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TMI Blog2014 (11) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with and/or fulfilled for the Ld. Deputy Commissioner of Income Tax, Central Circle XI, Kolkata to assume jurisdiction u/s 153C of the Income Tax Act, 1961 and thereby upholding the assessment order u/s 153C/143(3) of the Act simply following the findings in the assessment order passed in original assessment proceeding without any application of mind on the matter and /or passing any speaking order on the issues involved and his purported findings on that behalf are absolutely is ab initio void, ultra vires and null in law. 2. FOR THAT the specious action of the Ld.Commissioner of Income Tax (Appeals) Central I, Kolkata in upholding the action of the Ld.Deputy Commissioner of Income Tax, Central Circle XI, Kolkata of denial of deduction claimed u/s 80IB of the Income Tax Act, 1961 on account of transport subsidy and crane hire charges on the allegation that such receipts being of income nature is altogether unlawful, illegal, invalid and untenable in law. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Central I, Kolkata was unjustified in upholding the finding of the Ld.Deputy Commissioner of Income Tax, Central Circle XI, Kolkata denying claim of deduction under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Appellate Tribunal, Gauhati Benches. In the present context, the Ld. Assessing Officer framed the impugned assessment order u/s 153C/143(3) of the Act by taking the total income arrived at in the original assessment order u/s 143(3)/154 of the Income Tax Act, 1961 dated 02-08-2006 which included the denial of deduction u/s 80IB of the Act on the subsidies. As these issues were subject matter of the proceedings u/s 143(3) of the Act and were in further litigation before the higher authorities and accordingly, the assessment for the assessment year under dispute was not pending on the date of initiation of action u/s 153C of the Act. The appeal pending in the Income Tax Appellate Tribunal, Gauhati Benches cannot abate in terms of second proviso to s.153A of the Act. Even if it is pending on the date of search, no such intention was indicated by the Legislators in terms of second proviso to s.153A of the Income Tax Act, 1961, to abate such proceedings, which have been completed, or concluded and to restore the assessment to the file of the Assessing Authority. Only the assessment or reassessment which is pending before the Assessing Officer on the date of initiation of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by Section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed ........" (Emphasis Supplied) Thus, as there was no addition conceived by the Ld.Assessing Officer on the basis of searched material for framing assessment u/s 153C of the Act, he ought to have closed the proceedings by referring to the assessment framed u/s 143(3) of the Act. It is trite that where assessments do not abate the proceedings initiated u/s 153C of the Act is ex-facie void and accordingly, is liable to be quashed on this score also. Further, the Ld. Assessing Officer in the instant case assumed jurisdiction u/s 153C of the Act without any application of mind on the materials which did not reveal issues of incriminating nature so as to justify his action. In fact, the assessment framed u/s 153C/143(3) of the Act by reitera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, for the preceding six years, calling upon that person to file its returns. As soon as the notices are issued, due process of law shall begin and the Assessing Authority and the assessee are required to follow the same, which shall culminate with the Assessing Authority to assess or reassess the total income of the searched person in all the six years in question. While conferring such jurisdiction upon the Assessing Authority, the Legislature, to remove all the difficulties with regard to the multiplicity of proceedings pending on the date of initiation of search, through 2nd Proviso to s.153A of the Act, directed abatement of all those proceedings which are pending on that date, so that the assessee and the Assessing Authority shall deal with only one type of proceedings, wherein the Assessing Authority shall assess or reassess the total income of the searched person. This barrier has been set up by the legislature only with regard to proceedings that were found pending before the Assessing Authority on the date of search. Therefore, only a proceeding which is pending shall get abated. In other words, any proceeding that has reached its finality shall not be disturbed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must conclusively reflect or disclose any undisclosed income." (Emphasis Supplied). This decision was followed by various authorities across the country and as such proceedings u/s 153C of the Act were upheld even if no incriminating material relating to the other person were found in the search thereby leading to infructuous litigation. In fact, such was the situation that the addition resulted in the assessment order framed u/s 143(3) of the Act was identical to the one assessed u/s 153C/143(3) of the Act thereby raising two tax demands of identical amounts involving same subject matter for the assessment year 2003-2004. Thus, such action was leading to absurdity and unintended consequences. While inserting the provisions of s.153C of the Act, the Legislature did not envisage such a situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong 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 each other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A". The provisions of s.153C of the Act was amended to obviate practical difficulties which arose in its interpretation from time to time. The amendment made by Finance (No.2) Act, 2014 as the Legislature found that different authorities were assigning different meanings to the provisions. As such, a state of affairs resulted in ambiguities which gave rise to conflicting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atures. To do away with this judicial error, the Act was amended to cure the obvious omission and to clarify the intention behind the enactment. There is no doubt or dispute to the fact that the provision of s.153C of the Act is a procedural provision. Law of procedure are meant to regulate effectively, assist and aid of substantial and real justice and not to foreclose even an adjudication on the substantial rights of citizens of property, personal and other laws. In the case of STATE OF UTTAR PRADESH VS SINGHARA SINGH (AIR 1964 SC 358), the Apex Court quoted with approval the decision in the case of TAYLOR VS TAYLOR (1875) 1 CH D 426, for the proposition that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of dealing with the matter are necessarily forbidden. Further, in contrast to statutes dealing with substantive rights, statutes dealing with merely matters of procedure are presumed to be retrospective unless such a construction is textually inadmissible [DELHI CLOTH & GENERAL MILLS CO.LTD. VS CIT (AIR 1927 PC 242)]. Further, as stated by Lord Denning that the rule that an act of Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he intendment of the Legislature. It, therefore, follows that the amended provision of s.153C of the Act is also declaratory. It seeks to clarify the law so as to remove doubts leading to the Courts giving conflicting decisions. Being clarificatory in nature, it must be held to be restrospective in the facts and in the circumstances of the case. The Legislature may pass a declaratory Act to set aside what the Legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear the meaning of a provision of the principal Act and make explicit that which was already implicit. It is settled that section 154 is a procedural provision. It is settled law that an amendment of a procedural law is normally regarded as retrospective in operation because no one has any vested right in a procedural law and the Tribunal was therefore, justified in holding that section 154(1)(bb) which was inserted during the financial year 1964-1965, could be applied for the assessment year 1963-1964, and the IAC had jurisdiction under section 154(1)(bb) to rectify the mistake in the penalty order dated 4-3-1970 for the assessment year 1963-64 [NURUDDIN & BROS VS CIT (1979) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence such assessment did not abate. We may gainfully refer to the 2nd proviso to section 153A of the Act : "Assessment in case of search or requisition 153A (1) Notwithstanding any thing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolkata Bench in the case of LMJ International Limited vs DCIT 119 TTJ (Kol) 214 where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such assessment years cannot be disturbed u/s 153C of the Act. Thus it is clear that the provisions of section 153C of the Act cannot be invoked automatically in respect of any assessment year unless there exists incriminating documents for that previous year. The provision of section 153C of the Act cannot be invoked on routine information or on income already accounted/disclosed in the original return, the assessment of which is complete. In this regard we may gainfully refer to the decision of the Mumbai Special Bench of the ITAT in the case of Alcargo Global Logistics Ltd vs DCIT. In this case the Special Bench has held that "(1) in assessment that is abated AO retains original jurisdiction as well as the jurisdiction conferred on him by section 153A of the Act for which assessments shall be made for each of the six assessment years separately. (2) In other cases any addition to the income already been assessed the assessments u/s 153A of the Act will be made on the basis of incrimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtly setting aside the order u/s 143(3) of the AO on the issue and the open assessment merged in consequence of search with the assessment u/s 153A, the said case law is not applicable." 11. In this case the AO made the disallowance of interest amounting to Rs. 7,53,440/- by holding that huge interest free advance has been given to the sister concern. The assessment was not made on the basis of the incriminating material found during the course of search. AO has observed that in the regular assessment the nature and purpose of advances was not examined by the AO. 12. Upon assessee's appeal the ld. CIT(A) has deleted the addition by holding that the matter has attained the finality in the regular assessment. He also noted that no incriminating materials have been found during the search. The ld. CIT(A) has also referred to the decision of ITAT, Kolkata in the case of LMJ International 119 TTJ 214. Against the above order the Revenue is in appeal before us. 13. We have heard both the counsel and carefully perused the records. We have already held in the assessee's appeal as above that dehors incriminating material no assessment can be done u/s 153C of the Act for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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