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TMI Blog2018 (7) TMI 2042X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition of ₹ 6,86,686/- by presuming it as undisclosed purchase price of society plot No. B-148, Shivaji Nagar, Nevta, Jaipur ignoring the following facts: (i) That ₹ 6,86,686/- is the value adopted by Jaipur Development Authority (JDA) in the month of March 2014 for the purpose of charging regularization, development and other charges and but the same is not the purchase price or DLC rate of impugned plot of land. (ii) During the course of action u/s 132 of IT Act at the residence of assessee and other relatives, no incriminating material or other documents evidencing any payment over and above the purchase price of said society plot No. B-148 was found; (j) That the said plot of society was sold after conversion for ₹ 3,75,000/- on 10.10.2016 (DLC rate ₹ 3,18,825/-) whereas the said society plot was purchased in 1997 which is out of block period. (k) That without prejudice to above sub-ground ld. CIT(A) was not justified in not allowing benefit under section 48 of IT Act for cost inflation. 2. Briefly stated, the facts of case are that a search and seizure operation under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other expenses cost 5,000/- Cost/payments in conversion of plot into urban plot 74,512/- 3.2 It was submitted that without finding any incriminating material or other information during the course of search on 30.10.2014 evidencing any unrecorded investments in purchase of above referred plot of land, both the lower authorities made/sustained addition of ₹ 6,86,686/- in avoidance of the following facts: (1) As per the procedure for conversion of unapproved plot of land into urban plot of land, it is first surrendered to JDA. After payment of regularization and lease money by the owner, same plot is re-allotted to the same persons by JDA through registration in the office of Sub-registrar. (2) The payments made to JDA and other capital expenses incurred by assessee in making the plot as urban plot of land in March 2014 (which is cost of improvement) were ignored but amount of ₹ 6,86,686/- fixed by JDA in re-allotment of same plot after conversion in March 2014 was made basis of addition. (3) assessee was alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized during the course of search. 3.4 It was further submitted by the ld. AR that similar additions have been made in the hands of Dr. (Miss) Surabhi Tomar, Dr. Eshan Sharma, Amit Rana for A.Y. 2013-14 and in the absence of any incriminating material found during course of search, the additions made by the AO have been deleted by the ld. CIT(A). It was accordingly submitted that the additions so made by the AO be directed to be deleted. 4. On the other hand, ld DR has relied upon the authorities below and submitted that once a search u/s 132 is carried out, it is incumbent upon the AO to assess or reassess the income of the assessee in respect of 6 assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The AO had no discretion but to assess or reassess the total income of the assessee as per the provisions of Section 153A of the Act. 5. We have considered the rival submissions as well as purused the material available on record. A search and seizure action was carried out in case of the assessee s group on 30.10.2014. The original return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 37 and 39 as under:- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- 19. Under the provisions of Section 153A, as we have already noticed, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated 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 releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 153A to 153C cannot be interpreted to be a furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty. (Emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. 28. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 that it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided. 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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