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TMI Blog2012 (8) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained unaccounted loan to Mohini Sharma and interest thereon of Rs.27,000/- in the assessment year 2003-04 to 2005-07?" 3. We may clarify that in Q. No.2 the reference to the assessment year "2000-01" should rightly be "2003-04" and to the assessment year "2005-07" should be 2005-06. 4. The brief facts giving rise to the present appeals may be noted. The assessee is an individual. He was carrying on business in hing under the name and style of M/s. A.K. Traders. On 13.12.05, there was a search of the assessee‟s residence and business premises under Section 132 of the Act. Pursuant to the search, the Assessing Officer issued notices under Section 153A of the Act and called upon the assessee to file the returns of income for the six years as envisaged in the Section. Notices under Sections 142(1) and 143(2) along with a detailed questionnaire were issued on 20.11.2007 in response to which the assessee submitted his explanation on 29.11.2007. After considering the explanation and details submitted by the assessee, the Assessing Officer made additions to the income returned in respect of the assessment years under consideration, which included an amount of Rs.1,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty mentioned above if she failed to pay back the loan amount within the stipulated period of 18 months. A copy of the general power of attorney also recovered from the assessee during search. After considering the above over whelming evidences, it is incomprehensible to believe the assessee that he has no connection whatsoever with the documents found during search. The duty casts on the appellant to rebut the evidences found during search with cogent material that he has no connection with these contents of the documents found during search. In stead of leading any evidence in his support, the appellant is trying to explain in a very casual and evasive manner on the clinching evidence found from him. In the absence of any explanation much less the reasonable explanation the amount of Rs.1,50,000/- mentioned on the undertaking which was executed by an independent person on stamp paper, the same is to be added as income of the assessee from undisclosed sources. Thereby no interference is called for on the action of the A.O. in assessing the above sum in the total income of the assessee." On the aforesaid reasoning, the CIT (Appeals) confirmed the addition of Rs.1,50,000/-. 7. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Agricultural Income Notional Interest 10,33,129.00 27,000.00 2005-06 Agricultural Income Notional Interest 36,524.00 27,000.00 2006-07 Gift Agricultural Income Notional Interest 5,18,631.00 36,474.00 27,000.00 It may be added that in respect of the assessment year 2000-01, there was also an addition of Rs.13,89,095/- made in the assessment order for alleged non-genuine exchange fluctuation, but the said addition was deleted by the CIT(Appeals) against which the Revenue filed an appeal before the Tribunal in ITA No.2246/DEL/2009. The Tribunal dealt with the six appeals filed by the assessee and the appeal filed by the Revenue in a consolidated order for the assessment years 2000-01 to 2006-07. By the same order, certain appeals in the case of one Samir Bhatia, another hing merchant, were also decided. We are however, concerned only with the case of Anil Bhatia. 11. Before the Tribunal, the assessee also questioned the validity of the additions made in the assessments framed under Section 153A of the Act. The challenge was based on the following line of argument. It was contended that during the search of the assessee‟s premises, no document or incri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the notional interest of Rs.27,000/-added in the assessment years 2004-05 and 2005-06 was also deleted. 15. The first question which we have to consider is whether the Tribunal was right in holding that no addition can be made for agricultural income, gifts received and unexplained deposits as stated in the chart set out in Para 10 (supra) on the ground that in respect of these additions, no material was found during the search carried out under Section 132 and also on the ground that for all the years under consideration, the returns filed by the assessee before the search had been processed under Section 143(1)(a) of the Act. Though the Tribunal has not referred expressly to the provisions of Section 153A of the Act, its decision in Paragraph 9.6 of the order is based on the premise that the Assessing Officer had wrongly invoked Section 153A since (a) no material was found during the search in respect of the agricultural income, gifts received and unexplained deposits and (b) the returns filed by the assessee prior to the search had been accepted under Section 143(1)(a) of the Act. The same reasoning however, has not been applied by the Tribunal in respect of the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing contained in sub-section(1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revised with effect from the date of receipt of the order of such annulment by the Commissioner. Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.- For the removal of doubts, it is hereby declared that- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 17. The three sections introduced w.e.f. 1.6.2003 replaced the "Post Search Block Assessment Scheme" in respect of any search under Section 132 or requisition under Section 132A made after 31.5.2003. In Circular No.7 of 2003 dated 5.9.2003 reported in (2003) 263 ITR (St)62, the new Scheme was explained by the CBDT in the following manner: "65. The special procedure for assessment of search ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A 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 was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 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." 65.8 It also provides that in computing the period of limitation for completion of such assessment or reassessment, the period during which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as „block assessment‟ because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as „block period‟. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made. 22. In the light of our discussion, we find it difficult to uphold the view of the Tribunal expressed in Para 9.6 of its order that since the returns of income filed by the assessee for all the six years under consideration before the search took place were processed under Section 143(1)(a) of the Act, the provisions of Section 153A cannot be invoked. The Assessing Officer has the power under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to us. The result is that the first substantial question of law is answered in the negative, in favour of the Revenue and against the assessee. 23. We are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We, therefore, express no opinion as to whether Section 153A can be invoked even in such a situation. That question is therefore left open. 24. As regards the second substantial question of law, it impinges on the decision of the Tribunal deleting the addition of Rs.1,50,000/- made in the assessment year 2000-01 on account of unexplained loan to Mohini Sharma and the deletion of the addition of Rs.27,000/- each as interest for the assessment years 2003-04 to 2005-06. On this aspect we have examined the order of the departmental authorities as well as the Tribunal. The addition has been made by the Assessing Officer in the assessment year 2003-04 and para 5 of the assessment order deals with the issue in the following manner: - "The page 68 of Annexure A-3 seized from premises no.31B/2, Rajpura Road, Civil Lines, Delhi. It is seen that Sh.Anil Kumar Bhatia has given a loan of Rs.1,50,000/- to Smt. Mohini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition. It may be added that the CIT(Appeals) had before him a photocopy of the document seized as recorded by him towards the end of the second paragraph of its order (paragraph not numbered). 27. In the light of the aforesaid findings, it was incumbent upon the assessee in his further appeal before the Tribunal to rebut the findings of fact and adduce evidence or explanation as to why the findings are perverse or arbitrary or cannot be given effect to. The contention however, raised by him before the Tribunal, as noted in Paragraph 10 of the order of the Tribunal is that Mohini Sharma was not examined by the departmental authorities and that the unsigned document lacked corroboration and therefore, cannot be made the sole basis for making the addition. It would also appear to have been contended before the Tribunal that the document was not acted upon right from the beginning. The Tribunal accepted the contention and deleted the addition. 28. The Tribunal is the ultimate fact finding authority and an appeal to the High Court is provided only on a substantial question of law. The findings of fact entered by the Tribunal are normally binding on the High Court. However, if those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt of the money from the assessee. It was not for the Assessing Officer to record any statement from Mohini Sharma confirming the transaction. The very plea of the assessee that the document was not acted upon is open to question in light of the fact that the copies of the General Power of Attorney were also recovered during the search along with the document. This shows that there was at least prime facie evidence to show that the document was acted upon and parties had taken some steps in furtherance thereto. In these circumstances, the Tribunal ought to have examined the case set up by the assessee without putting on blinkers and should have scratched the surface instead of simply accepting the assessee‟s stand. We are unable to find fault with the observation of the CIT(Appeals) that the assessee‟s explanation was very casual and evasive despite the evidence found during the search. The view taken by the Tribunal, with respect, appears to us to be one which cannot be sustained having regard to the evidence on record and the total lack of any explanation adduced by the assessee. The finding of the Tribunal cannot therefore be upheld as a reasonable inference ..... X X X X Extracts X X X X X X X X Extracts X X X X
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