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TMI Blog2022 (11) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... nts for abated assessments and unabated assessments. As in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. In respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance.The arguments of the ld. DR deserves to be rejected herein. Thus none of the additions that were made by the ld. AO were based on reliance placed on search materials received from the AO of the searched person. We hold that assessment for A.Y.2009-10 had originally been completed u/s.143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the CIT(A) erred in dismissing appellant's claim that re-examination of issues/genuine claims, which had obtained finality as per Order u/s 143(3) of the Act, are beyond the scope of assessment u/s 153C of the Act. 3. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not considering and dismissing the appellant's main Ground of Appeal No. 2 {before the CIT(A)} which was a question of law as to whether AO can re-examine the claims which had obtained finality as per Order u/s 143(3) of the Act and did not abate as per the provisions of section 153C r.w.s. 153A of the Act. 3.1. That on the facts and in the circumstances of the case and in law, the CIT(A) erred in not considering and dismissing the appellant's main Ground of Appeal No. 2 {before the CIT(A)} without appreciating the fact that in the case of assessments which do abate, the addition / disallowances can solely be made on the basis of only incriminating materials which admittedly, in the case of appellant, is not available. 3.2. That the CIT(A) erred in deciding Alternate Grounds {Ground Nos. 5 to 7 before CIT(A)} without considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany for the A.Y.2009-10 on 30/09/2009 declaring total income of Rs.1345,80,61,460/-. This return was revised by the assessee on 31/03/2011. The assessment was completed u/s.143(3) of the Act on 30/12/2011 determining total income at Rs.1374,99,31,150/-. This assessment was framed on the assessee company by the Assessing Officer in Kolkata as the registered office of the assessee company was situated in 10, Camac Street, Kolkata 700 017 at that point in time. Later the case of the assessee was transferred from Kolkata to Mumbai jurisdiction vide order u/s.127(2) of the Act dated 30/09/2014 by the Administrative Commissioner of Income Tax of Kolkata. Strangely yet another notice u/s.148 of the Act was issued by the Kolkata Officer on 13/10/2014 seeking to reopen the assessment of the assessee. 3.2. A limited search and seizure action was conducted by the Investigation Wing, New Delhi on the basis of information passed on by the CBI on 15/10/2013. The information received from the CBI on 15/10/2013 over phone was that during a search action being carried out by CBI at the premises of Aditya Birla group at 4th Floor, UCO Bank building, Parliament Street, New Delhi, the CBI team ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act, the following disallowances / additions were made:- i) Disallowance u/s.14A of the Act - Rs.23,26,88,361/- ii) Disallowance of prior period expenses -Rs. 89,78,073/- iii) Disallowance of Penalty expenses - Rs 9,36,000/- iv) Carbon Credit treated as revenue income - Rs 7,94,64,467/- v) Addition made on account of illegal Unaccounted provision(illegal mining) -Rs.20,04,07,521/- vi) Denial of deduction u/s.80IA of the Act -Rs.112,12,25,027/- vii) Expenses related to exempt income u/s 80IA and 10B having impact in their Respective computations -Rs 2,62,53,000/- 3.4. The ld. AR before us submitted that none of the aforesaid additions were made based on the incriminating material in the form of petty cash book vide Annexure-A-8 received from the Assessing Officer of ABMCPL(being the searched person u/s.132 of the Act). The ld. AR submitted that the A.Y.2009-10 was a concluded assessment as on the date of assumption of jurisdiction u/s 153C of the Act by the ld. AO and hence, no addition or disallowance could be made in the search assessments framed either u/s.153C of the Act without existence of any incriminating material relatable to such asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Jharkhand and Goa. The ld. AO had observed in para 14.3 of his order that as per the said report, the assessee was found to be involved in illegal mining activity of Iron ore. After calculating discrepancy in the production data, the ld. AO worked out the addition on account of suppressed production of Rs.20,04,07,521/- (490522 MTS x Rs.408.56 per MT) and made an addition for the same in the search assessment concluded u/s.153C of the Act. From the aforesaid narration of facts and the manner in which this addition has been made by the ld. AO, it could be safely concluded that the ld. AO had not relied upon any search material that has been handed over by the Assessing Officer of ABMCPL (being the searched person u/s.132 of the Act) and that this addition had been made by merely placing reliance on the Justice M B Shah commission report. The only incriminating material which was handed over to the Assessing Officer of the assessee herein was Annexure A-8 containing petty cash book. No additions have been made for A.Y.2009-10 in the impugned search assessment u/s.153C of the Act by placing reliance on the said petty cash book. Hence, it could be safely concluded that the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance or additions in the assessment framed u/s.153C of the Act in the hands of the assessee. We have already stated supra that the jurisdiction of the assessee has been changed from Kolkata to Mumbai vide order u/s.127(2) of the Act dated 30/09/2014 by the Administrative Commissioner of Income Tax. When the jurisdiction of the case has already been shifted from Kolkata to Mumbai on 30/09/2014, we are unable to understand as to how the Kolkata Assessing Officer could have issued notice u/s. 148 of the Act on 13/10/2014 for A.Y.2009-10. Hence, we hold that the said notice is without jurisdiction and accordingly null and void. When the primary notice u/s.148 of the Act dated 13/10/2014 becomes null and void, there cannot be any pending proceedings on the date of assumption of jurisdiction u/s.153C of the Act by the ld. AO i.e. 26/11/2014. Hence, the argument advanced by the ld. DR in this regard is dismissed as legally not tenable. 3.5.1. The ld. DR further argued that the term evidence is to be used as per the Indian Evidence Act, 1872. He argued that the expressions incriminating material and evidence cannot be used interchangeably as the term evidence has got a wid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been , or would not be, disclosed for the purposes of the Act (hereinafter referred to as the undisclosed income or property) ; then the officer , so authorized could conduct a search and proceed as per the requirements laid down in the said section. He argued that the aforesaid three primary conditions for invoking search proceedings cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. 3.8. The ld. DR vehemently argued that the provisions of section 153A of the Act use the expression assess or reassess total income and hence the search assessment could be framed u/s 153A of the Act irrespective of any incriminating materials. 3.9. We find that it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was originally completed u/s 143(3) of the Act and hence it falls u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned 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 falling within six assessment years referred to in clause (b), in the prescribed 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 immediately preceding the assessment year 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: 3.10. We find that the Co-ordinate Bench of Kolkata Tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL-167-ITAT-KOL had explained the aforesaid provisions as below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year. 3.11. We find that the provisions of section 132 of the Act relied upon by the revenue would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and grounds raised by the Revenue need not be gone into as they would become academic in nature. No opinion is given thereon by us and they are left open. 5. In the result, appeal of the assessee is allowed in ITA No. 1023/Mum/2018 for A.Y. 2009-10 and appeal of the Revenue in ITA No. 1554/Mum/2018 for A.Y. 2009-10 is dismissed. ITA No. 1021/Mum/2018 Assessee Appeal Asst Year 2010-11 ITA No. 1551/Mum/2018 Revenue Appeal Asst Year 2010-11 6. These cross appeals in ITA Nos.1021/Mum/2018 1551/Mum/2018 for A.Y.2010-11 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-47, Mumbai in appeal No.CIT(A)-47/10115/16-17 dated 27/04/2016 (ld. CIT(A) in short) against the order of assessment passed u/s.153C r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/03/2016 by the ld. Dy. Commissioner of Income Tax, Central Circle 1(4), Mumbai (hereinafter referred to as ld. AO). 7. We find that the assessee had raised the same grounds that were raised by it in Asst Year 2009-10. Similarly the revenue has also raised the same grounds in Asst Year 2010-11 except the ground raised in respect of Carbon Credit which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of its group Executive President Shri Shubhendu Amitabh at his residential premises on 16/10/2013. The search and seizure action resulted into seizure of unaccounted cash of Rs.25,13,41,000/-; jewellery and billion worth of Rs.44,82,394/- besides incriminating documents from the office of the ABMCPL and from the residence of Shri Shubhendu Amitabh. Several books of accounts, documents etc., were found seized and inventorised as Annexure-1 to Annexure-23. Also various computer hard discs and laptops were seized which were inventorised as Annexure-24 to Annexure-40. 8.3. The Annexure A-8 seized from the premises of ABMCPL which was subjected to search u/s.132 of the Act was a petty cash book of M/s. Essel Mining Industries Ltd., i.e. the assessee before us. This petty cash book belonging to Essel Mining and Industries Ltd., was found and seized from the said premises of ABMCPL and since the said entries suggest that the ownership of unaccounted cash lies in the hands of M/s. Essel Mining Industries Ltd., and therefore, it has direct bearing on the determination of its total income. Accordingly, the Assessing Officer of the searched person i.e. ABMCPL recorded due satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already in the regular assessment framed u/s. 143(3) of the Act for the A.Y.2010-11 on 28/03/2013. Hence, there cannot be any reliance that could be placed on any search material. Disallowance of Club expenses Rs 37,152/- We find that this disallowance was made already in the regular assessment framed u/s. 143(3) of the Act for the A.Y.2010-11 on 28/03/2013. Hence, there cannot be any reliance that could be placed on any search material. Disallowance of Penalty Charges Rs 4,59,000/- We find that this disallowance was made already in the regular assessment order u/s.143(3) of the Act on 28/03/2013 for the A.Y.2010-11. Hence, there cannot be any reliance that could be placed on any search material. Addition made on account of illegal unaccounted provision Rs.22,54,01,541/- We find that the ld. AO in page 19 para 13.1 had addressed this issue wherein he had made this addition by placing reliance on Justice M.B.Shah Commission report submitted before the Hon ble Supreme Court pointing out discrepancy in production data of the assessee. It is pertinent to note that Justice M B Shah Commission was setup on illegal mining of Iron Ore and Manganese Ore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this deduction u/s 80IA of the Act. Apportionment of common expenses and its impact on claim of deduction u/s 80IA and u/s 10B of the Act Rs 5,39,65,517/- We find that this is only concerned with workings for allowability of deduction u/s 80IA and u/s 10B of the Act with regard to apportionment of common expenses. It is only a computational issue. There cannot be obviously any reference to incriminating material found during search regarding this issue. Hence there cannot be any reliance that could be placed on any search material for reworking the claim of deduction u/s 80IA and u/s 10B of the Act. 8.5. The ld. DR argued that the term evidence is to be used as per the Indian Evidence Act, 1872. He argued that the expressions incriminating material and evidence cannot be used interchangeably as the term evidence has got a wider amplitude and meaning and confined only to seized material , whereas the expression incriminating material has got a very narrow scope confined to search proceedings. He vehemently argued that the expression incriminating material is not found in the provisions of the Act and it is only the Hon ble Higher Courts which had given th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot be given a go by while framing section 153A assessments and the instant case falls under section 132(1)(c ) of the Act. 8.8. The ld. DR vehemently argued that the provisions of section 153A of the Act use the expression assess or reassess total income and hence the search assessment could be framed u/s 153A of the Act irrespective of any incriminating materials. 8.9. We find that it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the Act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s 143(3) of the Act and hence it falls under concluded proceeding , as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed 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 immediately preceding the assessment year 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: 8.10. We find that the Co-ordinate Bench of Kolkata Tribunal in the case of ACIT vs Kanchan Oil Industries Ltd in ITA No. 725/Kol/2011 dated 9.12.2015 reported in 2016-TIOL-167-ITAT-KOL had explained the aforesaid provisions as below:- 6.4 In our opinion, the scheme of assessment proceedings should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the aspects, wherein the existence of incriminating materials does not have any relevance. However, in respect of unabated assessments, the legislature had conferred powers on the ld AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A of the Act , as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A of the Act would become redundant and would lose its relevance. 8.12. In view of the above, the arguments of the ld. DR deserves to be rejected herein. 8.13. From the aforesaid narration of each of the disallowances / additions made, it could be safely concluded that none of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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