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TMI Blog2018 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... al gains of ₹ 66,02,026/- and ₹ 54,59,715/- to business income of ₹ 62,93,434/- and ₹ 54,09,181/-; respectively, in proceedings u/s. 143(3) r.w.s. 147 r.w.s. 144 & u/s. 153 r.w.s. 143(3) of the Income Tax Act, 1961; in short "the Act"; respectively. Heard both the parties. Case file perused. 2. The assessee's sole substantive ground identically pleaded in both these appeals challenges validity of the impugned Section 153A proceedings. Its further case is that there were no assessment proceedings pending in its case of the two assessment years in question. Learned counsel informs us that the Assessing Officer had framed regular assessments on 31.12.2008 and 31.12.2010; respectively assessing its abovestated capital gains as business income. Then came the impugned search on 09.08.2011 followed by consequential instant assessment proceedings raising the very substantive issue of capital gains versus business income once again. 3. Learned counsel then takes us to the CIT(A)'s order common in both the assessment years under challenge making it clear that there is no incriminating material found or seized during the above search as under: "4. Brief facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;to reiterate" the total income as stood decided after giving effect to the Hon. ITAT's order for the relevant year i.e. A.Y.2006-07. No doubt, that in effect, would also imply that the decision of the Hon. ITAT that the addition of ₹ 62,93,433/- made by the ld. AO and upheld by the Hon. ITAT on account of the same having been treated as income from business was required by the AO to be only "reiterated" and therefore also to be upheld in the present proceedings before me. Thus, though the decision of the ld. AO, in treating the capital gains as business income is upheld; such upholding is not on merit but merely by way of reiteration of total income as determined consequent to the order of the Hon. ITAT. Thus, the ground raised by the appellant for A.Y.2006-07 is partly allowed. 6. With respect to A.Y. 2008-09, from the statement of facts filed by the ld. AR, it appears that an assessment u/s 143(3) was framed by the AO prior to search, against which the appeal filed has already been decided by my ld. predecessor vide order dated 16/11/2011 and appellant is in further appeal before ITAT. In view of these facts, it is crystal clear that in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of the assessee is essentially a legal issue emanating from facts on record of the Revenue and, therefore, we deem it fit and proper to adjudicate the issue straightway even while the CIT(A) has omitted to adjudicate the same. The aforesaid ground of the assessee hinges only on one pertinent point as to whether or not while framing order u/s.153A of the Act, the Revenue is entitled to interfere with the assessment completed u/s.143(1) of the Act and not pending at the time of search in the absence of any incriminating material/documents unearthed as a result of search. 14.3. On facts, we take note of the undisputed fact that the return of income was filed for AY 2007-08 stood finalized prior to search owing the expiry of time limit for regular assessment under section 143(3) of the Act. We also note the averment made on behalf of the assessee that no incriminating material/document has been found in the course of the search proceedings which exhibits intention contrary to what is declared in the books of accounts maintained by the assessee. We note that the assertions made by the assessee to the effect that income arising on sale of capital asset has been treated as busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post- search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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