TMI Blog2024 (3) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment has to be completed under Section 153A read with limitation prescribed u/s 153B. The Hon ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] held that 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 u/s 132A of the IT Act, 1961. The completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the IT Act, 1961 subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 and those powers are saved. Therefore, the proceedings initiated u/s 148 on 30.03.2021 could abate in view of the notice issued u/s 153C on 20.03.2022, if there incriminating material for relevant Assessment Year. Section 153A of the IT Act, 1961 was introduced along with Section 153B and 153C of the IT Act, 1961 and deleted the special procedure for assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f searched person and the other person petitioner herein would be the same date i.e., 19.03.2022. The six preceding AY from that date would be from 2016-2017 to 2021-2022. The Impugned Order passed by the AO u/s 153C r.w.s. 143(3) of the IT Act, 1961 is liable to be quashed. However, the proceedings pending under Section 148 of the IT Act, 1961 which stood abated on account of the notice issued under Section 153Cof the IT Act, 1961 dated 20.03.2022 cannot be said to have abated. It will stand revived. Incorrect trajectory of the proceedings u/s 153C on 20.03.2022 which has culminated in the Impugned Order dated 31.03.2023 obviously could not abate the proceeding which was initiated u/s 148. Therefore, while quashing this impugned order passed u/s 153C read with Section 143(3) dated 31.03.2023, the reassessment proceedings initiated under Section 148 of the IT Act, 1961 has to be completed. The Impugned Order stands quashed. However, there shall be a direction to the respondent to complete the reassessment proceeding initiated under Section 148 strictly in accordance within the timelines provided under Section 153 (2) of the IT Act, 1961 in terms of the decision of Abhisar Buildwell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson and Shri.Suresh Khatri, the Director of searched person under Section 131 and 132(4) of the Income Tax Act as detailed below:- S.No Section of Income Tax Applicable Shri. Rajendra Kothari (Accountant) Shri. Suresh Khatri (Director) Shri. G.R. Ananthapadmanabhan 1 Section 132(4) 10.11.2020 11.11.2020 - 2 Section 131 24.11.2020 23.03.2021 11.03.2021 9. The statements have led to several collateral proceedings against not only the searched person but also against the petitioner and others whose case were heard along with the petitioner. This order is confined to the assessment year 2015-2016. Rest of the cases relate to proceedings for the assessment year 2017-2018 to 2021-2022 of the petitioner and others. They are being disposed separately by a separate order today. 10. The Assessing Officer of the petitioner and the searched person are one and the same. The Assessing Officer has issued two separate satisfaction notes under Section 153C of the IT Act, 1961 on 19.03.2022 both in the capacity of the Assessing Officer of the searched person viz., M/s.Mohanlal Jewellers (P) Ltd and in the capacity of the other person viz., the petitioner herein under Section 153C of the IT Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above ledgers i.e. AYYA and ANAND have been maintained by him for the business transactions in the J-pack software. 5. The consolidation of the details maintained under the ledgers AYYA and ANAND In TTT group is tabulated as under respectively: Group ANAND Ledger/Year Receipt Issued Metal Cash Metal Cash Gross Net Gross Net 2015-2016 0 0 0 3266.24 3368.37 0 2016-2017 1924042.05 1818052.79 359512158 1843232.18 1742835.38 355642158 2017-2018 2102768.19 1985910.59 183118669 2178525.1 2057096.68 186988669 2018-2019 2162325.57 2046728.38 494761110 2166530.86 2050138.25 477213538 2019-2020 2244718.68 2128101.01 1174361454 2243113.61 2126218.53 944102211 2020-2021 1009647.93 954947.9 1243802567 1043470.5 983203.30 772748719 Total 9443501.93 8933740.67 3455555958 9478138.45 8962860.24 2736695295 Group AYYA Ledger/Year Receipt Issued Metal Cash Metal Cash Gross Net Gross Net 2015-2016 0 0 0 0 0 0 2016-2017 0 0 0 0 0 0 2017-2018 0 0 0 0 0 0 2018-2019 530760.41 526979.44 989231272 322705.89 320918.8 954231272 2019-2020 212680.9 212680.9 1407810554 300735.42 298741.54 1405660554 2020-2021 175377.76 175377.76 992374090 155576.13 155576.13 1008024090 Total 918819.07 915038.1 3389415916 7790 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am satisfied that the ledger accounts maintained by M/s.Mohanlal Jewellers (P) Ltd. in the specialized software J Pack representing sale purchase of gold along with cash transactions as discussed above pertains to M/s.GRT Jewellers India (P) Ltd. and the information relates to unaccounted transactions of M/s.GRT Jewellers India (P) Ltd and has a bearing on the determination of the total income of the assessee M/s.GRT Jewellers India (P) Ltd. 9. Therefore, I am satisfied that M/s.GRT Jewellers India (P) Ltd. is covered under Section 153C of the Income Tax Act, 1961. Accordingly, notices u/s. 153C of the act are issued for A.Ys 2015-16 to 2020-21. 14. After a notice under Section 148 of the IT Act, 1961 was issued for the assessment year 2015-2016 on 30.03.2021, a notice under Section 143(2) of the IT Act, 1961 was issued on 11.02.2022 to the Petitioner. Thereafter, a notice under Section 153C of the IT Act, 1961 was issued to the petitioner on 20.03.2022 for the years of 2015-2016 to 2021-2022 when already a proceeding under Section 148 was initiated on 30.03.2021 against the petitioner and was pending. 15. In view of the said notice dated 20.03.2022 issued to the petitioner unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as Section 153A of the IT Act, 1961 is concerned, in case any proceeding for assessment or reassessment is pending on the date of issuance of a notice under Section 153C of the IT Act, 1961 such proceedings will abate and such assessment has to be completed under Section 153A read with limitation prescribed under Section 153B of the IT Act, 1961. This position has also been explained by the Delhi High Court in Delhi High Court in Commissioner of Income-tax vs. Anil Kumar Bhatia , [2013] 352 ITR 493 (Delhi), to which I shall refer a little later. 21. In CIT Vs. Calcutta Knitwears , (2014) 6 SCC 444, it was phrased as under:- 39. Further, Section 158-BE(2)(b) only provides for the period of limitation for completion of block assessment under Section 158-BD in case of the person other than the searched person as two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search carried on after 1-1-1997. The said section thus, neither provides for nor imposes any restrictions or 40. In the lead case, the assessing officer had prepared a satisfaction note on 15-7-2005 though the assessment proceedings in the case of a sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 2 above, with regard to recording of the satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the other person is one and the same then also he is required to record his satisfaction as has been held by the Courts 23. Scope of Section 153A, B C of the IT Act, 1961 has been explained lucidly in Commissioner of Income-tax vs. Anil Kumar Bhatia , [2013] 352 ITR 493 (Delhi). The deem was rendered in the context of Section 153A of the IT Act, 1961. The relevant portion of the decision in Commissioner of Income-tax vs. Anil Kumar Bhatia , [2013] 352 ITR 493 (Delhi) reads as under:- 17. We now proceed to discuss the correctness of the conclusion of the Tribunal that the Assessing Officer had wrongly invoked section 153A of the Act. This section was introduced into the Act by the Finance Act, 2003, with effect from June 1, 2003, along with sections 153B and 153C. Section 153A provides for assessment in case of search or requisition . It runs as follows: 153A . (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from June 1, 2003, replaced the Post Search Block Assessment Scheme in respect of any search under section 132 or requisition under section 132A made after May 31, 2003. In Circular No. 7 of 2003, dated September 5, 2003, reported in [2003] 263 ITR(St.) 62, 106, the new Scheme was explained by the Central Board of Direct Taxes in the following manner: The special procedure for assessment of search cases under Chapter XIV-B be abolished : The existing provisions of the Chapter XIV-B provide for a single assessment of undisclosed income of a block period, which means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. The Finance Act, 2003, has provided that the provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after May 31, 2003, by inserting a new section 158BI in the Income-tax Act. Further three new sections 153A, 153B and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132A shall be completed within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed. It also provides that in computing the period of limitation for completion of such assessment or reassessment, the period during which the assessment proceeding is stayed by an order or injunction of any court ; or the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under subsection (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, or the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee of being re-heard under the proviso to section 129, or in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing on the date on which such application is made and ending with the date on which the order under subsection (1) of section 245D is received by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le block assessment concept was given a go-by. Under the new section 153A, in a case where a search is initiated under section 132 or requisition of books of account, documents or assets is made under section 132A after May 31, 2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under section 153A and the new scheme provided for, the Assessing Officer is required to exercise the normal assessment powers in respect of the previous year in which the search took place . 20. Under the provisions of section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of section 153A says that such proceedings shall abate . The reason is not far to seek. Under section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the total income of the assessee in whose case a search or requisition has been initiated. Obviously, there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs, namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of subsection (1) of section 153A that any proceedings for assessment or reassessment of the assessee which are pending on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee filed returns before the date of search which stood processed under section 143(1)(a). The other reason given by the Tribunal in the same paragraph of its order that no material was found during the search is factually unsustainable since the entire case and the arguments before the Departmental authorities as well as the Tribunal had proceeded on the basis that the document embodying the transaction with Mohini Sharma was recovered from the assessee. While summarizing the contentions of the assessee in paragraph 5 of its order, the Tribunal itself has referred to the contention that no document much less incriminating material was found during the search of the assessee's premises, except one unsigned undertaking for loan. Again, in paragraph 10 of its order, while dealing with the assessee's contention against the addition of Rs. 1,50,000 being unexplained loan given to Mohini Sharma, the Tribunal has stated that it has analyzed the subject document carefully, recovered from search suggesting that the document was recovered during the search from the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the reasons stated above, it is concluded as under: - i. that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under Section 153A; ii. all pending assessments/reassessments shall stand abated; iii. in case any incriminating material is found/unearthed, even, in case of unabated/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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, a person other than the person referred to in Section 153-A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person][and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of Section 153-A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in subsection (1) of Section 153-A]:] [ Provided that in case of such other person, the reference to the date of initiation of the search under Section 132 or making of requisition under Section 132-A in the second proviso to[subsection (1) of Section 153-A] shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer of both searched person and other person is one and the same. When the notice was issued on 20.03.2022 under Section 153C of the IT Act, 1961, the date of satisfaction note of searched person and the other person petitioner herein would be the same date i.e., 19.03.2022. The six preceding Assessment Years from that date would be from 2016-2017 to 2021-2022. 38. The Delhi High Court in SSP Aviation Limited vs. Deputy Commissioner of Income-tax, [2012] 346 ITR 177 (Delhi), has held as under:- 14 .. However, in the case of the other person, which in the present case is the Petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date. 39. This view has been affirmed by the Hon ble Supreme Court recently in Commissioner of Income-tax-14 vs. Jasjit Singh , [2023] 155 taxmann.com 155 (SC).Where it was held as under:- 9. It is evident on a plain int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961. Therefore, while quashing this impugned order passed under Section 153C read with Section 143(3) of the IT Act, 1961 dated 31.03.2023, the reassessment proceedings initiated under Section 148 of the IT Act, 1961 has to be completed. 42. The reassessment proceedings initiated under Section 148 of the IT Act, 1961 is therefore directed to be completed in the manner known to laws in accordance with Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd , [2023] 454 ITR 212 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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