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TMI Blog2013 (9) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... R For the Respondent : Shri Gunjan Prasad, CIT. DR ORDER Per T. S. Kapoor, AM. These are two appeals filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-I, New Delhi both dated 18.07.2011 for the assessment years 2004-05 2005-06. The grounds taken by the assessee are as under:- Grounds for Assessment year: 2004-05 1. Under the facts and circumstances of the case, the appellate order passed by the Ld. CIT (A) is illegal being against the principles of natural justice and against the provisions of IT Act, 1961especially in view of the following:- a) That neither any valuable article or thing nor any incriminating document was found during the search and hence section 153A was not applicable. b) That the cases laws relied upon by the appellant were not considered. c) That he has relied upon the judgment of Hon'ble ITAT, Delhi in the case of Shivnath Rai Hrnarain (India) Ltd. Vs. DCIT, (2009) 17 ITD 74 without appreciating the fact that the same has been overruled by Hon'ble ITAT, Delhi in its later judgment in the case of Shri Anil Kumar Bhatia Ors. Vs. ACIT, (2010) 1ITR (Trib) 484 (Del) which was bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) In relying on the case law which is not applicable to the appellant. 3. The Ld. CIT (A) has grossly erred on facts as well as in law in confirming the charging of interest under various sections of the IT Act, 1961. 4. The appellant craves leave to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings. 2. The brief facts of the case are that search and seizure operation u/s 132 of the Income Tax Act, was carried out in the case of assessee on 12.09.2007 and, therefore, notice u/s 153 A of Income Tax Act dated 17.10.2008 was issued to the assessee requiring it to file income tax returns. The assessee filed returns of income for assessment year 2004-05 and assessment year 2005-06 declaring Nil income in respect of assessment year 2004-05 and income of ₹ 50,04,700/- for assessment year 2005-06. Both the returns were same as were filed originally u/s 139 (1) of the Act, on 30.10.2004 and 27.10.2005 respectively. Notices u/s 143(2) and 142(1) along with questionnaires were issued to the assessee on 18.09.2009 requiring the assessee company to file necessary details and in response, the Ld. AR of the assessee company fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not complied with then the set off unabsorbed business loss or depreciation will not be allowed. It may be seen from the above that the assessee company is not covered in the definition of Industrial undertaking defiled in section 72A(7) (aa) of the Act. Therefore, the company cannot be allowed to set off of accumulated business loss or depreciation of the amalgamating company as stipulated by section 72A of the Act. Hence the entire loss of ₹ 1,80,32,339/- incurred by the amalgamating company, M/s Compact Motors Ltd. shall not be set off against the business income of the amalgamated company M/s MGF Automobiles Ltd. for the A. Y.20040-05. 4.3 Further, even on merit also, the assessee has failed to retain 3/4th of te book value of assets of the amalgamating company for continuous period of five years from the date of amalgamation. In the A. Y. 2007-08, the company has sold land amounting to ₹ 37,93,375/-. The above land was added to the assets of the assesssee company in the scheme of amalgamation. By the above sale the amalgamation company has violated provisions of sub-section (3) of section 72A of the Income Tax Act, 961. Therefore, otherwise also the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (2010) 130 TTJ (Chennai) 700. It is clear that section 153C, read with section 153A brings into the purview of assessment both regular and undisclosed income subsequent to action u/s 132 or section 132A upon invocation of section 153A or section 153C. The proviso to section 153A clearly mandates the Assessing Officer to assess or reassess the total income in respect of each assessment year falling within six assessment years. The next proviso further mandates that any assessment or reassessment in respect of any those six years which are pending shall abate. Hence, it is clear that under such circumstances, assessment or reassessment will be done pursuant to section 153A or section 153C. It will not be correct to interpolate that no regular assessment or reassessment can take place u/s 153A and 153C. There is no reference to incriminating search materials as in earlier section 158BB/158BC, to which the assessment has to be confined. Thus, assessment or reassessment u/s 153C/153A does not have to be based on incriminating material found during search. Futher, the Delhi Tribunal in the case of Shivnath Rai Harnarain (India) Ltd. Vs. DCIT (2009) 17 ITD 74 (Delhi) has observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and taking over of assets and liabilities including losses of amalgamating company were before Ld. Assessing Officer before the search and before original assessment which was completed u/s 143(3) on 18.12.2006 and in this respect our attention was invited to paper book page 24 where original assessment passed u/s 143(3) was placed. Our attention was specifically invited to paper book page 25 wherein Assessing Officer had allowed the set off of business loss, and unabsorbed depreciation. 8. Continuing his arguments, he submitted that assessment u/s 153 is different from regular assessment and it is made only where a search is initiated u/s 132. Quoting from provisions of section 153A, the Ld. AR submitted that second proviso to section 153A (1) states that assessment or reassessment if any relating to any assessment year falling within the period of 6 assessment years pending on the date of initiation of search shall abate and in view of this provision he argued that completed assessment u/s 143(3) will not abate and in the case of assessee the assessment was not pending as it was already completed on 18/12/2006. He further argued that for assessment u/s 153A purpose of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Anil P. Khimani vs. DCIT, 2010-TIOL-177-ITAT-MUM. In view of all these legal arguments, the Ld. AR argued that assessment u/s 153A where no incriminating material was found during search has to be completed on the originally assessed income only. 11. Arguing on the second ground of appeal regarding disallowance of set off of loss despite directions of Hon'ble High Court of Delhi, the Ld. AR read from the order of High Court dated 27.09.2004 and invited our attention to paper book page 45 which read as under: That not withstanding anything contained in any provision of the Income Tax Act,1961 the accumulated loss and the unabsorbed depreciation of M/s Compact Motors Ltd. the Transferor Company shall be deemed to be the loss or as the case may be, allowance for depreciation of M/s MGF Automobiles Ltd., the Transferee Company for the year in which the amalgamation is effected from the appointed date w.e.f. 01.04.2003 and other provisions of the Income Tax Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly. In view of these findings of Hon'ble High Court, it was argued that as per scheme of amalgamation the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reopened which further implies that assessments not pending or completed assessments will not be reopened. The special Bench, Mumbai decision in the case of All Cargo Global Logistics Ltd. has dealt with this issue and has held that completed assessments falling within six year can only be reopened if some incriminating material is found during search. The Hon'ble Delhi High Court in the case of CIT vs Anil Kumar Bhatia had also considered the same situation and held that assessment for six years has to be re-opened, but left the question regarding additions to be made in a completed assessment where no incriminating material was found. The relevant extract of Hon'ble High Court is as under:- Where no incriminating material was found during the search conducted u/s 132 of the Act. We therefore, express no opinion as to whether section 153A can be invoked then in such a situation that question is therefore left open. 14. Hon'ble ITAT (Mum) in the case ACIT vs. Pratibha Industries Ltd., ITA No.2197 to 2199/Mum/2008 has considered the case law of Anil Kumar Bhatia as decided by Hon'ble Delhi High Court and after considering the findings of the court has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g material, we have to trace out the logical conclusion, by harmonizing the legislative intendments and the judicial decisions, as held by the Hon'ble Supreme Court of India in the case of K P Verghese (Supra), wherein it was observed, so as to achieve the obvious intention of the Legislature and produce a rational construction. When we look into the decision of the Hon'ble Delhi High Court in Anil Kumar Bhatia (Supra), we find that the Hon'ble Court has pointed out that in case where there is no abatement, total income has to be determined by clubbing together the income already determined in the original assessment order and the income that escaped assessment (Situation 2A in the Graphic). In the circumstance, what we are dealing in instantly, there are finalized assessment proceedings and no incriminating material indicating any escaped income (Situation 2B in the graphic). Taking a cue from the decision of Hon'ble Delhi High Court in the case of Anil Kumar Bhatia (Supra) we can tread on the same premise and hold that on clubbing, what remains in the income originally determined or assessed (i.e. income originally determined+Zero= income originally determined- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and 'reassess' has been used for completed assessment proceedings which do not abate as they are not pending on the date of initiation of the search or making of requisition and can be tinkered only on the basis of incriminating material found during the course of search or requisition of documents therefore, it is not open to the assessee to seek deduction or claim relief not claimed by it in the original assessment which already stands completed in an assessment u/s 153A made in pursuance of a search or requisition. In the present case it is apparent that on the date of search be on 12/09/2007, the assessments for assessment year 2004-05 2005-06 were already completed. There was no incriminating material found during search for these years as is apparent from arguments of Ld. AR and from records and Ld. Departmental Representative did not bring to our notice regarding any incriminating material having been found during search. Therefore following the Judicial Precedents, we are of the opinion that though assessments for the above year were bound to be reopened but additions could be made only if some incriminating document was found during search. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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