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TMI Blog2022 (10) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... d in assessing them in this year. We set aside the orders passed by CIT(A) in the hands of these assessees for AY 2015-16 and direct the AO to delete the additions made in this year in the impugned assessment order. Addition made u/s 68 - assessee has availed accommodation entries by way of capital gains in order to convert unaccounted money into accounted one - HELD THAT:- AO has simply relied upon the report of the investigation department and held that the long term capital gains declared by the assessee are not genuine. No other material was brought on record by the AO to prove that the assessee has indeed availed only accommodation entries. We noticed that the assessee has furnished all documents relating to purchase and sale of securities. The shares have entered into and exited from his demat account. The purchase and sale transactions have been routed through the bank accounts of the assessee. All these documentary evidences produced by the assessee have not been disproved. Accordingly, decision rendered in the said case of Shyam R Pawar [2014 (12) TMI 977 - BOMBAY HIGH COURT] is squarely applicable to the facts of the present case. We hold that the tax authorities are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any incriminating evidence found at the time of search." We noticed earlier that the search has taken place in the hands of the assessee on 16.11.2017. The assessee had earlier filed return of income u/s 139(1) of the Act for AY 2015-16 on 29-08-2015. It is submitted that the time limit for issuing notice u/s 143(2) of the Act has expired for this year prior to the initiation of search and hence the assessment of this year was not pending as on the date of search. Accordingly, it was submitted that assessment of this year would fall under the category of "unabated assessments". 4. The contention of the assessees is that the assessment of AY 2015-16 shall not abate, since no assessment was pending on the date of search. It was further contended that in the cases of unabated/ finalized/completed assessments, the AO could have interfered with the issues already concluded only if the search team has found any incriminating material during the course of search warranting such interference. It is the submission of Ld A.R that the search officials did not unearth any incriminating material warranting interference with the income originally declared in the return of income. In support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Bench in that regard held as under: "48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO to assess or reassess total income of the six years as provided in section 153A(1)(b) and reiterated in the 1st proviso to this section. The second proviso states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments and their fate depends upon subsequent orders in appeal. On consideration of the provision and the submissions, we find that this provision also makes it clear that the abatement of pending proceedings is not of such permanent nature that they cease to exist for all times to come. The interpretation of the Ld. Counsel, though not specifically stated, would be that on annulment of the assessment made u/s 153(1), the AO gets the jurisdiction to assess the total income which was vested in him earlier independent of the search and which came to an end due to initiation of the search. 50. The provision contained in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1)(b) and the first proviso ? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Bench of the Tribunal in Al-Cargo Global Logistics Ltd. was a subject matter of challenge before this Court as a part of the group of appeals disposed of as CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645/58 taxmann.com 78/232 Taxman 270 (Bom.) upholding the view of the Special Bench of the Tribunal in Al- Cargo Global Logistics Ltd. Consequently, once an assessment has attained finality for a particular year i.e. it is not pending then the same cannot be subject to tax in proceedings under Section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under Section 153A of the Act which are contrary to and/or not disclosed during regular assessment proceedings. 7. In view of the above, on issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corpn. (Nhava Sheva) Ltd. (supra). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO in AY 2015-16, we do not find it necessary to deal with the issues urged on merits of addition, as the same would be rendered academic in nature. 13. We shall now take up the appeal filed by the assessee for AY 2012-13. The assessee had filed return of income u/s 139(1) earlier declaring a total income of Rs. 2,28,320/-. Consequent to the search operation, the assessment was reopened u/s 153A of the Act and the search assessment u/s 143(3) r.w.s 153A of the Act was completed by the AO on 10-12-2019 determining the total income at the very same amount of Rs. 2,28,320/-. Subsequently, the AO reopened the assessment by issuing notice u/s 148 dated 29-03-2019. Accordingly, the impugned assessment came to be passed by the AO u/s 143(3) r.w.s 147 of the Act. In the original return of income, the assessee had declared long term capital gain of Rs. 17,08,443/- on sale of shares of Divine Multimedia Ltd. The sale value of shares was Rs. 21,69,043/-. The AO received information that the assessee has availed bogus long term capital gains by way of availing accommodation entries and accordingly, the AO reopened the assessment. Thereafter, the AO completed the assessment by assessing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr. Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the concurrent orders because another view was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R Pawar (supra) is squarely applicable to the facts of the present case. The Ld A.R also relied upon following decisions, which support the case of the assessee:- (a) CIT vs. Smt Jamnadevi Agrawal (2012)(20 taxmann.com 529)(Bom) (b) PCIT vs. Ziauddin A Siddique (ITA No. 2012 of 2017)(Bom) (c) PCIT vs. Smt Renu Agarwal (ITA No. 44 of 2022)(Bom) (d) Shri Sohanraj Uttamchand vs. DCIT (ITA No. 1787/Chny/2017) 19. In view of the above, in the facts and circumstances of the case, we hold that the tax authorities are not justified in disbelieving the long term capital gains declared by the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition relating to assessment of sale consideration of Rs. 21,69,043/- realised on sale of shares of Divine Multimedia Ltd. 20. The next ground urged by the assessee relates to the claim for deduction of Education Cess. In view of the retrospective amendment brought in by Finance Act, 2022 holding that the education cess is not allowable as deduction, we hold that the claim of the assessee is not tenable. Accordingly, we reject this ground of the assessee. 21. Since we have delet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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