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TMI Blog2025 (3) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of search and seizure operation, the following amounts were seized: Rs. 1,77,50,045/- from the office premises of VIP Housing Rs. 50,00,000/- was seized from the residence of Shri Dhanapal Rs. 50,00,000/- and gold of Rs. 38,69,168/- seized from VIP City. The case was centralized with this circle and a notice u/s 142(1) was issued to the assessee. In response to that assessee filed return of income on 22.02.2016 returning an income of Rs. 2,34,86,595/-. Subsequently, the assessment was completed u/s 143(3) of IT Act, 1961 by accepting the returned income. No addition was made on the seized cash and jewellery which resulted in escapement of taxable income worth Rs. 3,16,19,213." 3. It is the specific contention of the petitioner that no tangible materials were available before the authority for reopening of the assessment that was completed on 31.03.2016 under Section 143(3) of the Income Tax Act, 1961. 4. Learned counsel for the petitioner would submit that a search was conducted under Section 132 of the Income Tax Act, 1961 on 03.09.2013 and thereafter proceedings were initiated against the petitioner under the provisions of Section 153A of the Income Tax Act, 1961 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner has placed reliance on the following decisions of the Hon'ble Supreme Court, Delhi High Court and that of this Court:- i. Income Tax Officer, Ward No.16(2) Vs. TechSpan India Private Limited, [2018] 92 taxmann.com 361 (SC). ii. Assistant Commissioner of Income-tax Vs. ICICI Securities Primary Dealership Limited, [2012] 24 taxman.com 310 (SC). iii. Replika Press Private Limited Vs. Deputy Commissioner of Incometax, [2013] 37 taxmann.com 417 (Delhi). iv. Commissioner of Income-tax Vs. Kelvinator of India Limited, [2002] 123 Taxman 433 (Delhi). v. NLC India Limited Vs. Assistant Commissioner of Income-tax, [2022] 142 taxmann.com 26 (Madras). vi. Fenner (India) Limited Vs. Deputy Commissioner of Income-tax, [1999] 107 Taxmann 53 (Madras). vii. Commissioner of Income-tax, Chennai Vs. Schwing Stetter India Private Limited, [2015] 61 taxmann.com 19 (Madras) viii. Principal Commissioner of Income-Tax-6, Chennai Vs. Santech Solutions Private Limited, [2018] 97 taxmann.com 179 (Madras). ix. Chinnathambi Rajeswari Vs. Assistant Commissioner of Income-tax, [2024] 163 taxmann.com 439 (Madras). x. M/s.Durr India Private Limited Vs. Assistant Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ern Newspaper Society Vs. CIT, [1979] 119 ITR 996. iii. Commissioner of Income Tax Vs. Gulam Rasool, (1997) 225 ITR 904 / [1997] 91 TAXMAN 167 (MP). iv. Commissioner of Income Tax Vs. Sun Engineering Works Private Limited, [1992] 198 ITR 297, v. Ester Industries Limited Vs. Union of India and others rendered in W.P.(C) No.7482 of 2011 on 28.01.2013. vi. M.K.Venkatachalam Vs. Bombay Dyeing and Manufacturing Company Limited, (1958) 34 ITR 143 (SC). vii. Maharaj Kumar Kamal Singh Vs. Commissioner of Income Tax, (1959) 35 ITR 1 (SC). viii. Commissioner of Income Tax, Delhi Vs. Kelvinator of India Limited, (2010) 320 ITR 561 / [2010] 187 Taxman 312 (SC). 17. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 18. During the search that was conducted on 03.09.2013, cash of Rs. 2,77,50,045/- and gold weighing 1378.400 grams were seized. The details of cash and gold seized from the petitioner and his associates are as follows:- Sl.No. Place of Seizure Value at Rs. 1 Premises of the Petitioner and M/s.VIP City 1,77,50,045 2 Premises of Mr.Dhanapal 50,00,000 3 Premises of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, wherein it has been concluded as under:- "20. What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Mavji [(1976) 1 SCC 985 : 1976 SCC (Tax) 111 : (1976) 102 ITR 287] The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the ITO initiates reassessment proceedings in the light of "information" obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the ITO, having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Supreme Court in Commissioner of Income Tax Vs. Sun Engineering Works Private Limited, [1992] 198 ITR 297 and had summarized the position as follows:- "39. The principle laid down by this Court in Jagan Mohan Rao case [(1969) 2 SCC 389 : (1970) 75 ITR 373] therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under Section 22(2) of the 1922 Act (corresponding to Section 148 of the Act) the previous under-assessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous under-assessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not effect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of "under-assessment" based on clauses (a) to (d) of Explanation I to Section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in Jagan Mohan Rao case [(1969) 2 SCC 389 : (1970) 75 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment." 25. The Delhi High Court in Ester Industries Limited Vs. Union of India and others in W.P.(C) No.7482 of 2011 dated 28.01.2013, taking note of the decision of the Hon'ble Supreme Court in M.K.Venkatachalam Vs. Bombay Dyeing and Manufacturing Company Limited, (1958) 34 ITR 143 (SC) and that of the decision of the Hon'ble Supreme Court in Maharaj Kumar Kamal Singh Vs. Commissioner of Income Tax, (1959) 35 ITR 1 (SC), observed as under:- "9. The original assessment was made on 30-11-2006 under section 143(3). The Finance Act, 2008 inserted clause (h) of Explanation 1 to section 115JB retrospectively from 1-4- 2001. The effect of this clause was to increase the book profit by "the amount of deferred tax and the provision therefor". It is not in dispute that one of the reasons to believe as recorded by the respondent is that in view of the retrospective amendment, the deferred tax liability, for which a provision had been made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, the profit and loss adjustment account and statement made before the ITO had brought into focus the question of taxability of the surplus and (d) that the decision in Ramachari case [(1961) 41 ITR 142 (Mad)] had been reported by April 10, 1962. No Income Tax Officer can be presumed to have completed the assessment without looking at all this material and the said decision. No doubt, some doubt had been thrown as to whether a statement had been given at the time of original assessment that the amount of surplus was not taxable as an income or a capital gain but the case has proceeded on the footing that such a statement was there before the officer. This, therefore, is nothing but a case of "change of opinion". On the other hand, the authorities and the Tribunal have drawn attention to the fact that the return, the Section 143(2) notice and assessment were all on the same day and counsel for the revenue urged that, obviously, in his haste, the ITO had not looked into the facts at all. It is urged that no Income Tax Officer who had looked into the facts and the law could have failed to bring the surplus to tax in view of the then recent pronouncement in Ramachari case [(1961) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of the original assessment. Though it was a decision of 1961 and the ITO could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of that decision then and, when he came to know about it, he rightly initiated proceedings for assessment." (emphasis added) 29. In the facts of the case, it is evident that the search was completed on 03.09.2013. The Return of Income was filed by the petitioner was on 22.02.2016. Assessment was completed on 31.03.2016 under Section 143(3) of the Income Tax Act,1961, based on the returns filed on 22.02.2016. 30. At best, the assessment order that was passed on 31.03.2016 under Section 143(3) of Income Tax Act, 1961, may have given rise to an option either to invoke the machinery of revision under Section 263 of the Income Tax Act, on the ground that the assessment order dated 31.03.2016, passed under Section 143(3) of the Income Tax Act, was both erroneous and prejudicial to the interests of the revenue, or that there was income that had escaped assessment. Although there was no suppression of fact in the return that was filed on 22.02.2016, merely because amounts were recovered from the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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