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TMI Blog2024 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... A. No. 38/2019 I.T.A. No. 319/C/2016 2007-08 10th October, 2018 2 I.T.A. No. 39/2019 I.T.A. No. 314 to 319/C/2016 2004-05 10th October, 2018 3 I.T.A. No. 41/2019 I.T.A. No. 314 to 319/C/2016 2005-06 10th October, 2018 4 I.T.A. No. 40/2019 I.T.A. No. 314 to 319/C/2016 2003-04 10th October, 2018 5 I.T.A. No. 37/2019 I.T.A. No. 314 to 319/C/2016 2006-07 10th October, 2018 6 I.T.A. No. 34/2019 I.T.A. No. 314 to 319/C/2016 2002-03 10th October, 2018 7 I.T.A. No. 54/2019 I.T.A. No. 325/C/2016 & 478 to 481/C/2018 2006-07 26th November, 2018 8 I.T.A. No. 53/2019 I.T.A. No. 325/C/2016 & 478 to 481/C/2018 2004-05 26th November, 2018 9 I.T.A. No. 52/2019 I.T.A. No. 325/C/2016 & 478 to 481/C/2018 2005-06 26th November, 2018 10 I.T.A. No. 60/2019 I.T.A. No. 325/C/2016 & 478 to 481/C/2018 2007-08 26th November, 2018 11 I.T.A. No. 46/2019 I.T.A. No. 325/C/2016 & 478 to 481/C/2018 2003-04 26th November, 2018 12 I.T.A. No. 36/2019 I.T.A. No. 326/C/2016 2007-08 5th February, 2019 13 I.T.A. No. 33/2019 I.T.A. No. 477/C/2016 2006-07 5th February, 2019 14 I.T.A. No. 30/2019 I.T.A. No. 476/C/2016 2005-06 5th February, 2019 15 I.T.A. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year. The Assessing Officer, however, used the incriminating material to reject the books of account of the appellants/assessees for all the assessment years from 2002-03 to 2008-09 and proceeded to 'estimate' the alleged 'escaped income' for all the aforementioned assessment years based on the estimation done for the assessment year 2008-09. Inasmuch as the extent of suppression for the assessment year 2008-09 was computed at 70% of the declared income of the appellants/assessees for the said assessment year, the declared income for the other assessment years was accordingly enhanced by the same percentage [70%] for the purposes of determining the differential tax that had to be demanded from the appellants for those assessment years. The Assessing Officer also disbelieved the gross profit ratio that was declared by the appellants/assessees for the various assessment years and increased the same from the average of 18%, that was declared by the assessees, to the average of 22%. The only other piece of evidence relied on by the Assessing Officer for rejecting the books of account of the appellants/assessees was the statement obtained from an employee of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these proceedings. The appellants are stated to have availed the benefit of the Amnesty Scheme and settled the demand for the assessment year 2008-09. 7. In the appeals before us, the following substantial questions of law have been raised while impugning the orders of the Appellate Tribunal. For the sake of convenience and brevity, only the substantial questions of law raised in the appeals preferred for the assessment year 2007-08 are reproduced below., as identical questions of law have been raised in the appeals for the other assessment years : i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law and justified in estimating the income from undisclosed source for the Assessment Year 2007-08, amounting to Rs. 2,22,65,770/- in the assessment made u/s 153A r.w.s. 143(3) of the I.T. Act, 1961? ii) Did not the Appellate Tribunal err in law in estimating the undisclosed income for the above Assessment Year in the absence of any material or evidence found at the time of search and merely based on suspicion and without any proof ? iii) Should not the Appellate Tribunal have found that in so far as the Assessment Year 2007-08, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible and proper for the Assessing Officer to have re-opened the assessment pertaining to the appellants herein for the assessment years 2002-03 to 2007-08 under Section 153A of the I.T. Act, under circumstances where the search conducted under Section 132 of the I.T. Act did not yield any incriminating material pertaining to the appellants/assessees for the said assessment years ? While the First Appellate Authority appears to have found that the Department was not justified in doing so, the Appellate Tribunal took a contrary view based solely on the judgments of this Court in Travancore Diagnostics Pvt. Ltd. v. Assistant Commissioner of Income - Tax - [[2017] 390 ITR 167 (Ker)] and Commissioner of Income - Tax v. M/s. Hotel Meriya - [[2011] 332 ITR 537 (Ker)]. It is the correctness of the said view of the Appellate Tribunal that we are called upon to examine in these appeals. 10. In the case of Commissioner of Income Tax v. M/s. Hotel Meriya - [[2011] 332 ITR 537], the Assessing Officer, during the search operations under Section 132 of the I.T. Act, in the premises of the Hotel had seized certain sale slips, copies of certain bills and also recorded statements of the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have been referred to a judgment of the Supreme Court in Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell Pvt. Ltd. - [(2024) 2 SCC 433], which deals with the manner in which an assessment under Section 153A for a block period must be made pursuant to a search under Section 132 of the I.T. Act or a requisition under Section 132A of the I.T. Act. In particular, the said decision notices the amendments that were brought into the I.T. Act through the Finance Act, 2003 with effect from 01.06.2003, and observes as follows: "9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the 'undisclosed income' was chargeable to tax at a special rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments 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 the Act, subject to fulfillment 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 term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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