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TMI Blog2016 (4) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-09 vide assessment order dated 06.12.2010 and for assessment year 2009-10 dated 09.12.2011, the Assessing Officer has accepted the returned agricultural income and when no incriminating material found to suggest the agricultural income is non-agricultural income and arbitrarily disallowing the same by the Assessing Officer and the ld. CIT(A) are not justified. Accordingly, the agricultural income declared by the assessee has to be accepted. Disallowance of deduction under section 54F - The assessee having purchased the land by investing capital gains and the intention to construct a residential building, for which, the assessee have a period of three years to construct a new residential building and if at all the assessee fails to comply with the requirement of section 54F as per proviso to section 54F(1) to (4) of the Act, then only it can be denied. Interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3) r.w.s. 153A as held by the Tribunal in the case of ACIT v. VN. Devadoss [2013 (9) TMI 400 - ITAT CHENNAI ). The interest under section 234B is to be levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 153A of the Act. For the assessment year 2012-13, in response to the notice under section 153A of the Act, the assessee has filed the return on 11.03.2014 declaring income of ₹.9,79,49,860/-. For the assessment year 2013-14, she has filed the return on 06.12.2013 declaring income of ₹.3,71,63,300/-. 3. Subsequently, the Assessing Officer has issued notice under section 143(2) of the Act dated 01.08.2014 and also notice under section 143(1) of the Act on 18.11.2014 for all these assessment years. The Assessing Officer framed the assessment for each assessment year as follows: 01. Assessment year 2007-08 Total income as returned by the assessee ₹. 17,19,84,270 Disallowance of agricultural income ₹. 5,00,000 Total assessed income ₹. 17,24,84,270 02. Assessment year 2008-09 Total income as determined vide order under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of agricultural income ₹. 4,82,050 Total assessed income ₹. 3,76,45,350 4. Now, the contention of the ld. Counsel for the assessee is that out of the assessment years 2007-08 to 2013-14, the assessment for the assessment years 2008-09 and 2009-10 were completed under section 143(3) of the Act. Hence, the assessments, which are already completed, either under section 143(1) or under section 143(3) of the Act, cannot be reopened. In other words, it was submitted that if an order already in existence, having obviously passed prior to incision of search/requisition, the Assessing Officer, if empowered to reopen those proceedings and reassess the total income taking note to the undisclosed income, if any, unearthed during the search. According to the ld. Counsel for the assessee, the assessment reopened for the assessment years 2007-08 to 2010-11 cannot be survive as there was no incriminating documents found during the course of search relating to these assessment years. The addition made on these assessment years is only an ad-hoc addition by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expired by this time and thereby, the assessments stated to be reached finality by operation of law for the assessment years 2007-08 to 2011-12 as on the date of search as the time limit to issue notice for these assessment years is already over. Being so, no assessment or reassessment or pending assessment at the time of search carried out on 15.05.2012. In respect of these assessment years, section 153A empowers the Assessing Officer to complete the assessment for 6 consequent assessment years consequent to search action under section 132 or requisition under section 132A of the Act. It is also to be noted that the assessment as well as reassessment are possible in the case of pending assessment. Further, when the assessments are already completed and no assessments are pending at the time of issue of notice under section 153A, reassessment can be made only if any incriminating material found during the course of search and item concluded in earlier assessment cannot be considered in the reassessment under section 153A of the Act. In other words, the scope of assessment under section 153A can be summarized diagrammatically as under: Image No. 1 7. Thus, as seen from the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion answered in clause (b) would be applicable as the addition in the assessment order passed under section 153A, can be made only on the basis of incriminating material found in the course of search in case where the assessment has already been finalized. Thus, in this case, no addition can be made over and above the returned income which has become final prior to the date of search and there is no material found at the time of search. The aforesaid Mumbai Special Bench decision of the Tribunal in All Cargo Global Logistic Ltd. (supra) has also been reaffirmed and applied by the Mumbai Benches of the Tribunal in the case of Gurinder Singh Bawa v. DCIT [2012] 28 Taxman.com 328 (Mum.). The relevant observation of the Tribunal is reproduced herein below: 6. We have perused the records and considered the rival contentions carefully. The dispute raised is regarding legal validity of addition made by AO under section 153A of the Act. Under the provisions of section 153A, in all cases, where search is conducted under section 132 of the Act, AO is empowered to assess or reassess total income of six assessment years preceding the assessment year in which search was conducted. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. 10. Further, the Coordinate Benches of the Tribunal in the case of Sree Gopalakrishna Fabrics v. DCIT in I.T.A. Nos. 788 to 794/Mds/2015 vide order dated 27.11.2015 has taken similar view. 11. Moreover, in the case of Jai Steel (India) v. ACIT [2013] 259 CTR 281, the Hon ble Rajasthan High Court has held that in case nothing incriminating material is found on account of search of search or requisition then the question of reassessment of concluded assessment does not arise. If any books of account or other documents relevant to the assessment has not been produced in the course of original assessment and found in the course of search, such books of account or other documents are to be taken into consideration while assessing or reassessing the total income under the provision of section 153A of the Act. The requirement of assessment or reassessment under section 153A had to be read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee has to be accepted. 14. Regarding disallowance of deduction under section 54F, the plea of the ld. DR is that the assessee has purchased the commercial land, as such, the assessee has not entitled for claiming deduction under section 54F of the Act. The ld. DR relied on the judgment in the case of ITO vs. Rohini Reddy 122 ITD 1. 15. On the other hand, the ld. Counsel for the assessee has submitted that the assessee purchased the plot for the purpose of constructing residential building and it is in the process of the same and there is a time limit of three years after transfer of asset to construct a new residential house in order to avail exemption under section 54F of the Act and he also relied on the CBDT Circular No. 667 dated 18.10.1983 for a proposition that the cost of residential house also includes the cost of the plots also. According to the ld. Counsel for the assessee, in the assessment year under consideration, the claim of the assessee under section 54F cannot be denied and if at all it has to be denied, it can be only after the expiry of three years from the date of transfer of asset. 16. We find force in the argument of the ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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