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TMI Blog2016 (5) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... at the residential premises of the assessee on 18.11.2011. According to the Commissioner of Income Tax the Assessing Officer could not examine certain issues relating to investment made by the assessee in various companies and firms and the interest income received /receivable from some of the debtors. It was also noticed by the Commissioner of Income Tax that the opening capital balance for the year 2006-07 and the capital account for the subsequent years was not properly reconciled by the assessee during the course of the proceedings u/s 153A r.w.s.143(3). It was further noticed by the Commissioner of Income Tax that the Cash Flow Statement furnished by the assessee indicating drawings and justifying the cash found during the course of search at Rs. 14,50,000/- cannot be accepted as the drawings reflected in such Cash Flow Statement would not have been adequate for the assessee's life style and has accordingly proposed to estimate the drawings at a higher level and thus add back the cash found during 'search as unexplained cash since not supported by the Cash Flow Statement filed. For all these deficiencies, he has proposed that the assessment completed u/s 153A be revie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to reexamine the statement of affairs vide their orders No. 986/MDS/2012 dated 12.09.2012. 6. While re-examining, comparing and contrasting the two Statement of Affairs for both the assessment years 2006-07 and 2007-08, the Assessing Officer has noticed a shortage of Rs. 1,01,97,722/- in the liability side for the assessment year 2006-07 and Rs. 12,15,79,373/- for the assessment year 2007-08. When these differences were sought to be explained by the assessee, the assessee has come up with another revised Statement of Affairs as substantial differences in the balances of Assets and Liabilities. Thus, there was substantial discrepancies in the three Statements of Affairs which could not be examined properly by the Assessing Officer during the proceedings u/s 153A finalized on 28.3.2014. Thus, the acceptance of the Revised Statement of Affairs was suffering from defects resulting in a assessment erroneous and prejudicial to the interests of revenue. 6.1 The assessee filed revised statement of affairs for assessment year 2005-06, figures of which are basis for opening balances of assessment year 2006-07. Following major discrepancies are as under (a) figures o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs for AY 2007-08 showed balance of loan received of Rs. 38,96,40,723/- (liability side of SOA). The second SOA did not include this item at all but in third statement of affairs filed on 28/03/2014, the balance on this account has been shown at Rs. 33,70,54,907/-. Although there is increase in loan received balances if compared with the SOA for AY 2006-07 filed on 28/03/2014, yet difference balances shown in statement of affairs originally filed and the SOA filed on 28/03/2014 is not explainable. (b) Balances of loan paid was shown at Rs. 52,45,95,954/- in SOA originally filed which stood reduced to Rs. 1,33,75,858/-. Now in the statement of affairs filed on 28/03/2014, it has been increased to Rs. 54,71,54,871/-. No explanation is filed by the assessee for such difference and sources of investment (c) On 11/04/2006, there is a deposit of Rs. 5,21,898/-. The assessee has credit it as 'other income' but it is not reflected from the statement of taxable income. This amount has escaped assessment. Similarly, there is another credit of Rs. 25,000/- on 19/09/2006. (d) The assessee had given list of balances of loan received and paid during the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not examine certain issues relating to the investments made by the assessee in various companies and firms and interest incomes received/ receivable from some of the debtors. It was also noticed that the opening capital balance for the year 2006-07 and the capital account for the subsequent years was not properly reconciled by the assessee during the course of the proceedings u/s.153A r.w.s. 143(3). It was further noticed by the Assessing Officer that the Cash Flow Statement furnished by the assessee indicating drawings and justifying the cash found during the course of search at Rs. 14,50,000/- cannot be accepted as the drawings reflected in such Cash Flow Statement would not have been adequate for the assessee's life style and the Assessing Officer has accordingly proposed to estimate the drawings at a higher level and thus add back the cash found during search as unexplained cash since not supported by the Cash Flow Statement filed. For all these deficiencies, the Assessing Officer has proposed that the assessment completed u/s.153A be reviewed u/s.263 by Commissioner of Income Tax as he could not examine the issues due to paucity of time as the information was filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 12.09.2012, directed the Assessing Officer to re-examine the statement of affairs filed by the assessee. 19. Inspite of this, now the Commissioner of Income Tax wanted to review the order of the Assessing Officer passed u/s.153A r.w.s 143(3) dated 28.03.2014. First of all u/s.263 of the Act, the Commissioner of Income Tax must call for examining the records of the proceedings under Act and after examining the same if he came to a conclusion that the order passed by the Assessing Officer to be erroneous in so far as it is prejudicial to the interest of revenue, then he can revise the assessment order u/s.263 of the Act and issue notice. There should be independent application of mind by Commissioner of Income Tax himself. He cannot solely act upon the proposal sent by Assessing Officer so as to rectify any omission on the part of the Assessing Officer since the Assessing Officer has the remedy to rectify the same under the Act. From the proceedings u/s.263 of the Act in the present case, it is evident from the first para of the impugned order that the Commissioner of Income Tax acted upon the proposal sent by the Assessing Officer which is not permitted u/s.263 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax in its order u/s.263 wanted to review the giving effect order to Tribunal order by Assessing Officer which is not possible. If there is any error in giving effect order by the Assessing Officer, that order is to be reviewed and not the order passed u/s.153A r.w.s.143(3) of the Act. There is no dispute that Section 153A is applicable in this case. Hence, the Assessing Officer is obliged to issue notice under section 153A in respect of six preceding years, preceding the year in which search etc. has been initiated. Thereafter, he has to assess or reassesses the total income of these six years. It is obligatory on the part of the Assessing Officer to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. There is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat completed assessments stand on a different footing from the pending assessments because appeals etc. proceedings continue to remain in force in case of completed assessments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, it is found that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the assessee, though not specifically stated, would be that on annulment of the assessment made under section 153(1), the Assessing Officer gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. 22. The provision contained in section 132(1) empowers the officer to issue a warrant of search of the premises of a person where anyone or more of conditions mentioned therein is or are satisfied, i.e. (a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, (b) summons or notice has been or might be issued, he wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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. 25. The question now is - what is the scope of assessment or reassessment of total income under section I53A(1)(b) and the first proviso? 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, 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 provision. Similar position will 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 jurisdiction t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search action u/s.132 of the Act. 28.2. In view of the above, the original assessment order for the assessment year 2006-2007 was already completed u/s.143(3) of the Act. Hence the assessment u/s.153A to be made on the basis of incriminating material, which means books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search. It was admitted fact in this case that there was no incriminating material discovered in the course of search action. There was also no allegation that the assessee has failed to produce books of accounts and documents in the course of original documents. It is also a fact that recorded by Commissioner of Income Tax that the Assessing Officer failed to examine the books of accounts produced by him due to paucity of time and the Assessing Officer proposed the Commissioner of Income Tax to review the order u/s.153A of the Act. 29. In our opinion, the Commissioner of Income Tax wanted to do the things indirectly which cannot be done directly. Further, he mentioned in the order that the Assessing Officer examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of income in place of the income estimated by the Assessing Officer. In our opinion, the Assessing Officer exercises quasi-judicial power vested in his hands and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the Commissioner of Income Tax wanted to do further enquiry as he has not satisfied with the enquiry made by the Assessing Officer. In the present case, the Assessing Officer made enquiry both in the course of original assessment u/s.143(3) for the assessment year 2006-07 and also during the course of assessment u/s.153A of the Act and the assessee has given a detailed explanation to Assessing Officer to consider the same after being satisfied by the explanation given by the assessee, he adopted not to make any addition. 31. Further, as held by jurisdictional High Court in the case of Mariam Aysha vs. Commissioner of Agricultural Income Tax 104 ITR 381 that consent cannot give jurisdiction is an essential principle of law. The taxing authority can act only if there is power under the statute to do so. Being so, the contention of the Departmental Representative cannot be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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