TMI Blog2023 (5) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... orting to the provisions of sec.153A unless some incriminating materials relating to the said assessments, which are contrary to and/or not disclosed during regular assessment proceedings, are found. Whereas the provisions of sec.153A of the Act provide for issuing of notice u/s 153A of the Act for six assessment years immediately preceding the year of search and thereafter, the AO shall assess or reassess the total income for the above said six years. This section further provides that all pending assessment or re-assessment pending as on the date of search shall abate. Hence the assessments of the assessment years falling within the period of above said six years which are not pending, i.e., which have attained finality shall not abate. Assessments of such assessment years are called unabated/completed/finalized assessments. The question as to whether the AO is entitled to interfere with such kinds of unabated/completed/ finalized assessments or not without there being any incriminating material found during the course of search, was examined in the case of All Cargo Logistics Ltd [ 2012 (7) TMI 222 - ITAT MUMBAI(SB)] wherein it was held that the AO could interfere wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions as to whether addition can be made in absence of incriminating material under the provision was not adjudicated on this issue but adjudicated on the issue of deduction w/s 801A, hence the issue as to whether addition can be made in absence of incriminating material under the provision has not been decided conclusively by Hon'ble Supreme Court. iii. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 61,57.440/- on account of bogus purchase expenses ignoring the facts that the assessee failed to prove the genuineness of purchases, and any expenditure in respect of which payments by account payee cheques is not enough evidence to prove the existence of the parties and also the genuineness of the transaction? iv. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 8,42,369/- as alleged sub-contract expenses ignoring the facts that the assessee failed to prove the genuineness of these expenses and to produce evidences to substantiate the genuineness? v. Whether on the facts and circumstances of the case and in law, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved by the order, the assessee has filed an appeal before the CIT(A). The Ld. CIT(A) found that the assessee has filed the appeals for the A.Y 2014-15 to 2020-21, therefore for the sake of convenience all these appeals are heard together and consolidated order is passed and the CIT(A) has taken a lead case of the A.Y 2014-15. The assessee has challenged the validity of additions made by the AO since these assessments fall under the category of unabated assessments and no incriminating material relating to these years was found in the course of search. In support of this proposition assessee relied on the jurisdictional Hon'ble Bombay High Court decision of M/s. All cargo Global Logistic Ltd and CIT Vs Continental ware housing corporation (Nhavaseva) Ltd and the Hon ble Tribunal decisions. Whereas, the CIT(A) has considered the grounds of appeal, submissions of the assessee, findings of the scrutiny assessment, remand report, and provisions of law and judicial decisions and decided on merits and cancelled the assessment order as no incriminating material was found during the course of search proceedings and allowed the grounds of appeal observing at page 14 Para 4.3.3 to 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g materials, the completed assessment has only to be reiterated. Similar view has been taken in the case of Murli Agro Products Ltd.[2014] 49 taxmann.com 172 (Bom). The Hon'ble jurisdictional High Court in the case of Commissioner of Income-tax- II, Thane v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bombay) has held that no addition can be made in respect of assessments which have become final, if no incriminating material is found during the search. It has been held that once the original assessment has attained finality, then the Assessing Officer while passing the independent assessment order u/s.153A r.w.s.143(3) cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings u/s.153A establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. The Hon'ble jurisdictional High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. Has held as under: A bare perusal of section 153A would indicate as to how a non-obstante clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in furtherance thereof is contemplated.[Para 23] Assessee's reliance upon the Division Bench judgment of this Court rendered in CIT v. Murli Agro Products Ltd. [2014] 49 taxmann.com 172 in that context is, therefore, well placed.[Para 24] The Division Bench outl ined the ambit and scope of the powers conferred by section 153A and observed that on a plain reading of section 153A, it becomes clear that on initiation of the proceedings under section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under section 132 or making requisition under section 132A stand abated and not the assessments/reassessments already finalised for those assessment years covered under section 153A. 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 assessment/reassessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment or reassessment and which are in force on the date of initiation of the search or making of the requisition. As that specific argument was canvassed and dealt with by the Division Bench and that is how it was called upon to interpret section 153A, then, each of the above conclusions rendered by the Division Bench would bind the instant Court.[Para 29] Even otherwise, Court is in agreement with the Division Bench when it observes as above with regard to the ambit and scope of the powers conferred under section 153A. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by the revenue. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under after 3 section 132A after 31-3- 2003. There is a mandate to issue notices under section 31-3- 153(1)(a) and assess or reassess the total immediately preceding the assessment year come of such search is conducted or requisition is made Six assessment years relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Tribunal. 5. At the time of hearing, the Ld. DR submitted that the CIT(A) has erred in quashing the assessment order and deleting the additions on the ground that no incriminating material was found in the course of search relying on the judicial decisions and the revenue has filed the SLP in the case of Hon'ble Bombay High court decision and the same is pending and prayed for allowing the revenue appeal. 6. Per Contra, the contentions of the Ld. AR that the CIT(A) was correct in deciding the appeal on legal ground as the AO could not have made addition in these years in the absence of incriminating material and all these four assessment years falls under the category of unabated assessment years. The Ld. AR emphasized that the CIT(A) has considered the fact that the search has taken place on 06.11.2019 and the return of income for A.Y.2014-15 was filed on 24.11.2014 and the assessment order u/s 143(3) was passed on 27.09.2016, the time limit for issue of notice u/s 143(2) of the Act is 30-09-2015 and was considered. The contentions of the Ld.AR are that in respect of A.Y.2015-16, 2016-17 2017-18 the time limit for issue notice u/s 143(2) of the Act has expired m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18 fall under the category of unabated assessments . There is also no dispute that the department did not unearth any incriminating material relating to the additions of bogus purchases, bogus job works labour charges, subcontracts payments, unexplained cash credits of loans and interest on loans and hence the AO, in the absence of any incriminating material relating to the above said additions, could not have made any addition in unabated assessment years. In support of the above said proposition, we rely upon the decision rendered by Hon ble Bombay High Court in the case of Continental Corporation (Nhava Sheva) Ltd (2015)(58 taxmann.com 78)(Bom) and Gurinder Singh Bawa (2017)(79 taxmann.com 398)(Bom), wherein the Hon ble Bombay High Court held that the unabated assessments (finalized assessments) cannot be touched by resorting to the provisions of sec.153A of the Act unless some incriminating materials relating to the said assessments, which are contrary to and/or not disclosed during regular assessment proceedings, are found. 9. Whereas the provisions of sec.153A of the Act provide for issuing of notice u/s 153A of the Act for six assessment years immediately precedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has 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. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. 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. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y if incriminating materials are gathered in the course of search or during proceedings under Section 153A of the Act which are contrary to and/or not disclosed during regular assessment proceedings. 7 . In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessments were pending, so as to abate nor any incriminating evidence was found. The grievance of the revenue is only with regard to finding in the impugned order on the merits of the individual claim regarding gif ts and deemed dividend. However once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A 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 the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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