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TMI Blog2022 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... diction u/s 153C of the Act cannot be assumed. The ratio of the above decision would apply to section 153A of the Act also. Snce the additions u/s 80IA(4) of the I.T.Act is not based on incriminating material found during the course of search in the premises of the assessee and the assessments for assessment years 2001- 2002 to 2005-2006 have already been concluded on the date of search, the A.O. cannot make an addition u/s 153A of the I.T.Act, insofar as the claim of deduction u/s 80IA of the I.T.Act is concerned. As regards other additions are concerned for all the assessment years, since it is based on the material found in the course of search of Sri.V.Sambamoorthy and in absence of initiation of proceedings u/s 153C of the I.T.Act, the other additions also cannot be made in a proceedings u/s 153A of the I.T.Act. It is ordered accordingly. - ITA No.978 to 980, 982, 984/Bang/2014 And ITA No.941 to 944/Bang/2014 - - - Dated:- 25-4-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Revenue : Sri.Sri.Dilip, Standing Counsel for Department For the Assessee : Sri.V.Chandrashekar, Advocate ORDER PER GEORGE GEORGE K, JM : These cross app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by limitation. 5.1 As regards the first legal contention is concerned, the learned AR submitted that the assessment completed u/s 153A of the I.T.Act is bad in law, since the additions have been made on the basis of material found in a search conducted on a person other than the assessee (i.e., search conducted in the premises of one Sri.V.Sambamoorthy, for which an independent search warrant was issued). According to the learned AR, the assessment ought to have been completed u/s 153C of the I.T.Act and in this context the learned AR relied on the co-ordinate Bench order of Bangalore Tribunal in the case of Sri.Anil H.Lad v. DCIT in ITA No.1852 1853/ Bang/2013 (order dated 28.06.2019). The learned AR also placed reliance on the judgment of the Hon ble Delhi High Court in the case of PCIT(Central) v. Anand Kumar Jain (HUF) Ors. in ITA No.23/2021 and 26 to 31/2021 (judgment dated 12.02.2021). 5.2 As regards the second legal contention is concerned, the learned AR submitted that the search proceedings was completed in the month of March 2007 and hence the assessment order ought to have been completed by December 2008, whereas in the instant case, the assessments were comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt finding of the Hon ble jurisdictional High Court in the case of Pr.CIT v. M/s.Delhi International Airport Pvt. Ltd. (supra), reads as follow:- 30. Thus, it is clear that the Assessing Officer while passing the order under Section 153A read with Section 143(3) of the Act, ordinarily cannot disturb the assessment / reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings, as held by the Coordinate Bench of this Court in the case of IBC Knowledge Park (P) Ltd. supra. A concluded assessment could not be disturbed without there being any basis for doing so which is impermissible in law. Even in case of a searched person, the same reason would hold good .. 6.1 The judgment of the Hon ble Delhi High Court in the case of CIT v. Kabul Chawla reported in (2016) 380 ITR 573 (Delhi) had summarized the legal position as regards assessment u/s 153A of the Act, as follows:- 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 6.2 The Hon ble jurisdictional High Court in the case of Pr.CIT v. M/s.Delhi International Airport Pvt. Ltd. (supra) had also referred to the judgment of the Hon ble Delhi High Court in the case of CIT v. Kabul Chawla (supra) (Refer para 20 of the Karnataka High Court judgment). From the above judicial pronouncements, cited supra, it is clear that the assessments which are not pending and hence does not abate, the addition can be made only on the basis of incriminating material found during the course of search. The search in the instant case took place on 01.03.2007 and the last of the panchnama was drawn on 10.04.2007. On the date of search, the assessment proceedings for assessment years 2001-2002, 2002-2003 and 2005-2006 has not abated as the time limit of issue of notice u/s 143(2) of the I.T.Act had expired on that date. Thus, the assessments are deemed to have been concluded for the above mentioned three assessment years. As regards the assessment years 2003-2004 and 2004-2005 are concerned, the issue of applicability of provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings u/s 153C of the I.T.Act ought to have been initiated in the case of the assessee when satisfaction was arrived at in the assessment proceedings of Sri.V.Shambamoorthy that material found and seized in the search of Sri.V.Shambamoorthy did not pertain to him, but instead pertains to the assessee. 6.4 The learned Standing Counsel, during the course of hearing, submitted that invoking the provisions of section 153C of the I.T.Act, would results in two assessment orders being passed, one u/s 153A and the other u/s 153C of the I.T.Act, which is impermissible in law. According to us, there is no bar on the A.O. to issue notice u/s 153C of the I.T.Act when there is pending proceedings u/s 153A of the I.T.Act in the case of the assessee, because the assessment proceedings which commence u/s 153A of the I.T.Act would become pending proceedings and the same would abate on the date on which the proceedings is initiated u/s 153C of the I.T.Act, inasmuch as the proceedings initiated u/s 153C of the I.T.Act is later than the proceedings u/s 153A of the I.T.Act. In an assessment order to be passed u/s 153C r.w.s. 143(3) of the I.T.Act, not only the material found in the search of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53A of the Act, enables and empowers the AO to frame an assessment in the case of a person where search is initiated under section 132 of the Act for 6 Assessment Years immediately preceding the Assessment Year in which the search takes place. The first proviso to section 153A of the Act requires the AO to assess or re-assess each of the 6 Assessment Years immediately preceding the Assessment Year in which the search takes place. The second proviso to section 153 of the Act provides that pending assessment proceedings on the date of search shall abate and the assessments for those years have to be framed under section 153A of the Act. The provisions of section 153A of the Act reads as under:- 153A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 17[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. 12.6.4 From the above, it is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on hand. But, no satisfaction, it appears, has been recorded that these materials have a bearing on the determination of income. Thus, the AO has not followed the procedure laid down in section 153C of the Act for taking cognizance of the material found / seized in the case of Shri. Manoj Kumar Jain and making an assessment with reference to those materials in the case on hand. 12.6.6 The Kolkata Bench of ITAT in the case of Krishna Kumar Singhania (168 ITD 217) has considered the provisions of sections 153A and 153C of the Act and after examining the different scope of these two sections, at para 10 of its order, has held as under:- We have heard the rival submissions. We find that it is not in dispute that there were no documents that were seized from the premises of the assessee except loose sheets vide seized document reference KKS / 1 comprising of 8 pages , for which satisfactory explanation has been given by the assessee and no addition was made by the Id AO on this seized document. The seized document used by the Id AO for making the addition in section 153A assessment is CG/1 to 11 and CG/HD/1 which were seized only from the office premises of Cygnus group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), Revenue sought to take cognizance of the search material and disallow depreciation in regular assessment proceedings and the provisions of section 158BD of the Act was not invoked. The Hon ble Bombay High Court held that the scope of a regular assessment and the scope of assessment under section 158BD of the Act are different as they stand on different footings and has gone on to uphold the action of the Tribunal in holding that the provisions of section 158BD of the Act ought to have been invoked to make any disallowance of depreciation based on material found in the course of search conducted by the Department in the case of some other person. This judgment also supports the contention of the assessee that no addition could be made in the assessments framed under section 153A of the Act, based on materials found and seized from some other person, unless provisions of section 153C are invoked. 12.6.8 Taking into account the aforesaid factual and legal matrix, we are of the considered view that the AO could not have taken cognizance of the seized documents and other material found and seized in the course of search conducted in the premises / case of Shri. Manoj Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in section 153A), then the only legal recourse available to the department was to proceed in terms of section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed. On this count alone, we find no perversity in the view taken by the ITAT. Therefore, we do not find any substantial question of law that requires our consideration. 6.6 The learned Standing Counsel submitted that the decision of the Co-ordinate Bench in the case of Sri.Anil H Lad (supra) was per in curium inasmuch as the said order did not notice the judgment of the Hon ble Karnataka High Court in the case of Canara Housing Development Company (supra), and hence, the same ought to be ignored by this Bench. The order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 153A of the I.T.Act had already commenced. 6.7 In view of the aforesaid reasoning, since the additions u/s 80IA(4) of the I.T.Act is not based on incriminating material found during the course of search in the premises of the assessee and the assessments for assessment years 2001- 2002 to 2005-2006 have already been concluded on the date of search, the A.O. cannot make an addition u/s 153A of the I.T.Act, insofar as the claim of deduction u/s 80IA of the I.T.Act is concerned. 6.8 As regards other additions are concerned for all the assessment years, since it is based on the material found in the course of search of Sri.V.Sambamoorthy and in absence of initiation of proceedings u/s 153C of the I.T.Act, the other additions also cannot be made in a proceedings u/s 153A of the I.T.Act. It is ordered accordingly. 6.9 Since all the additions are deleted, the other legal grounds raised by the learned AR as regards the assessment order passed u/s 153A r.w.s. 143(3) of the I.T.Act being time barred (assessment order dated 31.12.2008), is not adjudicated. 6.10 In the result, the appeals filed by the assessee are partly allowed. ITA Nos.941, 942, 943 944/Bang/2014 (Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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