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TMI Blog2020 (12) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... de and that of the AO be restored. 3. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off." 2. Search and seizure proceedings under section 132(1) of the Act were conducted on 14/06/2012 at the business & residential premises of M/s Hansa Tubes Pvt. Ltd. and its other group entities/associates by the Investigation wing (Income Tax), Chandigarh. The assessee namely Shri Surinder Garg was inter alia covered in the course of the aforesaid search proceedings. In compliance to the notice issued under section 153A of the Act the assessee submitted his return of income for A.Y. 2010-11 declaring a total income of Rs. 94,85,000/-. 3. During the course of the assessment proceedings it was observed by the A.O that the balance sheet of the assessee revealed an amount of Rs. 50,00,000/- as current liability under the head "Security (Rent)". Further, on the asset side of the balance sheet the assessee had reflected under the head investment an amount of Rs. (-)2,30,00,000/- with a narration "advance against property". Observing that the assessee was in receipt of advances from a company viz. M/s Hansa Metallic Pvt. Ltd in which he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating document/ material having surfaced in the course of the search proceedings the impugned addition of Rs. 2,80,00,000/- could not have been validly made by the A.O in respect of the unabated assessment for the year under consideration. 5. The CIT(A) after deliberating at length on the contentions advanced by the assessee found favour with his claim that the A.O de hors any incriminating material found in the course of the search proceedings had invalidly assumed jurisdiction and made an addition u/s 2(22)(e) in respect of the unabated assessment in his case for the year under consideration. Observing, that neither any incriminating material/evidence was found during the course of the search conducted in the case of the assessee and no assessment proceedings were pending in his case as on the date on which search proceedings were conducted, the CIT(A) drawing support from the judgment of Hon'ble Delhi High Court in the case of CIT (Central)-III Vs. Kabul Chawla 281 CTR 45 and the order of the ITAT, Chandigarh Bench in the case of M/s Mala Builders Pvt. Ltd. Vs. ACIT-CC-II in ITA No. 433 to 437/Chandi/2014, therein concluded that the impugned addition made by the AO could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdictional aspect itself. On a perusal of the order of the CIT(A), we find, that he had inter alia relied on the order passed by the ITAT, Chandigarh Bench in the case of M/s Mala Builders Pvt. Ltd. (supra), wherein involving identical facts the Tribunal had quashed the addition after drawing support from the judgment of the Hon'ble High Court of Bombay in the case of Commissioner Of Income-tax Vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom) and that of the Hon'ble High Court of Delhi in the case of CIT Vs. Anil Kumar Bhatia 352 ITR 493. In its aforesaid order the Tribunal had observed as under: "14. The undisputed facts in the present case are that on the date of search conducted on the assessee u/s 132 of the Act, i.e 17-03-2010, no assessment proceedings relating to the impugned year were pending. In fact the assessee had filed return filed u/s 139(1) of the Act on 29-06-2004 no notice u/s 143(2) had been issued to the assessee and on the date of initiation of search i.e. 17-03- 2010 the time limit for issuing notice u/s 143(2) had expired. Thus, on the date of search no assessment proceedings were pending. Further in the assessment made u/s 153A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 493, interpreted the provisions of section 153A of the Act at length, and held that as against the earlier block assessment procedure which roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments, under the present assessment procedures prescribed under section 153A/B/C of the Act, only one assessment order in respect of each of the six assessment years had to be passed. The Hon'ble High Court held that this was sought to be achieved in case of those assessment years where assessment proceedings were pending on the date of search by abating them and framing fresh assessment including incomes relating to incriminating material found during search. In case of those assessment years where an assessment order had already been passed under section I43(l)(a) or 143(3), those assessments could be reopened and the total income reassessed taking note of the undisclosed income if any unearthed during search, the fetters to reopening, being removed by insertion of the non- obstante clause to section 153A. The entire thrust of the judgement rested on the interpretation that there cannot be multiple assessment orders i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise 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 made. The word 'assess' in Section 153 A is relatable to abated proceedings (Le. those pending on the date of search) and the word ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and requisition, its construction would have to be made accordingly. 2. The second proviso to section 153A (1) states that on initiation of proceedings u/s 153A ,the assessment/reassessment proceedings pending on the date of conducting search or making requisition u/s 132A of the Act, shall stand abated. The CBDT Circular no. 8 of 2003 dt.18-09-03, clarifies that proceedings in appeal, revision or rectification against finalized assessments/reassessments shall not abate. Reading the two together, the Courts have stated that as per section 153A, Assessments/reassessments already finalized do not abate, meaning thereby that they attain finality, which cannot be disturbed unless some incriminating materials are gathered during the course of search. 3. That the words "assess" or "reassess" has been used at more than one place in the section and a harmonious construction of the entire provision would lead to the conclusion that the word "assess" has been used in the context of abated proceedings and "reassess" has been used for completed proceedings which would not abate as they are not pending on the date of initiation of search or making of requisition. 23. We may add that tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the considered view that in a case where no assessment proceedings are pending on the date of the search and seizure proceedings, the assessment under section 153A can be carried out only on the basis of seized material. In a case where no incriminating material is unearthed during the course of search proceedings and the assessment proceedings remain unabated as on the said date, no additions can be validly made in the hands of the assessee. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del). Apart therefrom, a similar view had also been taken by the Hon'ble High Court of Bombay in the case of CIT vs. Murli Agro Product (ITA No. 36/2009) (Bom) and Commissioner Of Income-tax Vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom). In the aforementioned cases, it has been observed by the High Courts that as on the date of the initiation of search and seizure proceedings under section 132 of the IT Act, as no proceedings for the year under consideration were pending, therefore, in the absence of any incriminating evidence found during the course of search and seizure proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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