
