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TMI Blog2021 (1) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... are 2002-03 to 2006-07. 2. Brief facts of the case are that a search u/s, 132 of the Income Tax Act was conducted on 26.03.2008 in the premises of the firms and in the residence of the partners of E T Devassy Group. 2.1 Consequent to the search the Assessing Officer issued notices under Section 153A of the Income Tax Act for the Asst. Years 2002-03 to 2007-08 and issued notice under section 142(1) for the Assessment year 2008-09. 2.2 The Assessees filed returns of income and the assessing officer completed the assessments under section 153A vide order dated 29.12.2009 in respect of the Asst. Years 2002-03 to 2007-08 and u/s. 143(3) relating to Asst. Year 2008-09 in respect of the following 84 cases in respect of 13 Assessees. 1. M/s New Kerala Investments ( Asst Years 2002-03 to 2008-09) 2. M/s E T Devassy & Sons, Edassery (Asst Years 2002-03 to 2008-09) 3. St. Francis Tile Industries ( Asst Years 2007-08 to 2008-09) 4. St. Francis Clay Decor Tiles (Asst Years 2004-05 to2008-09) 5. St. Francis Clay Works (Asst Years 2002-03 to 2008-09) 6. Edassery Ceramics (Asst Years 2002-03 to 2008-09) 7. E.T. Devassy (Asst Years 2002-03 to 2008-09) 8. E.D.Jaison (Asst Years 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. However we make it clear that the common question with regard to the power of the Appellate Authority with respect to receipt of evidence in appeal and its application concluded by the tribunal in 84 cases and upheld by this court, will remain undisturbed" 3. While adjudicating the above issue, the Tribunal dismissed the appeals of the Revenue by observing as follows: "4. We have heard the rival submissions and perused the record. In our opinion, there is merit in the argument of the Ld. AR. We deem it appropriate to first refer to section 268A of the Income Tax Act, 1961 which was inserted by the Finance Act, 2008 with retrospective effect from 01/04/1999 which reads as under: "268A (1) The Board may, from time to time issue orders, instructions or directions to other income tax authorities fixing such monetary limits as it may deem fit for the purpose of regulating filing of appeal or application for reference by any income tax authorities under the provisions of this Chapter. (2) Where, in pursuance of the orders, instructions or directions issued under sub-section (1), an income tax authority has not filed any appeal or application for reference on any issue in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... netary Limit (Rs) 1. Before Appellate Tribunal 20,00,000/- 2. Before High Court 50,00,000/- 3. Before Supreme Court 1,00,00,000/- It is clarified that an appeal should not he filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. 4. For this purpose, 'tax effect' means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as 'disputed issues'). Further, 'tax effect' shall be tax including applicable surcharge and cess. However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions, such amount shall not he reduced from total income assessed while determining the amount under item D. 7. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Pr. Commissioner of Income-tax/ Commissioner of Income Tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this Circular". Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits. 8. In the past, a number of instances have come to the notice of the Board, whereby an assessee has claimed relief from the Tribunal or the Court only on the ground that the Department has implicitly accepted the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal shall not be governed by the limits specified in para 3 above and decision to file appeals in such cases may be taken on merits of a particular case. 12. It is clarified that the monetary limit of Rs. 20 lakhs for filing appeals before the ITAT would apply equally to cross objections under section 253(4) of the Act. Cross objections below this, monetary limit, already filed, should be pursued for dismissal as withdrawn/not pressed. Filing of cross objections below the monetary limit may not lie considered henceforth. Similarly, references to High Courts and SLPs/ appeals before Supreme Court below the monetary limit of Rs. 50 lakhs and Rs. 1 Crore respectively should be pursued for dismissal as withdrawn/not pressed. References before High Court and appeals below these limits may not be considered henceforth. 13. This Circular will apply to SLPs/appeals/cross objections/references to be filed henceforth in SC/HCs/Tribunal and it shall also apply retrospectively to pending SLPs/appeals/cross objections/references. Pending appeals below the specified tax limits in para 3 above may be withdrawn/ not pressed." 4.2 We have seen that the monetary limits have been made app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Department that this is an artificial restriction placed on Section 153A r w s 153C, that is nowhere envisaged in the Income-tax Act, wherein the Assessing officer has been granted the powers to assess or reassess the income for six previous assessment years, notwithstanding the provisions of Section 139,147,148,149,151 and 153 of the Act. 4.1 It was the submission of the Revenue that on this issue the High Court of Kerala has remanded the case back to the Tribunal for fresh consideration by taking into account the principles laid down by competent courts of law and take a decision on merits in accordance with law. Further, it was submitted that the assessee had filed a Special Leave Petition before the Supreme Court of India in SLP(C) 9164- 9203/2018 on this issue against the order of High Court of Kerala in RP Nos. 1072 of 2015 in ITA No 194/2015 dated 22/03/2016 and the Department had filed counter affidavit on the SLP filed by the assessee, which is pending for disposal. As such, it was the submission of the Revenue that the appeal in this case would fall squarely under the set of cases covered under Clause [a] of Para 10 of the CBDT's Circular 3 of 2018, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. AR submitted that the CIT (A), deleted the additions made by the Assessing officer to the returned income for the asst years 2002-03 to 2006-07 on estimate basis as it was not supported with any incriminating materials, i.e. oral or documentary evidence such as books of accounts etc. The Ld. AR submitted that the Assessing Officer in his remand report dated 22.04.2013 confirmed that there is no incriminating materials available for the Asst. Years 2002-03 to 2006-07 (Page 69-70 of C1T(A) Order). The Ld. AR relied on the judgment of the Supreme Court in the following cases wherein it was held that the assessment u/s 153A/153C cannot be done only on the basis of incriminating materials unearthed during the course of search: 1. CIT Vs Sinhgad Technical Education Society (SC) [CA No, 11080 of 2017] order dated 29/08/2017 2. CIT Vs Kabul Chawla (SC) [CA No. 6412/2016, 6408/2016 & 6415/2016] order dated 17/09/2018 3. CIT Vs Meeta Gutgutia (SC) [SLP 18121/2018] order dated 02/07/2018 4. PCIT Vs Kurele Paper Mills P Ltd (SC) [SLP 21186/2015] order dated 02/07/2015 5. Dy. CIT Vs MSEB Holding Co.(SC) SLP 26373/2019 dated 16/08/2019 6.2 In the present cases, the Ld. AR subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/ 153C of the Act. Further, the Ld. AR relied on the judgment of the Supreme Court in the case of DCIT Vs MSEB Holding Company Ltd, SLP (Civil) Diary 26373/2019, dated 16.08.2019 wherein it was held as under:- "Since the tax effect involved in this matter is less than Rs. 2 Crores, we see no reason to interfere in this matter the special leave petition is dismissed". From the above, it is clear that the issue involved in the present cases, do not involve any challenge to the constitutional validity of any of the provisions of the Act. In view of the above, it was submitted that the Miscellaneous Petitions filed by the department are devoid of any merit and are liable to be dismissed. 7. We have heard the rival submissions and perused the record. In the present case, originally, the issue was decided by the Tribunal by dismissing the appeals of the Revenue on the reason that the addition in pursuance to notice issued u/s. 153A of the I.T. Act can be made only if incriminating material is found and seized in case where there is also abatement of regular assessment proceedings. Against this, the Revenue went in appeal before the Jurisdictional High Court and framed the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed officer, during the course of the search or seizure examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act." 18. 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 sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of 131 of the 1961 Act, or a notice under sub-section (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. etc., can authorize the officers referred therein to enter and search any building etc. etc. Such authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) Assess or reassess the total income of six assessment years relevant to the previous year in which such search is conducted or requisition is made. Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived for the aforespecified period of six years, the assessee is bound to file a return, is the scheme of the provision. Even though the second proviso to Section 153A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under Section 153A(1)(a). This being the scheme of the provisions of the Act, the Appellate Tribunal ought to have considered the issue with specific reference to the facts involved in the case and as provided under Section 153A. 21. However, we find that the Tribunal without appreciating the facts and circumstances has proceeded purely on the basis that the cases at hand were covered under the Special Bench decision in All Cargo Logistics Ltd. (supra). In our view the course adopted by the Tribunal was not the proper one to decide the question with regard to the sustainability of the order passed by the First Appellate Authority. Therefore, we are of the considered opinion that the Tribunal has not adopted the right method to decide the issue with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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