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TMI Blog2015 (12) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s 147 and quashed the assessment order, therefore, we do not consider it appropriate to discuss the other grounds raised by the assessee on merits of the case. - Decided in favour of assessee. - I.T.A. No. 400/Vizag/2014, I.T.A. No. 401/Vizag/2014, I.T.A.No. 402/Vizag/2014, I.T.A. No. 403/Vizag/2014, I.T.A. No. 404/Vizag/2014, I.T.A. No. 405/Vizag/2014, .T.A. No. 406&407/Vizag/2014 - - - Dated:- 29-10-2015 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri Samuel Nagadeshi, AR For The Respondent : Smt. D. Komali Krishna, DR ORDER PER BENCH: These appeals by different assessee s are filed against the separate orders of Commissioner of Income-tax (Appeals)-I, Hyderabad and pertain to Asst. Year 2008-09 and 2009-10. Since, the facts are identical and issue involved is common in these appeals, they are clubbed, heard together and disposed of by this common order for the sake of convenience. 1. Brief facts extracted from ITA.No. 406/Viz/2014 is that there was a search operations u/s.132 in the premises of Sri. N.Suryanarayana Reddy and in the office premises of M/s Sai Lakshmi Township Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed u/s 143(3), r.w.s. 147 is bad in law, as the assessment is framed consequent to search proceedings cannot be reopened u/s 147, but, assessment can be done only u/s 153A of the Act. Therefore, assessment order passed u/s 143(3),r.w.s. 147 is bad in law and liable to be quashed. However, the CIT(A), did not adjudicated the issue of reopening of assessment, but upheld the assessment order on merits and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee is in appeal before us and raised the following grounds of appeal. 1. On the facts and in the circumstances of the case, the order of the learned Commissioner of Income-Tax (Appeals) to the extent confirming the order of the Assessing Officer under Section 143(3) read with Section 147 of the Income-tax Act, 1961 is erroneous in law and facts of the case. 2. The learned Commissioner of Income Tax (Appeals) erred in law and facts of the case, in directing the addition of ₹ 62,95,000/- as unexplained investment despite the same is fully explained with reference to the all ingredients as to the identity, credit worthiness and genuineness of the same as required by law by producing credible and ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that the Assessing Officer has made additions towards investments in purchase of lands as unexplained investments despite furnishing relevant details and verifiable creditable sources for the investments. The AR submitted that the assessee has got retirement benefits of ₹ 29 lacs and the said amount was invested in purchase of lands and the balance amount was unsecured loans taken from family members and filed the necessary evidences. The Assessing Officer allegation is that the genuineness of the transaction and creditworthiness are not proved is unjustified as the assessee has filed the details of sources of investments by filing confirmation letters from the parties from whom unsecured loans were taken along with their PAN numbers. The AR further submitted that the assessee had explained sources to the extent of ₹ 206 lacs with cogent materials before the DDIT(Inv) and accepted the balance amount of ₹ 24 lacs as unexplained investments, which is evident from the statement recorded during the post search proceedings. Despite proving the source for investments, the AO considered the entire investment as unexplained which is contrary to the evidences filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee except, filing some documents such as pattadar pass books and confirmation letters did not prove the capacity of the creditor with substantial evidence. Therefore the additions made by the Assessing Officer should be confirmed. 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case is that there was a search action u/s 132 in the premises of Sri. N.Suryanarayana Reddy and others. During the course of search, certain incriminating documents were seized from the premises of M/s Sai Lakshmi Township Pvt. Ltd., Visakhapatnam, which indicates that the assessee along with others have invested an amount of ₹ 230 lacs for purchase of lands. Consequent to search, during the post search proceedings the DDIT(Inv), summoned the assessee. The assessee appeared before the DDIT(Inv) and his statement was recorded. The assessee admitted before the DDIT(Inv) that he has source for investments to the extent of ₹ 206 lacs and the balance amount of ₹ 24 lacs was declared as unexplained investment. The Assessing Officer, based on the assessee statement issued notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.] Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide 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 31st May, 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 under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assess or reassess income of such other person in accordance with the provisions of section 153A. 65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer should satisfy himself that, there is material which suggests that there is an escapement of income. The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessment by way reasons for reopening of assessment, time limit for issue of notice and provision for obtaining sanction of higher authority in certain circumstances. Under the provisions of section 153A to 153C these hurdles are cleared by using the non abstante clause in the said section. In other words, under the new provisions of section 153A, the AO is not required to satisfy these conditions before issue of notice. The only requirement is that there should be a search action u/s 132 or books of account, other documents or any other asset are requisitioned under section 132A. Therefore, we are of the opinion that though, the Assessing Officer from both sections empowered to tax the income escaped from tax, both are works in a different situations, i.e. section 147 comes in to operation where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnish the return for the six assessment years immediately preceding the assessment year in which search is took place. Thereafter, the Assessing Officer has to assess or reassess the total income of those six assessment years. The word shall used in section 153A made it clear that the Assessing Officer has no option, but to issue notice and proceed thereafter to assess or reassess the total income. In the instant case, the Assessing Officer issued notice u/s 148 to reopen the assessment. Therefore, in view of the non-abstante clause begin with section 153A, the Assessing Officer has no jurisdiction to issue notice u/s 148 reopen the assessment of those six assessment year which falls within the exclusive jurisdiction of section 153A. Though, both provisions of the Act empowers the Assessing Officer to assess or reassess the income escaped from assessment, both sections are dealing with different situations. Section 147 comes into operation when, the Assessing Officer believes that there is an escapement of income chargeable to tax, either from the return already filed or through some external material evidence came to his knowledge, which shows the escapement of income. Whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 f irst proviso? We are of the view that for answering this question, guidance wi l l have to be sought from sect ion 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. Simi lar posi t ion wi l l obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jur isdict ion to make or iginal assessment and assessment u/s 153A merge into one and only one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings shall abate . The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the 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 ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clause with which sub section (1) of section 153A opens, the A.O. has no jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years which fal ls wi thin the exclusive jurisdiction of section 153A of the Act and accordingly the A.O. was not justified in issuing notice u/s 148 on 28-8-2006 and in completing the impugned assessment u/s 143(3) r.w.s. 147 of the Act on 31-10-2006. The A.O. instead of complying with the requirement of section 153A proceeded with the provisions of section 147/148 which are not applicable in the assessment u/s 153 A of the Act, therefore, the impugned assessment completed u/s 143(3) r.w.s. 147 of the Act is a nullity and as such the assessment order dtd. 31-10-2006 passed u/s 143(3) r.w.s. 147 of the Act is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed. 17. Considering the facts and circumstances of the case and also applying the ratios of the above mentioned decisions, we are of the considered opinion that the Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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