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TMI Blog2022 (12) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble non-jurisdictional High Court are followed by the lower authorities, only in the absence of benefit of guidance by the Hon ble jurisdictional High Court on that issue, on account of the persuasive effect of these decisions and on account of the concept of judicial propriety-factors which are inherently subjective in nature. Quite clearly, therefore, the applicability of the non-jurisdictional High Court is never absolute, without exceptions and as a matter of course, and that too is limited only on the issues on which there is no guidance of the Hon ble jurisdictional High Court. In the present case, we have the benefit of guidance on the subject by the Hon ble jurisdictional High Court. There is thus no occasion for us to consider the judgments of the Hon ble non-jurisdictional High Courts. In view of these discussions, the decisions of the Hon ble non-jurisdictional High Court have no relevance in the present context. It is also elementary in law that the mere pendency of the appeal, against a binding judicial precedent, in a higher judicial forum does not dilute, curtail or otherwise narrow down its binding nature. As long as the binding judicial preceden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to one Mauritius-based company by the name of Access Investment India, and 1,45,712 and 50,000 preference shares, in two different lots, to another Mauritius based entity by the name of Aanya Properties (2) Limited. Some of these shares were issued at par, and others at different rates of premium. It was in this backdrop that the Assessing Officer required the assessee to furnish the details in support of the credibility of the said subscribers of the shares, and genuineness of the transaction . The necessary details were furnished by the assessee, though, for the reasons we will set out in a short while, it is not really necessary to go into fine details about the same. Suffice to say that the details regarding identity, capacity, genuineness, and creditworthiness of these two shareholders of the assessee were duly furnished by the assessee, and even though the Assessing Officer did not point out any specific defects in the same, he noted that in the case of Luxora Realtors Pvt Ltd, a sister concern of the assessee- which was also subjected to search operations and resultant assessment under section 153A r.w.s. 143(3), the share capital money received by the group compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is reduced from Work-in-progress. This issue is discussed in para 6, 61.1 and 6.2 of the assessment order. In this regard, assessee, in the written submission (para 4 above), has - stated that the assessment u/s. 143(3) of the year under consideration was already passed prior to search and the AO did not make any addition on account of brokerage, sales marketing, finance cost and legal professional fees. Therefore, the AO cannot revisit the order without any incriminating material. AO has not brought out anything in the assessment order to establish, that certain new facts or new insights/revelations or any incriminating document or any admission in statements recorded in search proceedings were discovered or unearthed, due to which issued closed in earlier 143(3) order is being reassessed/revisited in the 153A assessment. In view of this, the ground no. 2 of assesssee s appeal is allowed. 6. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - 1. Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was justified in deleting the addition of Rs. 3,09,16,296/- and further holding that the AO co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Param Dairy Ltd. [2021] 133 taxmann.com 148 (SC) 3 Pr.CIT v. Gaurav Arora [2021] 133 taxmann.com 293 (SC) 4 CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 64 taxmann.com 34 (SC) In addition to the case laws relied Ld. DR further relied on the decision rendered by the Hon'ble Kerala High Court in the case of CIT vs K.P. Ummer dated 19/02/2019, ITA No. 174 of 2013 for the contention that there is no bar on making any addition to the income of the assessee even in case of completed assessments irrespective of the fact that no incriminating material was found during the course of search proceedings. 9. On the other hand, Ld. AR of the assessee submitted written submissions and it is reproduced below: - Ground No.1 2: Hon ble CIT(A) deleted addition made in assessment framed u/s 153C in absence of incriminating material. A.O. Para 6 Page 3 CIT(A) Para 5.2 Page 13 14 A) Regular assessment u/s 143(3) completed on 09/03/2017 by ACIT-15(2)(1) allowing expenses at Rs.3,09,16,296/- in the assessment framed and determining business loss at Rs.2,27,16,946/- as shown. (P37 to 49) B) Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer should have been charged to work-in-progress accordingly, he made addition. After careful consideration of the order passed by the Ld.CIT(A) and Ld.CIT(A) gave a finding that the addition made by the Assessing Officer in the Assessment Order are not based on any incriminating material found during the search it is in line with the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Continental Warehousing All Cargo Global logistics (supra). Further we observe that revenue has raised Ground No. 2 with the submission that revenue has not accepted the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Continental Warehousing All Cargo Global logistics (supra). However, the above decision is binding on this jurisdiction and we do not find any reason to interfere with the finding of the Ld.CIT(A) as per which Assessing Officer has not made the addition based on any incriminating material found during search. Therefore, ground raised by the revenue is dismissed. 5. It was thus submitted that the appeal deserves to be allowed on the short ground that admittedly there was no incriminating material found during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing taken cognizance of the Bombay High Court , referred above , have held that there is no requirement of existence of incriminating material either for invoking provision of section 153A or for revisiting the assessments which stood completed as on the date of search either u/s 143(1) or 143(3). As directed by the Hon ble Bench , kindly find below a summary of the decisions relied upon by the undersigned to counter the assessee s contention A) Commissioner of Income-tax, Central, Kanpur v. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad), dated 11 July, 2014 wherein after analysing the provisions of section 153A and the CBDT Circular dated 05.09.2003 explaining these provisions , the Hon ble Court held as under : 9. Under Section 153A of the Act, the Assessing Officer is bound to issue notice to the assessee to furnish return for 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. The Assessing Officer is required to assess or reassess the total income of the aforesaid years. 10. Under the block assessment proceeding under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the powers of the CIT to invoke the provisions of section 263, viz, When once the proceedings under Section 153A of the Act is initiated, whether the Commissioner of Income Tax can invoke the power under Section 263 of the Act to review the order of assessment passed by the Assessing Authority? , the Karnataka High Court also provided indepth analysis of the provisions of section 153A of the Act and held as under: When once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the total income of each year and then pass the assessment order.( para 10) Since the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the search under Section 132 of the Act? Is it legally sustainable to conclude an assessment of such a nature in the absence of any incriminating material having been unearthed in the search? Is it necessary that any incriminating material ought to have been unearthed in the search under Section 132 of the Act to make any additions to the returns filed by the assessee following notice under Section 153A(1) (a)? Answering the above two questions, the Court held as under: 7. In so far as the issue as to whether it is necessary that incriminating materials should be unearthed in a search under Section 132 of the Act to sustain a notice issued under Section 153A(1)(a) is concerned, the issue stands covered in favour of the Department as per the judgment of this Court in St. Francis Clay Becor Tiles's case (supra) and Promy Kuriakose's case (supra) though the second among them relates to a third person to the search as well; which cases would fall under Section 153C of the Act. We, therefore, answer the said question stating that for the issuance of a notice under Section 153A(1)(a), it is not necessary that the search on which it was founded should have nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 One of the Questions of Law framed by the Court, as mentioned in para 8 of its order is as under: Whether the Tribunal was correct in having found that in those years prior to 2005-06, where the due date for issue of notice under Section 143(2) had expired, as on the date of search, there could be no re-assessment made by virtue of the provisions under Section 153A; of such matters as available in the returns filed, which stands concluded by sheer efflux of time? The court relying upon two of its earlier decisions reported in CIT v. St. Francis Clay Decor Tiles [2016]385 ITR 624(Ker)] and CIT v. Dr P Sasikumar[2016(387)ITR 8(Ker)]held that the question is no longer res integra. After reproducing the relevant extract from St. Francis Clay D cor, the Kerala High Court held that 10. Hence, when a notice under Section 153A is issued, it enables the department to carry out re-assessment or assessment with respect to the six immediate prior years and the year in which the search is carried out. This does not require any incriminating material recovered on search relating to those prior years; in which there is no time left, on the date of search, for an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year; in which there is a proceeding initiated under Section 153A, pursuant to a search under Section 132. Otherwise, there would be parallel proceedings continued for the same assessment year. Hence, when a notice is issued pursuant to a search under Section 132, for assessment under Section 153A, all pending proceedings with respect to a regularly initiated assessment or re-assessment would stand abated. For the said years, the proceedings under Section 153A would be continued and the assessments concluded on that basis. However, when and if the said assessment proceeded with and concluded under Section 153A, is said aside by the statutory authorities or by this Court, then necessarily the original proceedings which stood abated would revive, which is the enabling provision under sub-section (2) of Section 153A. There can be no corollary inferred from the above provisions to find certain years to be of concluded assessment ; being possible of re-assessment only on incriminating material recovered in search relatable to that year. Hence, we, on the above reasoning and respectfully following the cited decisions of another Division Bench of this Court, answer the question of law ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 08/02/2022 copy of which is enclosed. The Hon'ble ITAT has considered the judgment relied upon by CIT(DR) and after considering the same has followed the judgment of Hon'ble Jurisdictional High Court relied upon by the assessee and held that no addition can be made in the completed assessment in the absence of incriminating material found in the course of search. The decision of co-ordinate bench in the case of associate concern of assessee M/s. Luxora Realtors Pvt. Ltd. is binding precedent. Relying upon the same it is humbly prayed that addition made in respect to share capital contribution in the absence of any incriminating material is unjustified and unsustainable. 4. It is worthwhile to note that Hon'ble Delhi High Court in recent decision in the case of Mamta Agarwal in ITA No.191/2022 vide judgment dated 14/07/2022 has held that no addition could be made in the absence of incriminating material found in the course of search. Ratio laid down fully supports the submission made. 5. It is settled proposition of law that on a legal position if two views are available, the view which is favourable to assessee needs to be adopted. The proposition submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal position is clear and unambiguous. As observed by the Hon'ble Supreme Court in the case of Mumbai Kamgar Sabha v. Abdulbahi Faizullbhai AIR 1976 SC 1455, It is trite, going by anglophonic principles that a ruling of a superior Court is binding law . While dealing with judicial precedents from non-jurisdictional High Courts, we may usefully take of observations of Hon'ble jurisdictional High Court in the case of CIT vs. Thana Electricity Supply Ltd. [(1994) 206 ITR 727 (Bom)], to the effect The decision of one High Court is neither binding precedent for another High Court nor for the Courts or the Tribunals outside its own territorial jurisdiction. It is well-settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect . Unlike the decisions of the Hon'ble jurisdictional High Court, which bind us in letter and in spirit on account of the binding force of law, the decisions of the Hon'ble non-jurisdictional High Court are followed by the lower aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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