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TMI BlogSearch and seizure assessmentsX X X X Extracts X X X X X X X X Extracts X X X X ..... (Inv.)/ ADIT(lnv.) should hand over the seized material to the Assessing Officer (before whom the cases get centralised) within a week of sending the Appraisal Report. 1.3 On receipt of the appraisal report and seized material, the Assessing Officer and Range Head should jointly scrutinize the appraisal report and seized material and prepare an Examination Note to decide: i. Cases where notices u/s 153A of the Income- tax Act, 1961 (the Act) are required to be issued. ii. Cases where notices u/s 153C of the Act are required to be issued. iii. Cases where notices u/s 148 of the Act are required to be issued. iv. Cases where seized material pertains to persons other than those whose cases have been centralised. 1.4 If necessary, confirmation may be obtained from the investigation wing for matching the names of entities as appearing in the warrant of authorisation as against the names appearing in the Panchnama prepared at the time of conclusion of search. 1.5 An action note, based on a comprehensive and methodical examination of seized material, in addition to the comments available in the appraisal report, must be prepared within 90 days to receipt of the seized materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A & 153C are applicable for six financial years proceeding the year of search. Notice for the year of search is to be issued u/s 143(2)/'142(1) of the Act. 1.9 The Assessing Officer should also explore the possibility of invoking the provisions of section 28lB of the Act so as to protect the interest of Revenue. This provision is applicable only during the pendency of the proceedings for assessment. After completion of assessment appropriate action for recovery must be taken. 1.10 Where, in the opinion of the Assessing Officer, any further enquiry by the Investigation Wing is to be carried out in respect of certain third parties, the same should be brought to the knowledge of the CIT (Central), who may, thereafter request the DlT(Inv.) for carrying out such enquiries. The DIT(lnv.) should, thereafter, carry out the necessary enquiries and inform the concerned Assessing officers of these third parties for taking appropriate action. Timelines should be clearly set out for completion of these enquiries. 1.11 Where the Assessing Officer is of the opinion that the case has implications involving enquiry by other agencies, references to such agencies should be made by the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look into the surrounding circumstances and go behind the motive of the transactions in the light of human probabilities may be referred to. 2.6 Assessees are increasingly resorting to filing of affidavits to substantiate their claims. The Indian Code of Civil Procedure Order 19 r.l of the Indian Code reads as follows: "Any Court may at any time for sufficient reason order that any particular (act or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing, on such conditions as the Court thinks reasonable: Provided that where it appears to the Court that either party bona fide desires the production of a witness for cross-examination, and that such witness can be produced, an order shall not be made authorizing the evidence of such witness to be given by affidavit." 2.7 The Assessing Officer must, therefore, apply his mind before admitting any affidavit on record and should not accept it without verifying the contents thereof. The rejection of the affidavit should be recorded after giving proper reasons and should be intimated to the assessee. If admitted, such affidavits need to be dealt with as per the Supreme Court judgement in M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omp Case 210 (SC), (page 712). 3.2 All the issues and evidence that is going to be relied upon in the assessment order should be made available to the assessee. The final show cause notice should be prepared in consultation with the Addl, CIT and should contain: i. The proposed structure of the order; ii. The evidence in possession of the department; iii. The case laws being relied upon; iv. The opportunity of rebuttal being provided to the assessee. 3.3 Where reliance is placed by the assessee on a case law, the Assessing Officer should ascertain the question which was before the Court, rather than relying solely on the ratio of the decision. The binding precedent for this is the Supreme Court decision in CIT v. Sun Engineering Works Pvt. Ltd. (198 ITR 297). It has been pointed out that a decision which is not founded on reasons nor on consideration of the issues, cannot be deemed to he a law declared, to have binding effect as is contemplated by Article 141 of the Constitution of India. A summary dismissal by the Supreme Court, without laying down any law, is not a declaration of law envisaged by Article 141 (supra). When reasons are given the decision of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 5.7.1969 and No. 78. F.50/78/69-1T J (21) dated 11.7.1969 to the effect that a constant and corrective watch may be ensured as the PAC has been repeatedly expressing itself against the observed tendency on the part of the assessing officers to make high pitched assessments. The following typical omissions and commissions, as detailed below, were highlighted: i. Assessing, Officers make additions to sales or to gross profits or make disallowances out of expenses without giving any reasons or by giving utterly inadequate reasons; such additions are either almost entirely knocked off or substantially reduced. ii. Assessing Officers tinker with remuneration paid to the Directors of the company, applying highly subjective and unrealistic standards of reasonableness. iii. While imposing penalties for non-payment of tax, the Assessing Officers do not care to check up whether they had disposed of petitions moved by the assessee for stay of demand. iv. Assessing Officers levy penalties u/s 271(1)(c) without caring to make out a convincing case; the assessee's explanation is often not discussed and shown to be unbelievable or false, nor is an attempt made to bring out clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of computation of income, all the issues mentioned in the assessment order are covered in the computation. 3.10 It would be advisable for the AO to consult his higher authorities while making large additions. 4. Post Assessment Action 4.1 Cases with potential prosecution angle should be identified. While prosecution for technical matters should be launched as early as possible, in cases of concealment of income, proper watch may be kept on progress of appellate proceedings and prosecution should be launched at the earliest possible. It may be noted that prosecution proceedings can be launched even before the Penalisation of the assessment proceedings and can be taken up independently of the assessment proceedings. Even if the group cases quality for decentralisation as per present guidelines, cases having prosecution potential should be identified separately, and excluded from the proposed list for decentralisation giving clear reasons for the same. 4.2 A paper book containing copy of the seized material, in addition to that annexed to or scanned into the assessment order, relied upon by the Assessing Officer, should also be prepared along with the passing, of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details: Name of the Assessee Date of initiation and completion of search whether case covered by Section 153A/ 153C/ 148 Seizure made with break up Disclosure, if any u/s 132(4) Date of passing orders for centralisation (1) (2) (3) (4) (5) (6) Date of receipt of Appraisal Report Date of receipt of seized re cords including copies of warrant Date of application. If any, received for inspection and date on which inspection actually allowed Date of issue of notice u/s 153/ 153C/ 148 Date of filing of return for assessment Income disclosed in return (7) (8) (9) (10) (11) (12) Details of tax paid on income disclosed in return Adjustment from P.D. accounts, if any, income dis closed on return Date of Bank of guarantee, if any, date of expiry and date of renewal thereof Date of application. If any, from the assessee making a claim that seized assets or part thereof are explained Details and date of decision on (16) above Date of first notice to take up assessment proceedings and also details of subsequent notices/questionnaire/hearing etc. (13) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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