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TMI Blog2014 (10) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... e that a search and seizure operation u/s 132 of the Act, 1962 was conducted by the Investigation Wing of the department on 19.2.2008 in the case of M/s B.L. Kashyap & Sons group of cases including assessee partnership firm. Subsequently, all the cases were centralized u/s 127(2) of the Act in the Central Circle-17, New Delhi. In response to the notice u/s 153A of the Act, the assessee filed a return for AY 2003-04 on 10.2.2009 declaring an income of Rs. 25,65,243/-. Thereafter, notices u/s 143(2) and 142(1) along with questionnaire dated 30.9.2009 calling for details relevant to the assessment year under consideration in this appeal i.e. 2002-03 were issued and served on the assessee. As per Assessing Officer, the assessee filed only parts of detail called but details/explanation related to statement of all bank accounts along with bank reconciliation statement, confirmed copies of accounts in terms of unsecured loans, party wise detail of purchases and purchase returns along with supporting documents and books of accounts along with supporting bills and vouchers were not filed before the Assessing Officer. The Assessing Officer held that in absence of the same, it was practically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and addition and the relevant operative para of impugned order reads as under:- "6.3 The submissions of the AR are considered. It is seen from the impugned order that the assessment proceedings began from the AO's end only from October 2009 and the appellant began to comply only in the month of December 2009, when the assessment was getting barred by limitation. The submission of the AR that there were more than 200 cases in the group and hence compliance was in parts - is hardly an explanation, much less a justifiable one, for not complying with the requirements specified by the AO. At the same time, some fault should also lie at the door of the AO, who started the proceedings after more than 7 months from the date of filing the return u/s 153A. Moreover, the AO was not precluded from taking stern measures provided in the Act for non compliance by the assessee. It is noted that the impugned order refers to the initiation of penalty notice U/S 271(l)(c) in respect of the estimated disallowance, but is silent on the initiation of penalty u/s 271(1)(b) that is specifically meant for cases of non compliance with notice. Therefore, when the AO himself has failed to invoke the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench Delhi in the case of Kusum Gupta vs DCIT in ITA No. 4873/Del/2009 dated 28.3.2013 and decision of ITAT 'E' Bench New Delhi in the case of MGF Automobiles Ltd. vs ACIT in ITA No. 4212 & 4213/Del/2011 dated 28.6.2013. Ld. Counsel for the assessee submitted that undisputedly under the provisions of section 153A of the Act, in all cases where search is conducted u/s 132 of the Act, the Assessing Officer is empowered to assess or reassess total income of six assessment years preceding the assessment year in which search was conducted. 11. The counsel further submitted that as per decision of Special Bench in the case of All Cargo Global Logistics Ltd. (supra), the provisions of section 153A came into operation if search or requisition is initiated after 31.05.2003 and on satisfaction of this condition, the Assessing Officer is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The counsel of the assessee further submitted that the Assessing Officer retains the original jurisdiction as well as jurisdiction u/s 153 of the Act for which assessment shall be made for each assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating material has been found. All these aspects had been referred to the Special Bench of the Tribunal in case of Alcargo Global Logistics Ltd. and order of Special Bench dated 6.7.2012 has been referred. 6.1 The Special bench in the case of Alcargo Global Logistics Ltd.(supra), has held that provisions of section 153A come into operation if a search or requisition is initiated after 31.5.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year of search. The Special Bench further held that in case assessment has abated, the AO retains the original jurisdiction as well as jurisdiction under section 153A for which assessment shall be made for each assessment year separately. Thus in case where assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. But in other cases the Special Bench held that the assessment under section 153A can be made on the basis of incriminating material which in the context of relevant provisions means books of account and other documents found in the course of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument or evidence or any other material which in the context of relevant provisions means books of accounts and other documents or evidence or material found in the course of search but not produced by the assessee in the course of original assessment and undisclosed income or property discovered during the course of search. The counsel pointed out that when assessment proceedings for the year under consideration have been completed prior to conduct of search, then during the reassessment proceedings u/s 153A of the Act, no disallowance or addition can be made on the same material without any incriminating material or document or evidence found in the course of search but not produced during the original assessment proceedings and any other undisclosed income or property is discovered during the course of search. 15. Replying to the above, ld. DR submitted that when the assessee is not replying to the questionnaire issued by the Assessing Officer and assessee has not filed required documents, details and evidence during the reassessment proceedings, then the Assessing Officer is obviously left with no other alternative but to complete reassessment or assessment proceedings on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer made impugned disallowance and addition out of total expenses claimed by the assessee without any incriminating material said to be found during the course of search and on the estimate and ad hoc basis. On the other hand, the Commissioner of Income Tax(A) deleted the addition with an observation that when the Assessing Officer himself has failed to invoke the relevant provisions of the Act to ensure compliance of the directions by the assessee, it may not be a strong basis to make a random estimated disallowance out of expenses debited to the P&L account. The Commissioner of Income Tax(A) was also justified in holding that no defect or even doubt has been pointed out by the Assessing Officer with regard to any particular expense to which disallowance could have been pegged and under these circumstances, ad hoc disallowance being without any basis is not sustainable. From the orders of the authorities below, we clearly observe that there was no incriminating material before the Assessing Officer which was found during the course of search to support the impugned ad hoc disallowance and addition. Under these facts and circumstances and on the basis of foregoing dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 153A r/w section 143(3) of the Act are also illegal, bad in law and without jurisdiction. 20. Replying to the above, ld. DR pointed out para no. 4 to 4.2 of the impugned order and submitted that the Commissioner of Income Tax(A) has dealt the issue in detail before dismissing the relevant ground of appeal of the assessee. The DR submitted that admittedly, the assessment order was passed on 29.12.2009 and the appellant received the same on 2.1.2010, then it is obvious that the time gap was actually taken for postal delivery and under these circumstances, the service of the order and demand notice cannot be presumed as illegal, bad in law, barred by limitation and without jurisdiction. The DR supported the action of the authorities below. 21. First of all, we observe that the Commissioner of Income Tax(A) has decided and dismissed this issue against the assessee with following observations and findings:- "4. In ground 3 of the appeal, the appellant has challenged the impugned order on the ground that it was time barred since the order dated 29-12-2009 was served on 2-1-2010 whereas the assessment was getting barred by limitation on 31-12-2009. 4.1 The authorised representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention and C.O. of the assessee become academic in nature.
23. During the arguments, the counsel of the assessee submitted that if appeal of the Revenue is disallowed, then the assessee does not want to press legal cross objections. The counsel fairly accepted that if appeal of the Revenue is disallowed, then the cross objections become academic which the assessee does not want to press. In view of above submissions, since we have disallowed the appeal of the revenue, then legal cross objections no. 1 and 2 are deemed to be not pressed and we dismiss the same as not pressed.
C.O. 3 & 4 of the assessee
24. Since we have upheld the impugned order of the Commissioner of Income Tax(A) which deleted the only disallowance and addition made by the Assessing Officer and no disallowance and addition exists against the assessee for assessment year under consideration, therefore, C.O. 3 and 4 of the assessee do not survive for adjudication and we dismiss the same without going on merits.
25. In the result, the appeal of the Revenue as well as Cross Objections of the assessee are dismissed.
Order pronounced in the open court on 31.01.2014. X X X X Extracts X X X X X X X X Extracts X X X X
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