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TMI Blog2024 (10) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... inal return of income for the assessment year 2009-10 on 21-09-2009, admitting a total income of Rs. 113,58,17,240/-. The assessment has been completed under Section 143(3) of the Income Tax Act, 1961 on 27.12.2011 accepting the returned income. A search and seizure operation under section 132 of the Income Tax Act, 1961 was conducted on 18-12-2014. Consequent to the search, a notice under Section 153A of the Income Tax Act, 1961 dated 07-09-2015 was issued and served on the assessee, requiring the assessee to file a return of income within 15 days from the date of receipt of the notice. In response to the notice under Section 153A of the Act, the appellant filed a return of income on 16-09-2015, admitting total income of Rs. 68,67,13,660/-, after claiming a deduction under Section 80IA (4) of the Act for an amount of Rs. 44,91,03,357/-, for the first time, in respect of profits and gains derived from the development of infrastructure projects. The case was taken up for scrutiny, and during the course of assessment proceedings, the AO called upon the assessee to show cause as to why the fresh claim of deduction under Section 80IA(4) of the Act, should not be disallowed in light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue along with certain judicial precedents and argued that the provisions of Section 153A of the Act, are very clear in as much as, the AO shall 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. Furthermore, as per clause (a) of Section 153A(1) of the Act, the provisions of this Act shall apply as if it were a return required to be furnished under Section 139 of the Income Tax Act, 1961. The appellant further submitted that since the profits derived from infrastructure projects executed by the assessee in terms of agreements with the Central or State Governments are eligible for deduction under Section 80IA(4) of the Act, the appellant claimed the deduction in the return of income filed in response to the notice under Section 153A of the Act. 5. The Ld.CIT(A), after considering the submissions of the assessee and taking note of certain judicial precedents, including the decision of the Coordinate Bench of the ITAT Hyderabad in the case of M/s KNR Constructions Ltd in ITA No. 946/Hyd/2015, held that in an assessment pursuant to notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 153A of the Act would not be maintainable. Further, the assessee was also found to be ineligible for such a deduction on merits, as well. The learned counsel for the Revenue, referring to the decision of the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works (P) Ltd. (supra) submitted that proceedings under Section 153A are analogous to the provisions u/s 147 of the Act. The assessment under section 153A of the Act is in consequence to a search under Section 132 or a requisition under Section 132A and the proceedings are undertaken for the purpose of bringing the undisclosed and escaped income to tax, and are therefore, for the benefit of the Revenue. Therefore, the appellant cannot take advantage of such consequential assessment for its benefit. In this regard, she has relied upon the decision of the Hon'ble Bombay High Court in the case of K. Sudhakar S. Shanbhag Vs. ITO reported in (2003) 126 taxman.com 476. The learned Senior Standing counsel further explained the provisions of section 153A and the second proviso provided therein and submitted that the assessment or reassessment, if any, relating to any assessment year falling within the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a claim under Section 80IA(4) of the Act. She further referring to the provisions of Section 80A(5) and Section 80AC, submitted that any claim under Section 80IA would be maintainable and entertainable only if it is made in a return within the due date prescribed under Section 139(1) of the Act. The conditions prescribed under section 80A(5) and 80AC are not a limitation on the power of the Assessing Officer or the Appellate Authorities, but in fact, attach to the claim itself and are required to be implemented by the respective Assessing Officer and appellate authorities and in this regard, she has referred to the decision of Hon'ble Gujarat High Court in the case of Rachna Infrastructure Pvt. Ltd. Vs. PCIT, reported in (2022) 138 taxman.com 416 (Guj). She further submitted that a claim for deduction under Section 80IA, in the original return filed under Section 139(1) is also mandatorily required to be supported by an audit report as prescribed under Rule 18BBB and in Form 10CCB and such audit report should be filed along with the return of income in order to claim any deduction under Section 80IA(4) of the Act. The legislative intent is clear in the manner in which any claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee further referring to Form ITR - 6 submitted that there is a separate Schedule (Schedule 80IA) for claiming deduction under Section 80IA, in which the assessee has rightly claimed deduction under the said provision. If the intention of the Legislature was to bar such claim of deduction, there is no reason why a separate Schedule has been provided for in the returns of income to be filed in response to notice under section 153A of the Act. The fact that such a Schedule has been provided for would indicate that there is no bar in making a claim under section 80-IA for the first time in the return filed in response to notice under section 153A. In this regard, he relied upon the decision of the Hon'ble Supreme Court in the case of V.D. M.Rm.M.Rm. Muthaiah Chettiar Vs. CIT reported in (1969) 74 ITR 183 (SC) and CIT Vs. P.K. Kochammu Amma Peroke reported in (1980) 125 ITR 624 (SC). 11. The learned Counsel for the assessee further referred to the provisions of Section 153A(1)(b) and submitted that, as per the said provisions, the AO is required to assess or reassess the total income. Hence, the assessment or reassessment of the entire total income is before the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income taking into consideration the incriminating material collected during the course of search and other material which would include income declared in the returns, if any, furnished by the assessee. Thus, even in the case of an unabated assessments, the AO is duty-bound to consider other materials which would include income declared in the returns. Therefore, a claim made in the return filed under Section 153A has to be mandatorily considered by the AO. He further referred to the decision of the Hon'ble Rajasthan High Court in the case of Jai Steel (India) Vs. ACIT (supra) and submitted that the reliance placed by the revenue on this judgment is no more good law after the decision in the case of Abhisar Buildwell (P) Ltd., (supra). Therefore, he submitted that when the law provides for the assessment of total income, then the AO should take into consideration material other than what was available during search and seizure operation for making assessment of total income of the assessee and if we go by the law, there is no bar in making fresh claim under Chapter VI-A, for the first time, in a return filed in response to notice under Section 153A of the Act. In this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom that of Section 147. In this regard, he relied upon the following judicial precedents : * DCIT Vs. Eversmile Construction Co. (P.) Ltd. [2012] 143 TTJ 322 (Mumbai) * KNR Constructions Vs. DIT IT Appeal Nos.946 to 948 and 983 to 986/Hyd/2015, dated 16-102015 * Malpani Estates Vs. Asst. CIT [2014] 64SOT 105 (Pune) * Goodyear India Ltd. Vs. State of Haryana [19891 188 ITR 402 (SC) * Mavilayi Service Co-operative Bank Ltd. Vs. CIT [2021] 431 ITR 1 (SC) * Government of Kerala Vs. Mother Superior Adoration Convent [2021] 126 taxmann.com 68 (SC) * V Jaganmohan Rao Vs. CIT/EPT (1970) 75 ITR 373 (SC) * ITO Vs. Mewalal Dwarka Prasad [1989] 176 ITR 529 (SC) 14. The learned Counsel for the assessee further referring to the decision of the Hon'ble Supreme Court in the case of V Jaganmohan Rao Vs. CIT reported in (1970) 75 ITR 373 (SC), and ITO Vs. Mewalal Dwaraka Prasad reported in (1989) 176 ITR 529 (SC), submitted that considering the difference in the views taken in ITO Vs. Mewalal Dwaraka Prasad (supra) and Sun Engineering Works (P) Ltd (supra), the matter came up for consideration before a larger Bench of the Hon'ble Supreme Court in the case of ITO Vs. K.L. Srihari (H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id return. In this regard, he relied upon the decision of ITAT Hyderabad in the case of ASR Engg. & Projects Ltd. Vs. DCIT reported in (2019) 111 taxmann.com 49 (Hyderabad - Trib.). Therefore, he submitted that the assessee has complied with the provisions of Section 80AC, and a fresh claim of deduction should be allowed. 16. The learned counsel for the assessee referring to various provisions of law, including Section 115BBE, Clause 4 of Section 92C, Clause (2) of Section 152, and Section 115A of the Act, submitted that wherever intended, the legislature has provided express provisions for barring a claim under Chapter VI-A, therefore, when there is no such express bar, the same cannot be read into the statute. He further referring to the argument of the learned senior counsel in respect of filing of audit report and Form 10CCB in light of Rule 18BBB submitted that Section 80IA(7) as it stood prior to substitution vide Finance Act, 2020 with effect from 01.04.2020 required filing of audit report in Form 10CCB along with the return of income, but the said section does not state that assessee is required to file audit report along with return under section 139(1) of the Act. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between exemption provisions and deduction provisions contained in Chapter VI-A. In Para 11, the Court has also not doubted or upset the ratio of GM Knitting's case (supra), but has only distinguished it on the count that it cannot be used in exemption provisions. Therefore, the ratio in GM Knitting's case (supra) has not been disturbed and continues to hold the field and if, we go by the said decision, there is no bar in making a fresh claim in the return of income filed under Section 153A of the Act. In this regard, he relied upon the following judicial precedents : * Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha Maryadit v. ITO [2023] 147 taxmann.com 449 (Nagpur - Trib.) * Wanka Vividh Karyakari Seva Sahkari Mandali Ltd. v. ITO [2023] 203 ITD 779 (Surat-Trib) * ITO v. Ramji Mandir Religious and Charitable Trust [2024] 205 ITD 150 (Ahmedabad - Trib.) 17. We have heard both the parties, perused the material available on record, and gone through the orders of the authorities below. We have also carefully considered various case laws cited by both parties. The solitary issue for our consideration is whether an assessee can make a claim for deduction under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], 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 and for the relevant assessment year or 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 and for the relevant assessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : Provided further that assessment or reassessment, if any, rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 19. A plain reading of Section 153A of the Act shows that, it starts with a non obstante clause, which states that notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated under Section 132, or books of accounts or other documents, or any assets are requisitioned under Section 132A, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and pending assessments. Further, under the proviso contained in Sub- section (2), the assessment or reassessment relating to any assessment year which has been abated under the second proviso, and if such an assessment is annulled in appeal or any other legal proceedings, it shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Further, such revival ceases to have effect if such order of annulment is set aside. Therefore, insofar as the completed assessments are concerned, they do not abate, and the pending assessments, abate. Thus, the completed assessments become final unless some incriminating material is found during the course of the search. If we go by the provisions contained in Section 153A of the Act, the intention of the legislature is to restrain the Assessing Officer to undo what has already been completed and has become final. Therefore, no reassessment in respect of completed assessment is contemplated under this provision in case no incriminating material is found as a result of the search. Insofar as the pending assessments are concerned, the jurisdiction to make an original assessment and the assessment under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abated/completed assessment, the Assessing Officer would assume jurisdiction to assess or reassess the total income, taking into consideration the incriminating material found during the course of search and other material available with the Assessing Officer, including the income declared in the return. In case no incriminating material is found during the search, the Assessing Officer cannot assess or reassess, taking into consideration other material in respect of completed assessment/unabated assessment. Meaning thereby, in respect of completed assessments, no additions can be made by the AO in the absence of incriminating material found during the search under Section 132 of the Act. The sum and substance of the ratio laid down by various High Courts, including the Hon'ble Supreme Court, in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd (supra) is that when a search is conducted under Section 132, all pending assessments within the block of six assessment years immediately preceding the assessment year in which such search is conducted abates and the Assessing Officer shall have jurisdiction to assess or reassess the total income of those assessment years on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entertain a claim for deduction otherwise than by filing a revised return. Since the assessee neither made any such claim in the original return filed under Section 139(1) of the Act, nor in any regular assessment proceedings by way of filing any revised return and, therefore, return in response to notice under Section 153A of the Act is not a substitution of a revised return for making claim of such benefits. Further, the Department also took support from the provisions of Section 80A(5) and Section 80AC of the Act to deny such claims on the ground that, as per the provisions of Section 80AC, where the assessee fails to make any claim in his return of income for any deduction under Section 10A or Section 10AA or Section 10B or Section 10BA or under any provision of this Chapter under the Head "CD eductions in respect of certain income", no deduction shall be allowed to them. Further, the provisions of Section 80AC deal with deductions not to be allowed unless return of income is furnished and as per the said provisions, no deduction under Section 80IA or other deductions/exemption provisions as contemplated are admissible unless the assessee furnishes a return of income for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant case laws referred to by both parties. We find that it is well settled from the decision of various High Courts and the decision of the Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd (supra) that in case of search assessments, where search is conducted under Section 132 of the Act, all pending assessments within the block of six assessment years immediately preceding the assessment year in which such search is conducted shall abate and the AO shall have power to assess or reassess the 'total income' of those assessment years on the basis of incriminating material found as a result of the search and any other material available with the AO, including the information provided by the appellant in the return of income filed for those assessment years. In case of unabated/concluded assessments, the AO shall have the power to reassess the total income, but such reassessment should be confined only to the incriminating material found as a result of the search. In other words, in case there is no incriminating material found as a result of the search, the completed assessment cannot be disturbed. 24. Having said so, now let us come back to the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has made a claim of deduction under Section 80IA(4) in the return of income filed in response to notice under Section 153A of the Act, also to be considered as if the assessee has made a claim on or before filing the return under Section 139(1), and further, it is contrary to the scheme of regular assessment and search assessment and is devoid of merits. Further, the argument of the counsel for the assessee that ITR Form provides for separate schedule for claiming deduction under Section 80IA of the Act is also devoid of merit, because, unlike the erstwhile special procedure for the assessment of undisclosed income of the block period, a separate form is provided for filing return of income for a block period, in the present scheme of assessment of search cases, there is no separate form prescribed by the legislature, which means in a new scheme assessment of each assessment year in consequent to search, the appellant has to file his return of income under very same ITR 6 which is used for filing regular return of income and the return filed under ITR Form 6 provides for various information including deductions under Section 80IA of the Act. Therefore, in our considered view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed, determining the assessee's total income and such orders are subsisting at the time when the search or requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, when the assessment has already been completed, the AO can reopen the assessment or reassess the assessment already made without following the procedure under Section 147 or Section 148 of the Act and determine the total income of the assessee. The arguments raised by the counsel for the assessee, in light of the provisions of Section 153A(1)(a) and Form ITR-6, that the moment the assessee files a return in response to Section 153A, it partakes the nature of the return filed under Section 139(1) of the Act and it satisfies all the conditions, including the provisions of Section 80A(5) and Section 80AC of the Act, is devoid of merit and is rejected. 26. We further note that, although the ratio laid down by the Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell (P.) Ltd (supra) is in the context of additions made by the AO in the assessments which are unabated/concluded on the date of the search in the absence of any incriminating material found a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of G.M.R. Infrastructure Limited Vs. DCIT in ITA No.1036 of 2017 dt.06.07.2021. We have gone through the decisions rendered by the Hon'ble Bombay High Court in the case of PCIT Vs. JSW Steel Ltd (supra), and we find that, the Hon'ble High Court held that once the search is conducted u/s 132 of the Act and the original assessment was pending and was not completed as on the date of search, in view of the second proviso of section 153A, assessment got abated, and thus, it was open for the assessee to lodge a new claim for deduction etc., which remain to be claimed in his earlier/regular return of income. The Hon'ble High Court has discussed the issue in Paras 12 and 13 of the order, which reads as under: "12. In this perspective we are called upon to decide the question projected by the revenue as substantial question of law arising from the order of the Tribunal. We have considered the grounds of appeal and the orders passed by the AO, CIT(A) and the Tribunal with the assistance of learned counsel for the Appellant. From a reading of the above it is clear that Section 153A of the said Act, provides for the 34 of 39 procedure for assessment in search cases. As al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Technology Pvt. Ltd., (supra), the Hon'ble High Court of Bombay once again examined the question of law raised before the Court which is similar to the question before the Special Bench and after considering relevant provisions of Section 153A(1) of the Act, held that consequent to notice under section 153A of the Act, the earlier return filed for the purpose of assessment which is pending would be treated as non-est in law. Further, Section 153A(1) of the Act itself provides filing of the return consequent to notice, the provisions of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the respondent/assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore, the provisions of the Act, which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act, would also continue to apply in the case of return filed under Section 153A of the Act. The relevant finding of the Hon'ble High Court is as under : "11. In the present facts for the subject assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bombay and Hon'ble High Court of Karnataka in the above-mentioned case, it is only in the context of abated assessments which are pending as on the date of search under section 132 of the Act, the return filed in response to notice under section 153A of the Act partakes the nature of return filed under section 139 of the 30. Act and the assessee can make/lodge any claim which otherwise, it would have raised in the return of income to be filed under Section 139 of the Income Tax Act, 1961. In other words, in case of unabated/concluded assessments like the AO, who cannot make additions in the absence of any incriminating material, the assessee cannot make any fresh claim, including the claim of deduction under Chapter VI-A of the Act. Therefore, we are of the considered view that the assessee cannot make any fresh claim of deduction or allowance of the expenditure for the first time in the return of income filed under section 153A of the Income Tax Act, 1961. 31. Coming back to another important argument of the learned counsel for the assessee, in light of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works (P) Ltd. (supra). The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year falling within six assessment years immediately preceding the assessment year in which such search is conducted or requisition is made. According to the provisions of Sections 147 and 153A of the Act, although both operate in different fields, the purpose is the same. Section 147 deals with income escaping assessment, and Section 153A deals with assessment consequent to search and seizure under Section 132, where any money, bullion, jewellery, valuable article or things found as a result of the search. Therefore, in our considered view, when the Hon'ble Supreme Court, in very categorical terms, held in light of the provisions of Section 147 of the Act that said provisions are for the benefit of revenue, and the assessee cannot make any fresh claim of deduction towards any income or expenditure, then going by the scheme of assessment under Section 153A, there is no doubt that said provisions are only for the purpose of detection of undisclosed money, bullion, jewellery, or any other article or thing. and said provisions are also for the benefit of revenue, and the assessee cannot take to its advantage. Therefore, the reliance placed by the revenue on the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Legislature. Further, if we accept the arguments of the learned counsel for the assessee, it discriminates the persons, who file the return of income and make a claim in the said return of income on or before the due date u/s 139 and the persons who do not file any return of income and also do not make any claim in the said return of income. Therefore, in our considered view, going by the wording of the provisions of Section 80A(5) and Section 80AC of the Act, in order to claim any deductions under Section 80IA(4) of the Act, the assessee should file its return of income on or before the due date prescribed under Section 139(1) of the Act and further, the said claim should be made in the return furnished. Further, in order to claim deduction under Section 80IA(4) of the Act, as per Section 80IA(7), furnishing of the audit report on or before the specified date referred to in Section 44AB of the Act is mandatory and not directory as argued by the learned counsel for the assessee. At this stage, we are taking support from the decision of the Hon'ble Supreme Court in the case of Commissioner of Customs (Imports), Mumbai Vs. Dilip Kumar and Company, (supra) wherein the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , under which circumstances ? I. In case of unabated/ completed assessment/s, no fresh claim can be made under chapter VI-A of the Income Tax Act, 1961, for the first time, in the return of income filed in response to the notice issued u/s 153A of the Act, pursuant to a search conducted under section 132 of the Act. II. in case of abated assessment/s, fresh claim can be made under chapter VI-A of the Income Tax Act, 1961, for the first time, in the return of income filed in response to the notice issued u/s 153A of the Act, pursuant to a search conducted under section 132 of the Act. 34. The present discussion hereinabove is with reference to the questions referred to on the issue, i.e. whether a fresh claim of deduction under Chapter VI-A of the Income Tax Act, 1961 could be maintained for the first time in the return filed pursuant to a notice under Section 153A of the Act or not. The learned counsel for the assessee and the Senior Standing Counsel appearing for the Revenue did not argue on the merits as to whether the assessee is eligible for such a claim or not. Therefore, the present appeals filed by the Revenue are posted for hearing on the issue of deduction claimed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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