TMI Blog2021 (11) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... peals and delete the additions. - SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER For the Assessee : Shri S.N. Soparkar, Sr. Advocate, Shri Parin Shah, AR, Shri Mukund Bakshi, AR For the Revenue : Shri Virendra Oza, CIT-DR. ORDER PER RAJPAL YADAV, VICE PRESIDENT: The appellants are father and son. Their appeals for Assessment Years 2012-13 and 2013-14 were decided by the learned Commissioner of Income-Tax (Appeals)-12, Ahmedabad [ CIT(A) in short] by separate orders passed in the case of each assessee on 14 March 2019. Hence, by way of the present four appeals, they are impugning the two orders of the learned CIT(A) passed on their respective appeals for Assessment Years 2012-13 and 2013-14. 2. The facts on all vital points are common in all these appeals; therefore, for the facility of reference, we are taking up the facts mainly from IT(SS)A No. 268/Ahd/2019 in the case of Shri Jayantilal Dalsukhbhai Panchal. The grounds of appeal taken by both the assessees are descriptive and argumentative in nature. In brief, they have raised two fold of grievances. Under the first fold of grievance, the assessee have challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns by 30.09.2013 in AY 2012-13 and 30.09.2014 in AY 2013-14. No notice under Section 143(2) was issued in these years. The first notice has been issued under Section 148 which is dated 27.04.2015. Therefore, on the date of search, no assessment proceedings or re-assessment proceedings were pending in these assessment years qua the assessees. The assessments are to be treated as completed assessments. The proceedings will not abate; hence, addition under Section 153A of the Act could only be made if some incriminating material was found during the course of search. This aspect was argued elaborately before the learned First Appellate Authority and the learned First Appellate Authority took cognizance of all these facts in the submissions as well as in the decision. But, ignoring the fact of service of notice under Section 148 on 27.04.2015, the learned First Appellate Authority has concluded that reassessment proceedings was pending; therefore, that would abate and assessments in these two years would be passed as if a regular assessments. The learned Counsel for the assessee took us through the findings of the learned CIT(A) in paragraph No. 5 to 5.3 which read as under:- 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-13 was pending, the proceeding abated. There should not be any dispute by the appellant that the assessment proceedings for A.Y. 2012-13 have not abated u/s 153A and therefore the additions to be made are not required to be restricted to the incriminating material found during the course of search in Narayan Realty Group. The assessment and additions made for the A.Y. 2012-13 are not hit (against the Revenue) by the case laws relied upon by the appellant in this regard. Because of the search in the Narayan Realty Group of case wherein the appellant himself was searched, the pending assessment proceedings u/s 147 (initiated on account of incriminating material found during the course of survey of Samarpan Infrastructure Pvt. Ltd, on 09/01/2013) get merged {in other words abates) with the later assessment proceedings initiated u/s 153A (on account of search conducted in the case of appellant himself). In view of these undisputed facts, I see no justification in the grounds of the appellant disputing the additions made by the AO based on the incriminating material found during the course of earlier survey. The appellant is not at all protected by -the case laws relied upon by him. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Panchal did not file any return under Section 139(1) of the Act for Assessment Year 2012-13; however, for Assessment Year 2013-14, he has filed his return of income under Section 139(1) of the Act on 31.10.2013 declaring total income of Rs. 1,95,35,690/-. All these returns were processed under Section 143(1) of the Income-Tax Act. It emerges out from the assessment order that a search and survey under Section 132/133A of the Income-Tax Act was carried out in the case of Rashmikant Bhatt Group of cases on 09.01.2013. According to the Assessing Officer, some incriminating materials related to the assessee were found and impounded during the course of survey proceedings carried out at Samarpan Infrastructure Pvt. Ltd. Therefore, based on the impounded material, the case of both the assessees were reopened under Section 147 of the Act for both the assessment years. Subsequently, a search under Section 132 of the Income-Tax Act was carried out in the Narayan Reality Group of cases, including the case of the assessees, on 13.11.2014. Consequently, the cases of both the assessees were centralized and proceedings under Section 147 of the Act were dropped and proceedings under Section 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search which was conducted upon the assessee on 13.11.2014. Thus, according to the learned Counsel for the assessee, the additions in the hands of both the assessees could be made if any incriminating documents exhibiting the fact of payment of on-money were found during the search at the premises of the assessee. The learned Assessing Officer has been harboring upon the information/loose papers collected from the third person which cannot be used against both the assessees. The learned Counsel for the assessee relied upon the following decisions:- 1. PCIT Vs. Saumya Construction (P.) Ltd., [2016] 387 ITR 529 (Guj.), 2. Pepsico India Holdings (P.) Ltd Vs. ACIT, [2015] 370 ITR 295 (Delhi), 3. Hon ble Gujarat High Court judgment in the case of PCIT vs. Chartered Speed Pvt Ltd, in Tax Appeal Nos. 126 127 of 2015, 4. Krishna Textiles Vs. CIT, [2009] 310 ITR 227 (Guj.) 5. Tribunal decision in the case of Hitesh Ashok Vaswani others Vs. DCIT in IT(SS) Nos. 118 to 123/Ahd/2019, decided on 12.11.2020. 7. On the other hand, learned CIT-DR was unable to controvert the contentions raised by the learned Counsel for the assessee. He requested that the Department be given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to 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, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of Rajesh Sunderdas Vaswani and Deepak Budharmal Vaswani under section 153A of the Act. ITAT Delhi Bench has specifically held that material recovered from the premises of other person cannot be used in the hands of the searched person. For that purpose an assessment under section 153C or 147 is to be made. At this stage, in order to fortify ourselves, we would like to make reference to the following paragraphs of the ITAT Delhi Bench's order. It reads as under: 15. Thus, when during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of the some other person, then the assessment has to be made under other provisions and not under section 153A of the Act. Hon'ble jurisdictional high Court has also considered the decision of Hon'ble Delhi High Court in the case of CIT Vs. Kabul Chawla (supra). Hon'ble Gujarat High Court framed the following question of law in the case of Pr.CIT Vs. Saumya Construction (supra): [A] Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? [B] Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? [C] Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 17. In the facts of the present case, a search came to be conducted on 07.10.2009 and the notice was issued to the assessee under section 153A of the Act for assessment year 2006-07 on 04.08.2010. In response to the notice, the assessee filed return of income on 18.11.2010. In terms of section 153B, the assessment was required to be completed within a period of two years from the end of the financial year in which the search came to be carried out, namely, on or before 31st March, 2012. Here, insofar as the impugned addition is concerned, the notice in respect thereof came to be issued on 19.12.2011 seeking an explanation from the assessee. The assessee gave its response by reply dated 21.12.2011 calling upon the Assessing Officer to provide copies of statements recorded on oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the search as well as the copies of the documents upon which the department placed reliance for the purpose of making the proposed addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (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 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 incr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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