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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 ..... be included. The other reason given by the Tribunal that no material was found during the search is factually unsustainable since the entire case and arguments had proceeded on the basis that the document embodying the transaction with Mohini Sharma was recovered from the assessee. If a document is found in the course of the search, Section 153A is triggered & it is mandatory for the AO to issue notices u/s 153A calling upon the assessee to file returns for the six AYs prior to the year in which the search took place – Decided in favor of Revenue. - ITA 1626/2010, ITA 1632/2010, ITA 1998/2010, ITA 2006/2010, ITA 2019/2010, ITA 2020/2010 - - - Dated:- 7-8-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Ms. Rashmi Chopra, Sr. Standing Counsel For Respondent: Mr. Kirti Uppal, Sr. Adv. with Mr.Krishan Kumar and Mr. Arvind Bansal, Advs. R.V. EASWAR, J.: ITA Nos.1626, 1632, 1998, 2006, 2019 and 2020 of 2010 are six appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961, which is hereafter referred to as the Act‟. The assessment years involved are 2000-01 and 2002-03 to 2005-06. On 14th May, 2012, the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed an appeal before the CIT(Appeals) and contended that the seized paper, on the basis of which the addition was made, did not contain the signature of the assessee, that the assessee had not given any loan to Mohini Sharma, that there was no admission or statement of Mohini Sharma to the effect that she took a loan from the assessee on the security of some property, that there was only a proposal by Mohini Sharma that if the assessee gave an amount of Rs.1,50,000/-, the same would be returned after selling the property, that these facts have been placed before the Assessing Officer and have not been controverted and, therefore, it was not proper for the Assessing Officer to make an addition without any supporting or corroborative evidence. 6. The CIT(Appeals) however, confirmed the addition, holding as under:- In so far as loan of Rs.1,50,000/- to Smt. Chander Mohini Sharma, on perusal of details, it is seen that a copy of the undertaking on Rs.100/- rupee stamp paper is found during action u/s 132 in assessee s premises. This undertaking was executed by Smt.Mohini Sharma on 10th day of Feb., 2003 in favour of Sh.Anil Bhatia acknowledging acceptance of loan of Rs.1,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments were found which suggest that the assessee is to get interest on the above loan @18% per annum from Smt. Chander Mohini Sharma. However, the appellant had not declared any income on this loan while filing return of income. Accordingly the A.O. is directed to assess Rs.27,000/- being the interest on the loan component of Rs.1,50,000/- for whole of the year, while computing the total income of the assessee. 8. The assessee filed further appeals before the Tribunal. In the appeal for the assessment year 2003-04, he challenged the addition of Rs.1,50,000/- being the loan given to Mohini Sharma and in the appeals for the assessment years 2004-05 and 2005-06, he questioned, inter alia, the addition of Rs.27,000/-for each of these years made by the CIT(Appeals) for notional interest on the loan. 9. Thus, the Tribunal was called upon to decide the correctness of the addition of Rs.1,50,000/- being loan given to Mohini Sharma in the previous year relevant to the assessment year 2003-04 and the notional interest of Rs.27,000/- each on the aforesaid loan for the assessment years 2004-05 and 2005-06. 10. In respect of the other assessment years, the Assessing Officer had made sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153A is not a de novo assessment and the additions made therein have to be necessarily restricted to the undisclosed income unearthed during the search. The Section has to be strictly interpreted. It is not an assessment such as a normal or regular scrutiny assessment. 12. In support of these submissions, the assessee relied on several orders of the Coordinate Benches of the Tribunal in Ahmedabad, Jodhpur and Kolkata. 13. The Tribunal found itself in complete agreement with the submissions made on behalf of the assessee. It referred to the orders of the Coordinate Benches of the Tribunal and ultimately held as follows: 9.6 From aforesaid analysis of judicial precedents, we are of the considered view that since for all the assessment years in consideration, processing returns u/s 143(1)(a) stood completed, for returns filed in due course before search, and no material being found in search thereafter, no addition can be made for agricultural income, gifts, unexplained deposit as stated in chart (supra). 14. As regards the merits of the addition of the loan and the notional interest thereon, the Tribunal held that the document recovered during the search did not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, 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. 65.3 Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. 65.4 The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after May 31, 2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. 65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 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 sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded. If, after the exclusion of the aforesaid period, the period of limitation available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the period of limitation shall be deemed to be extended accordingly. 65.9 The new section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, 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 such other person and issue such other person notice and ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril 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 AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. 19. 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 the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income‟ of the six assessment years in question in separat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition shall abate . Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile 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. The Tribunal has even proceeded to delete the addition of Rs.1,50,000/- as well as the notional interest on merits, holding that the document was unsigned, that Mohini Sharma was not examined by the income tax authorities and there was no corroboration of the unsigned document. If it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the assessee to file returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in the document was not found to be in the name of the assessee, that Mohini Sharma was not summoned by the Assessing Officer nor was her statement recorded, that the actual proposal embodied in the document was that if the assessee gave her the amount of Rs.1,50,000/- she would return the same after selling the property, that the proposal was not accepted by the assessee and that in these circumstances, the addition was made merely on conjecture and surmises. 26. The CIT(Appeals) sustained the addition by recording the following findings: - (a) The document seized from the assessee‟s premises is an undertaking on Rs.100/- stamp paper executed by Smt.Mohini Sharma on 10.2.2003. (b) She acknowledged the acceptance of a loan from the assessee, the loan amount being Rs.1,50,000/- for a period of 18 months on interest at the rate of 18% per annum. (c) The amount was received in cash. (d) In lieu of the loan, Mohini Sharma executed a General Power of Attorney in favour of the assessee transferring the title and rights in respect of the house bearing municipal No. 3601, Raja Park, Shakur Basti, Delhi-34. (e) She further undertook to forego all her rights in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We, therefore, do not feel bound by the findings of the Tribunal. It is true that the order of the Tribunal cannot be said to give rise to a substantial question of law merely because the High Court is of the view that it would have come to a different conclusion on the same evidence; however, where the appreciation of the evidence is unsatisfactory and crucial aspects of the evidence have been missed, it is a case of a finding or conclusion which no person properly instructed on the facts and the legal position would have reached. That is what has happened in the present case. 29. It is not, therefore, possible to countenance the decision of the Tribunal. Documents were found in the assessee‟s possession and were recovered from him. The primary duty was therefore, upon the assessee to explain them. The mere fact that the undertaking was not signed by Mohini Sharma did not absolve the assessee from the duty of satisfactorily explaining the possession of the documents. The amount is stated to have been advanced in cash. The undertaking seems to have stated, as found by the CIT(Appeals), that she would forego all her rights in the property if she failed to return the loan wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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