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TMI Blog2019 (11) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... identical facts and circumstances and in pursuant to the same search and seizure action dated 22/07/2015, therefore, for the sake of convenience, all these six appeals were clubbed together for the purpose of hearing and disposal. For the purpose of recording the facts, the appeal in the case of DCIT Vs. M/s Motisons Buildtech Pvt. Ltd. in ITA No. 1322/JP/2018 is taken as a lead case. In this appeal, the revenue has raised following grounds: "1. Whether on the facts and the circumstances of the case CIT(A), has erred in deleting the addition of Rs. 3,68,27,500/- made u/s 68 of the Act, ignoring the fact that assets of the assessee company don't commensurate to premium charged and further ignoring the fact that neither any business activity was performed nor any business income has been shown by the assessee. 2. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of Rs. 3,68,27,500/- made u/s 68 of the IT Act ignoring the fact that neither any business activity was performed nor any business income has been shown by these concerns from whom share application money has been received, hence it is the unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the A.O. without any incriminating material found or seized during the search and seizure action is not legally tenable. Aggrieved by the orders of the ld. CIT(A), the revenue has filed these appeals. 4. Before us, the ld CIT-DR has submitted that it is not a simple case of repetititon of the addition by the A.O. but the A.O. has conducted a due enquiry by recording the statements of the persons concerned and only after the enquiry conducted by the A.O. it was held that the assessee has failed to establish the creditworthiness of these share applicants and genuineness of the transactions. The ld CIT-DR has contended that the A.O. has also brought on record the return of income of these share applicant companies and found that all these said applicant companies are paper companies without having any business activity. Thus, the ld. CIT-DR has contended that the A.O. was duly aware and conscious about the fact that there was an earlier search on 31/10/2012 and in pursuant to the earlier search, the assessments were framed U/s 153A as well as U/s 153B(1)(b) of the Act for these assessment years wherein the A.O. made the addition on account of share premium received by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome incriminating documents/evidence found as a result of search and the same does not empower to the AO to make additions in search assessment without having any incriminating material found as the result of search over and above to undisclosed assets/expenses/ income etc. found during the course of search. Search u/s 132 was carried on 22.07.2015 over the Motisons Group and during the course of search the Income Tax department did not find any document/ evidence/material to show that the assessee was having some unaccounted money/income which was brought in books of accounts in the form of share application/share premium and this fact is evident from the record found/seized as a result of search. From a plain reading of the provisions of section 153A, it is evident that if a search has been initiated under section 132(1) or requisition has been made under section 132A, then the Assessing Officer is obliged to issue notice under section 153A, requiring such person to furnish return of income of six years in the prescribed form for the immediately preceding the year of search. The Assessing Officer is legally required to assess or re-assess the total income of six assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f share application money and share premium received by the assessee from the various companies have been deleted by the ld. CIT(A) on the ground that an identical addition was made by the A.O. while passing the assessment orders U/s 153A as well as U/s 153B(i)(b) of the Act which were also subjected to appeals and this Tribunal deleted those additions made by the A.O. pursuant to the first search dated 31/10/2012. The ld. CIT(A) noted the fact that the additions were made without any incriminating material found or seized during the course of search and seizure action dated 22/07/2015. These facts of making the earlier additions by the A.O. in respect of these share capital and share premium received by the assessee in the assessment orders passed in pursuant to the search dated 31/10/2012 are not in dispute. Further it is also undisputed fact that all these assessment proceedings were already completed and were not pending as on the date of search i.e. 22/07/2015. Thus, it is a relevant and material point to be considered whether the additions made by the A.O. without any incriminating material is sustainable in law or nor. In case of Motisons Buildtech Pvt. Ltd., the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material found or seized during the course of second search carried out on 22/07/2015. Therefore, in absence of any incriminating material found or seized disclosing any undisclosed income or unaccounted income, the addition made by the A.O. U/s 68 of the Act is not sustainable in law. There are binding precedents on this issue including the judgment of the Hon'ble Jurisdictional High Court in the case of Jai Steel (India) Vs ACIT (supra) as well as other decisions including the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs Meeta Gutgutia (supra). The said judgment of the Hon'ble Delhi High Court was challenged by the revenue before the Hon'ble Supreme Court, however, the SLP filed by the revenue was dismissed by the Hon'ble Supreme Court vide order dated 02/07/2018. We further note that an identical issue has been considered by this bench in the case of Kota Dall Mill Vs DCIT in ITA Nos. 997 to 1002/JP/2018 and 1119/JP/2018 and 1057 to 1062/JP2018 and 1210/JP/2018 vide order dated 31/12/2018 in para 6 as under: "6. We have considered the rival submissions as well as the relevant material on record. Undisputedly, the assessments for the assessment years 2010-11 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 postsearch material or information available with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court has reiterated its view in case of Principal CIT vs. Kurele Paper Mills (supra) in para 1 to 3 as under :- "1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of Rs. 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 ('ACT') on bogus share capital. But, the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act. 2. The Court finds that the order of the CIT(Appeals) reveals that there is a factual finding that "no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the AO." Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, in para 11 of the decision it was observed: "11. Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section 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 Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A 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." 58. In Kabul Chawla (supra), the Court discussed the decision in Filatex India Ltd. (supra) as well as the above two decisions and observed as under: "31. What distinguishes the decisions both in CIT v. Chetan Das Lachman Das (supra), and Filatex India Ltd. v. CIT-IV (supra) in their application to the present case is that in both the said cases there was some material unearthed during the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e abated assessment or reassessment can be made." 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was "not borne out from the scheme of the said provision" which was in the context of search and/or requisition. The Court also explained the purport of the words "assess" and "reassess", which have been found at more than one place in Section 153A of the Act as under: "26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess'-have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 61. It appears that a number of High Courts have concurred with the decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, sub-section (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading "Assessment in case of search or requisition". It is "well settled as held by the Supreme Court in a catena of decisions that the heading or the Section can be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; ** 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was: "We and our family firms namely M/s. Assam Supari Traders and M/s. Balaji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms." 65. Therefore, there was a clear admission by the Assessees in Smt. Dayawanti Gupta (supra) there that they were not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factual surmise that is logical and plausible. These findings do not call for interference. The second question of law is answered again in favour of the revenue and against the assessee." 69. What weighed with the Court in the above decision was the "habitual concealing of income and indulging in clandestine operations" and that a person indulging in such activities "can hardly be accepted to maintain meticulous books or records for long." These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act. This, therefore, was not material which was subsequently unearthed during the search which was not already available to the AO. Consequently, the additions sought to be made by the AO on account of security deposits were rightly deleted by the CIT (A)." Thus the essential corollary of these decisions is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. It is pertinent to note that the SLP filed by the revenue against the decision of Hon'ble Delhi High Court in case of Principal CIT vs. Meeta Gutgutia was dismissed vide order dated 2nd July, 2018. There are series of decisions on this issue including the decision of Hon'ble Jurisdictional High Court in case of M/s. Jai Steel India vs. ACIT (supra) wherein the Hon'ble High Court has held in para 23 to 30 as under:- "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A. With all the stops having been pulled out, the Assessing Officer under Section 153A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income, if any, unearthed during the search and the income 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 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be 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 Court in the case of K.P. Varghes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminating material was unearthed or any undisclosed income which was not disclosed in the books of accounts was detected or found. The only incriminating material which was referred by the AO is pages 21 to 26 of Annexure AS-1 in respect of long term capital gain earned by Shri Rajendra Agarwal and his family members. The said long term capital gain was disclosed by Shri Rajendra Agarwal in his statement under section 132(4) and, therefore, it was surrendered and offered to tax by Shri Rajendra Agarwal and his family members in the year of search. The AO himself has not made any addition in the hand of the assessee on account of long term capital gain which was found during the course of search and seizure. Thus, except the material disclosing the long term capital gain in the hand of Shri Rajendra Agarwal, no other incriminating material either found or referred or is the basis of the addition made by the AO while framing the assessment under section 153A of the Act for the assessment years 2010-11 to 1314. It is appropriate to refer relevant part of the assessment order in para 12 pages 48 to 50, para 19 page 83 and para 22 page 86 as under :- "12 Submissions made on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee firm has filed confirmation letters and this office carried out further enquiry to examine the reality of the transactions. An enquiry was sent to the Investigation Directorate Kolkata and it has been established that these investor or lender Companies are controlled by the entry operators. The statements of various entry operators are sufficient evide4nces to show that the unsecured loan and parther's capital are assessee's own undisclosed income brought into the books of the assessee under the garb of unsecured loan and partner's capital. c. The department has carried out search over the assessee group and during the course of search action u/s 132 of the I.T. Act, 1961, the incriminating documents seized during search proceedings vide pg no. 21 to 26 of Annexure AS-1 of Party B-1, wherein the details of year-wise LTCG earned by Shri Rajendra Agrawal and his family members, is maintained, which during search action has been accepted to be bogus by all family members in their respective statements." "19. In view of above facts of the case and in the light of above judicial decision, it is established that genuineness of the transaction has not been proved. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. CIT (A) though has not disputed the legal proposition on this issue, however, the contention of the assessee was turned down merely on the ground that the SLPs filed by the revenue in the cases of Kabul Chawla (supra) and M/s. All Cargo Global Logistics (supra) etc. have been admitted for decision by the Hon'ble Supreme Court. The relevant part of the finding of the ld. CIT (A) in para 3.2.2 and 3.2.4 at pages 35 and 36 are as under :- "3.2.2 As per the provisions of this section where a search is initiated u/s 132 of the Act, the A.O shall issue a notice requiring the person searched to furnish his return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Once such returns are filed, the AO has to assess or reassess the total income of such six assessment years.(emphasis supplied by me). (The decisive words used in the provisions are to 'assessee or reassess the total income'). The A.O. is thus duty bound to determine the 'total income' of the assessee for such six assessment years and it is obviou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue in which the SLP filed by the revenue was also dismissed by the Hon'ble Supreme Court, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. We order accordingly." In the said decision, the Tribunal has considered all the relevant decisions on the point relied upon by either of the parties and finally it was held that the addition made by the A.O. without any incriminating material found or seized in the course of search and seizure action is not sustainable particularly when the relevant assessment years were not pending as on the date of search. The ld. CIT(A) has decided this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed material found during the course of 2nd search. I also find that for this A.Yr the assessments stood completed on the date of search. The AO repeated merely the assessment order on the date of search and the reason for reiterating the assessment is as under: 23. The submissions of the assessee have been duly considered. After due consideration of the submissions put forth by the assessee company it is seen that the main objection of the assessee is on the following issues- (a) The assessee company was not covered in the search u/s 132(1) of the I.T. Act conducted on 22-07-2015 on the Motisons Group. (b) During the search proceedings under consideration no incriminating documents was found so no additions can be made over and above to incriminating material. (c) The issue regarding addition u/s 68 of Income Tax Act, 1961 has already been decided by CIT (A) and ITAT in the case of the assessee for the same year under the same facts and circumstances of the case. 24. The above main contentions of the assessee company are dealt with as under. (a) The name of assessee company has been written on the search warrant which was duly served upon the person present at the premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 68 can only be made by the assessing officer as per the definition of section 68 of the I.T. Act. In view of these observation the issue is decided as under. In the year under consideration addition is being made u/s 68 of the I.T. Act as the assessee has failed to established the main ingredients of section 68 (i.e. creditworthiness of all such companies who had paid such High Share premium). On in-depth analysis of the financial data of all these companies it is established that these companies do not have any profit earning apparatus and are showing hardly any business activities carried out by them. All these companies having no business activities and no fixed assets have shown to have received high share premium on their shares in the very first year of operation. 25. Having dealt with each of the contention of the assessee and having found the same to be untenable it is important to place on record certain aspects which have a bearing on the issue at hand. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such partners/directors and from business premises of the firms/companies of die group; notice under Section 153A of the Act was issued on 05.10.2004 for filing of return within 35 days of receipt of the notice, which was served on 12.10.2004; in compliance to this notice, return declaring income of 'NIL' was filed on 07.04.2005. In the return filed in response to the notice under Section 153A of the Act, the assessee, inter alia, claimed deduction of Saks Tax Incentive relying on decision in die case of D J. CIT v. Reliance Industries Ltd. [2004] 88 LID 273 (Mum.) (SB). The said claim was not made in the original return filed under Section 139(1) of the Act and it was contended that such claim can be made in the return filed in response to notice under Section 153A of the Act as it was over riding all proceedings earlier taken overall. The claim was not held to be admissible by all the authorities. When further appeal was filed, Hon'ble Rajasthan High Court while analysing the provision of sec. 132 r.w.s 153A held thus: 18. To consider the rival submissions made at the Bar in the context of the present case and the substantial question of law framed, the scope of 'a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessments already stands completed, the AO can reopen the assessments or reassessments already made without following the provisions of Sections 147, 148 and 151 of the Act and determine the total income of the assessee. 21. The argument raised by the counsel for the appellant to the effect that once a notice under Section 153A of the Act is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. 22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (1) the assessments or reassessments, which stand abated in terms of II proviso to Section I53A of the Act, the AO acts under his original jurisdiction, for which, assessments have to he made; (2) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Murali Agro Products Ltd. (2014) 49 Taxmann.com 172 wherein it was held thus: 8. We find it difficult to accept the above contention raised on behalf of the revenue. The object of inserting Sections 153A, 1536 and 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Income-tax Act, as stated in the Memorandum explaining the provisions in the Finance Bill 2003 (see 260 ITR (St) 191 at 219) was that under the existing provisions relating to search cases, often disputes were raised on the question, as to whether a particular income could be treated as 'undisclosed income' or whether a particular income could be said to be relatable to the material found during the course of search, etc. which led to prolonged litigation. To overcome that difficulty, the legislature by Finance Act 2003, decided to discard Chapter XIV B provisions and introduce Sections 153A, 153B and 153C in the IT Act. 9. What Section 153A contemplates is that, notwithstanding the regular provisions for assessment/reassessment contained in the IT Act, where search is conducted under Section 132 or requisition is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affect the assessment finalised on 29-12-2000. 12. Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Incometax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalised assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 6.3 The above quoted passage was also approved by Bombay High court in the case of Continental Warehousing Corporation (374 ITR 645, para 30 thereof) It appears that there is unanimity of view on the subject that when a search is initiated and an assessment is to be framed u/s 151/1 in respect of a year which was not pending on date of search and which does not abate, the same can be only on the basis of incriminating m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Similar view, that completed assessment can only be interfered only if there is incriminating seized material found during the course of search, also taken in many judgments, including by Hui-1'1)1c ITAT Jaipur, in many cases: a) Continental warehousing Corporation 3741TR 645 b) PCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding that an assessment framed U/s 153A of the Act in respect of a year which was not pending as on the date of search and which does not abate the same can be disturbed only on the basis of incriminating material. Hence, the ld. CIT(A) has held that in absence of incriminating material, the completed assessment can be reiterated and cannot be interfered with by the A.O. while making the assessment U/s 153A of the Act without any incriminating material unearthed during the course of search. The relevant facts leading to the conclusion that the A.O. has repeated the addition while framing the assessment U/s 153A of the Act pursuant to the search dated 22/07/2015 without any incriminating material found or seized during the course of search action is not in dispute. The revenue has supported its case only on the statements recoded by the A.O. during the course of assessment proceedings which in our considered view do not constitute incriminating material found or seized during the course of search. Further even those statements recorded by the A.O. have not resulted any fact or material to indicate any undisclosed income or unexplained cash credits which can be added U/s 68 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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