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TMI Blog2023 (9) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and further the proceedings initiated by him under section 153A of the Act is a valid one and conditions contemplated under section 132 are existing. The reasons recorded have to be given to the appellant to file its objections and then only an assessment can be proceeded with. The appellant contends that the satisfaction has not been recorded and thus the notice issued u/s. 153A of the Act is bad in law. 1.3 The learned Commissioner (A) failed to consider that the mandatory conditions for issuance of notice under section 153 A of the Act have not been complied like recording of reasons, having approval of the sanction by the higher authority and consequently the entire assessment i& liable to be cancelled. 4.1 The learned Commissioner (A) ought to have allowed the aircraft expenses and depreciation on aircraft in full as claimed by the appellant. 4.2 The learned Commissioner (A) ought to have accepted the details provided by the appellant and refrained from considering the surmises and apprehension of the assessing authority to justify the percentage of disallowance of aircraft expenses as computed by him. 4.3 The learned Commissioner (A) ought to have accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 in response to the notice u/s. 153A, the assessee filed a letter (dated 20.08.2008) on 01.09.2008 stating that earlier return filed on 31.10.2002 be treated as a return in response to notice u/s. 153A. Thereafter, statutory notices were issued to the assessee. On perusal of the financial statements, the assessee was specifically asked to furnish income & expenditure as well as profits derived from its various activities and the assessee furnished the same. Further on perusal of the depreciation statement, it was observed that the asse has purchased an aircraft during the year costing Rs. 8,93,31,393 and claimed depreciation for less than 180 days of Rs. 1,78,66,279. The assessee was asked to furnish details of expenses incurred in this regard and to disallow depreciation for personal use of Directors and family members proposed @ 50% thereof including the operational expenses. The assessee submitted that aircraft was used for business purpose only and assessee has also paid the fringe benefit tax on the said expenses. The assessee was asked time and again to produce the log book, but the same was not produced and assessee filed details of operational expenses year wise. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that assessee was asked to produce the log book repeatedly, in spite of the same the assessee did not file the log book which clearly shows that the personal use of aircraft cannot be denied. Accordingly, he submitted that the order of the CIT(Appeals) should be upheld. 9. Considering the rival submissions and perusing the entire material on record and the orders of authorities below, we note that the assessee filed its return of income u/s. 139(1) which was processed u/s. 143(1) of the Act. Further in pursuance of search conducted on 26.10.2007, notice u/s. 153A was issued to the assessee and in response the assessee offered the same return filed u/s. 139(1). The AO noted that the assessee has purchased an aircraft of Rs. 8.93 crores and depreciation has been claimed for less than 180 days of Rs. 1,78,66,279. The assessee was asked to produce log book for personal use of aircraft repeatedly, which was not produced by the assessee during the assessment proceedings but it was produced during the appellate proceedings. The assessee submitted a statement of yearwise operational expenses of the aircraft and that the assessee had paid taxes on fringe benefit towards the same. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s 153A must be restricted to: (a) grounds on which proceedings reopened; and (b)additional specific information coming to knowledge AO through modes other than search. AO not entitled to reopen entire assessment and undertake roving/fishing enquiries. Assessment u/s 153A in absence of any incriminating material may be dropped. Post dropping of proceedings u/s 153A, Revenue may, basis other information, proceed u/s 147 and/or 263 subject to satisfaction of jurisdictional conditions under the said provisions. iii. Incriminating material found during search only on issue 'A'. No other information/material available or found from any external sources. AO entitled to assess entire income, as pending regular assessment stood abated. AO also entitled to assess entire income and not just issue A. Scope of assessment u/s 153A must be restricted to: (a) grounds on which proceedings reopened; and (b) issue A detected during search. AO not entitled to reopen entire assessment and undertake roving/fishing enquiries. Assessment u/s 153A to be restricted to Issue A relating to which incriminating material is found during search. Original concluded assessment which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 136 taxmann.com 162/286 Taxman 119/[2021] 439 ITR 193 (Orissa) 13. CIT v. Veerprabhu Marketing Ltd.. [2016] 73 taxmann.com 149/388 ITR 574 (Cal.) 14. Pr.CIT v. Salasar Stock Broking Ltd. [G.A. No. 1929 of 2016, ITAT No. 264 of 2016, dated 24-8-2016] 2016 (8) TMI 1131 (Calcutta) 15. Pr. CIT v. Smt. Daksha Jain [D.B. IT Appeal No. 125 of 2017, dated 4-7-2019]/2019 (8) TMI 474 (Rajasthan) 16. Dr. A.V. Sreekumar v. CIT [2018] 90 taxmann.com 355/253 Taxman 428/404 ITR 642 (Ker.) ............. 6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the 'total income' taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. ............ 7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of section 153A of the Act, 1961, has summarised the legal position as under: Summary of the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll assess or reassess the total income in respect of each assessment year, falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the subsection pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. ........... 11. As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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