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TMI Blog2024 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or the requisition made, and the proviso thereto which mandates that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. In our view, the statutory provision gives a clear indication that, based on the material obtained during the search, the AO who gets the jurisdiction to re-open the assessments, can do so in respect of the individual assessment years comprised in the block period of six years only if the material obtained during the search under Section 132 of the I.T. Act, or any part thereof, relates to the assessment year in question. In the appeals before us, since it is not in dispute that the materials obtained during the search conducted on 21.08.2007 pertain only to the assessment year 2008-09, and there was no incriminating material against the appellants/assessees pertaining to the assessment years 2002-03 to 2007-08, the finding of the Appellate Tribunal reversing the orders of the First Appellate Authority, cannot be legally sustained. we set aside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which, Sri. Sunny Jacob and his wife Smt. Magi Sunny are partners. One of the firms is a proprietorship concern in which Smt. Magi Sunny is the sole proprietrix. All the business units under the group are engaged in the business of gold ornaments, and they are also assessees under the Income Tax Act [hereinafter referred to as the I.T. Act ]. 3. Pursuant to a search conducted under Section 132 of the I.T. Act, at the various business premises of the units coming under the umbrella of M/s. Sunny Jacob group, on 21.08.2007, notices were issued to the appellants/assessees herein under Section 153A of the I.T. Act. Under the said provision, an Assessing Officer is conferred with the jurisdiction to initiate fresh assessment proceedings in relation to an assessee, in relation of whom incriminating material has been unearthed in a search initiated under Section 132 of the I.T. Act or pursuant to the requisition of any books of account, documents or assets in terms of Section 132A of the I.T. Act. In the assessment proceedings that must follow, the Assessing Officer can, through a notice issued under Section 153A of the I.T. Act, require an assessee to furnish, within such period as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessees for the various assessment years. 5. Aggrieved by the assessment orders passed under Section 153A read with Section 143(3) of the I.T. Act for the various assessment years, the appellants/assessees approached the Commissioner of Income Tax (Appeals), who allowed the appeals preferred by the appellants for the assessment years 2002-03 to 2007-08, but confirmed the demand of differential tax for the assessment year 2008-09. In further appeals preferred both by the Department, as also the appellants herein, the Income Tax Appellate Tribunal set aside the orders of the First Appellate Authority and remanded the matter back to the Assessing Officer for a fresh consideration based on the observations of the Tribunal in the common order dated 16.11.2012. For the sake of completion of facts, it might be noticed that the said order of the Tribunal remanding the matter to the Assessing Officer was impugned before this Court and thereafter before the Supreme Court, but both the courts did not deem it necessary to interfere with the order of the Tribunal remanding the matter to the Assessing Officer for a fresh consideration. 6. Pursuant to the remand by the Appellate Tribunal, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atable to the Assessment Year 2007-08 ? iv) Did not Appellate Tribunal err in law in its observations and findings as regards undisclosed investment in immovable property by understating the value for purchase of immovable properties by partners Shri. Sunny Jacob and Smt. Maggy Sunny for the assessment Years 2002-03 to 2007-08 when such allegations were found to be arbitrary and unfounded in the individual assessment of the respective partners? Are not the above findings perverse in law, which would invalidate the conclusions therefrom in the appellant's case ? v) Did not the Appellate Tribunal err in law in sustaining the estimate of undisclosed profits from the appellant's jewellery business when there is not a single item of suppression of sale or profit found or established in the regular books of account maintained and produced by the appellant for the business ? vi) Whether, the Tribunal is justified in law in estimating suppression of turnover and estimate of profit therefrom amounting to Rs. 2,22,65,770/-, which has been added in the Assessment Order, on mere assumptions/presumptions, as regards suppression of sales turnover and profit ? vii) Is not the finding and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the assessee, found that the statements recorded from the partner of the Hotel and the employee in-charge of the bar, and other materials collected, would not amount to evidence as contemplated under Section 158BB of the I.T. Act, and that the statements recorded under Section 132(4) of the I.T. Act had only very limited application. The reliance of those statements by the Assessing Officer was therefore found to be erroneous in law by the Tribunal. Similarly, while the Assessing Officer in that case found that the statement given by the partner of the Hotel, as also the employee in-charge of the bar, to the effect that only 80% of the actual sales were recorded in the cash book, justified a conclusion that there was a suppression of sale to the extent of 20 to 22%, and that the said suppression could be extended to cover all the assessment years within the block period, the Appellate Tribunal had found that inasmuch as there was no evidence regarding concealment of income for the period from 1996-97 to 2000-01, the assessments for those years could not be re-visited based on the evidence that was available for a subsequent year. The said findings of the Appellate Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the undisclosed income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. Thereafter, while dealing with the aspect of jurisdiction of the Assessing Authority, and the manner in which he is to proceed with the assessment, the court observed as follows: 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating material would unambiguously clothe an Assessing Officer with the jurisdiction to initiate proceedings in terms of Section 153A of the I.T. Act for the block period of six years contemplated under that Section, when it comes to passing fresh assessment orders in respect of each of those assessment years comprised in the block of six assessment years, the Assessing Officer must necessarily relate such unearthed incriminating material to the assessment year in question. This is more so in view of the specific provisions under Section 153A (b), which requires the Assessing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or the requisition made, and the proviso thereto which mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. In our view, the statutory provision gives a clear indication that, based on the material obtained during the search, the Assessing Officer who gets the jurisdiction to re-open the assessments, can do so in respect of the ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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