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TMI Blog2020 (8) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... f any incriminating material seized as a result of search.That being so, we decline to interfere in the order passed by the ld. CIT(A), his order, on this issue, is hereby upheld and ground no. 1 raised by the revenue is dismissed. Admission of additional evidence - CIT-A admitting certain fresh evidence or materials produced by the assessee in contravention of the provisions of Rule 46A of I. T. Rules, 1962 - HELD THAT:- Two additional grounds, the ld CIT(A) had rejected the ground No.1 and did not admit it, hence there is no question of additional evidence. Ground No.2 raised by the assessee during the appellate proceedings relates to charging of interest under section 243A and 234B of the Act. Since it is a legal issue and emanated from assessment order, hence it can not be treated as additional evidence. Taking into account the factual position narrated above there is no any violation of the provisions of Rule 46A of the Income Tax Rules, therefore we dismiss ground No.2 raised by the Revenue. Disallowance of expenses claimed under the head Purchases Payment made for plots, lands building - HELD THAT:- Copy of audited profit and loss account was filed in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in allowing relief to the assessee by admitting certain fresh evidence or materials produced by the assessee in contravention of the provisions of Rule 46A of I. T. Rules, 1962. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of expenses of ₹ 2,55,96,663/- claimed under the head, Purchases Payment made for plots, lands building despite the fact that the assessee failed to discharge the onus cast upon him u/s 37(1) of the I. T. Act, 1961. 4. Any other ground that may be raised at the time of hearing. Now we shall take these grounds one by one: 4. Ground no.1 raised by the revenue relates to addition of ₹ 2,02,59,880/- on account of unexplained sundry creditors. 5. Brief facts qua the issue are that during the assessment proceedings the assessing officer examined the balance sheet of the assessee and it was noticed by him that assessee has shown sundry creditors of ₹ 3,27,96,977/-. From the annexure/details, it was noticed by the assessing officer that the creditors of ₹ 2,02,59,880/- were newly introduced during the current year. The assessee was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue notice u/s. 153A for all the assessment years falling within the block period and thereafter can assess or reassess the total income of the assessee not only based on the material gathered during the search but also any other material available with the AO at the time of passing the assessment order. The Hon ble High Court of Delhi in the case of CIT Vs. Anil Kumar Bhatia reported in [2013] 352 ITR 493 has lucidly explained the meaning, scope and legislative intention in introducing sections 153A, 153B and 153C. As stated and explained by the Hon ble Court, Section 153A provides for 'assessment in case of search or requisition'. It runs as follows: 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure for assessment of search cases under Chapter XIV-B be abolished : 65.1 The existing provisions of the Chapter XIV-B provide for a single assessment of undisclosed income of a block period, which means the period comprising previous years relevant to six assessment years preceding the previous, year in which the search was conducted and also includes the period up to the date of the commencement of such search, and lay down the manner in which such income is to be computed. 65.2 The Finance Act, 2003, has provided that the provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after May 31, 2003, by inserting a new section 158BI in the Income-tax Act. 65.3 Further three new sections 153A, 153B and 153C have been inserted in the Income-tax Act to provide for assessment in case of search or making requisition. 65.4 The new section 153A provides the procedure for completion of assessment where a search is initiated under section 132 or books ofaccount, or other documents or any assets are requisitioned under section 132A after May 31, 2003. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of such assessment or reassessment, the period during which the assessment proceeding is stayed by an order or injunction of any court; or the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, or the time taken in reopening the whole or any part of the proceeding or giving an opportunity to the assessee of being re-heard under the proviso to section 129, or in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing on the date on which such application is made and ending with the date on which the order under subsection (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded. If, after the exclusion of the aforesaid period, the period of limitation available to the Assessing Officer for making an order of assessment or reassessment,, as the case may be, is less than sixty days, suchremaining period shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. Under the provisions of Section 153A, the Assessing Officer is bound to issue notice to the assessee to furnish return's for each assessment year falling within the six assessment years immediately preceding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters, if need be. 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 relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments are concluded, search on premises could always be made; if the authority concerned is satisfied that action ought to proceed in that line. Once that is done, section 153A(1)(a) authorizes the issuance of notice calling for filing of returns. Once a return is filed in answer to such a notice, the Explanation to section 153A provides, among other things, that all provision of the Income Tax Act will apply to the assessment made under section 153A of the Act. This is themanner in which the provisions in sections 153A, 153B and 153C of the Act would regulate. Once that is done, it is well within the jurisdiction of the assessing authority to proceed with any lawful modes of assessment as prescribed in the Act. The Statute nowhere, makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under section 153A(1)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to law, including under section 143(3) or even section 144 of the Act, if need be. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found during the search cannot be sustained, since the AO has the power under section 153A to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original Assessment. 4.3.5 The Hon ble Kerala High court in the case of Francis Glay D cor Tiles reported in [2015] 385 ITR 624 observed that on going through section 132 of the Income Tax Act, what we find is that if the authority specified therein has reason to believe that any person to whom a summons under subsection (1) of section 37 of the Indian Income Tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of the 1961 Act, or a notice under subsection; (4) of section 22 of the Indian Income Tax Act, 1922 (11 of 1922), or under sub-section (1) of section 142 of 1961 Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice etc., can authorize the officers referred therein to enter and search any buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability to submit returns as provided under section 153A(1)(a). 4.3.6 The Hon ble Kerala High court in its recent decision in the case of Dr. A.V. Sreekumar Vs. CIT, Kochi reported in [2018] 404 ITR 642 held that reliance placed by the consent letters obtained by the Department by way of a Tax Evasion Petition could be sustained as valid to initiate proceedings under section 143 read With section 153A when the said document was not one recovered in the search conducted in the premises of the assessee. 4.3.7 As stated above there are dichotomous decisions on this issue. One set of leading decisions in the case of CIT v. Continental Warehousing Corpn. Ltd. 374 ITR 645 and CIT v. Kabul Chawla 380 ITR 573 held that no addition can be made in an unabated assessment in absence of any incriminating material found as a result of search. On the other hand another set of leading decisions in the case of CIT Vs. Anil Kumar Bhatia [2013] 352 ITR 493, E. N. Gopakumar Vs CIT [2017] 390 ITR 131, CIT Vs Raj Kumar Arora [2014] 367ITR 517 and Dr. A. V. Sreekumar Vs. CIT [2018] 404 ITR 642 held that additions can be made in, an unabated assessments even though no incriminating material fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However,the AO without making any further enquiry on the details submitted had simply ignored the same and cast the entire onus on the appellant just by invoking sec.68 of the Act. In other words, the AO without referring to any seized material or referring to any credible information in his possession has simply doubted the sundry creditors. Even during the search u/s.132(1) which is the final weapon of the department to unearth the undisclosed income, no adverse material in this regard appears to, have been found as the AO has not referred to the same in the order. Hence, additions made purely on guess work and surmise can t find any support and accordingly the AO is directed to delete the addition made of ₹ 2,02,59,880/-. 7. Aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us. 8. The ld. DR for the Revenue, before us, has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has relied on the order of the ld CIT(A). 9. We have heard both the parties and carefully gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 153A 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 LD 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 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 complete 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he returned income and not on the assessed income following the decision of Hon ble Jharkhand High Court. The ld CIT(A) has adjudicated these two additional grounds as follows: I have carefully considered the additional grounds filed by the appellant. The appellant vide ground no.1 is trying to bring in new facts which require further investigation and if admitted shall have adverse impact on the order of assessment. Hence, additional ground no.1 is hereby rejected. However, additional ground no. 2 being a bona fide legal ground and is emanating from the order under appeal, the same is admitted and will be adjudicated subsequently. We note that out of these two additional grounds, the ld CIT(A) had rejected the ground No.1 and did not admit it, hence there is no question of additional evidence. Ground No.2 raised by the assessee during the appellate proceedings relates to charging of interest under section 243A and 234B of the Act. Since it is a legal issue and emanated from assessment order, hence it can not be treated as additional evidence. Taking into account the factual position narrated above there is no any violation of the provisions of Rule 46A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer without referring to any seized material or referring to any credible information in his possession has simply doubted the expenses claimed. In ground no.1, I have given a detailed finding with regard to the circumstances under which, the Assessing Officer can tamper with unabated assessment. In view of the same, additions made purely on guess work and surmise can t find any support and accordingly the Assessing Officer is directed to delete the addition made of ₹ 2,55,96,663/-. 15. Aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us. 16. The ld. DR for the Revenue, before us, has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has relied on the order of the ld CIT(A). 17. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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