USHA MITTAL, MUMBAI V. ACIT CC 22, MUMBAI

CO 76/MUM/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2557 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MITESH SHAH
• Assessee Lawyers: S PADMAJA
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 68; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 4962/MUM/2014 (ASSESSMENT YEAR: 2006-07) ACIT, CC 22 & 30 VS. SMT. USHA MITTAL CENTRAL RANGE 5, MUMBAI ROOM NO. 403, 4 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 1601, MARATHON HEIGHTS P.B. MARG, JAIBHARAT OIL MILLS LOWER PAREL (W), MUMBAI -013 PAN AFTPM4951J APPELLANT RESPONDENT CO NO. 76/MUM/2016 (ASSESSMENT YEAR: 2006-07) SMT. USHA MITTAL VS. ACIT, CC 22 & 30 1601, MARATHON HEIGHTS P.B. MARG, JAIBHARAT OIL MILLS LOWER PAREL (W), MUMBAI -013 CENTRAL RANGE 5, MUMBAI ROOM NO. 403, 4 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AFTPM4951J CROSS OBJECTOR APPELLANT IN APPEAL APPELLANT BY: MS. S. PADMAJA RESPONDENT BY: SHRI MITESH SHAH DATE OF HEARING: 17.11.2016 DATE OF PRONOUNCEMENT: 23.11.2016 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 39, MUMBAI DATED 30.05.2014 FOR A.Y. 2006-07. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') WAS CONDUCTED ON 13.10.20 10 AT THE BUSINESS / RESIDENTIAL PREMISES OF THE WELSPUN GROUP, TO WHICH THE ASSESSEE WAS ALSO ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 2 CONNECTED. FROM THE DETAILS ON RECORD IT IS SEEN TH AT THE ASSESSEE HAD, INTER ALIA, DECLARED LONG TERM CAPITAL GAINS (LTCG) OF ` 34,42,139/- ON SALE OF 75000 SHARES OF ASAHI INFRASTRUCTURE AND WA S CLAIMED AS EXEMPT UNDER SECTION 10(38) OF THE ACT IN THE ORIGINAL RET URN OF INCOME FILED FOR A.Y. 2006-07 UNDER SECTION 139(1) OF THE ACT. THE R ETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 25.09.2007 AND A SSESSMENT WAS COMPLETED ACCEPTING THE RETURNED INCOME. 2.2 PURSUANT TO THE SEARCH ON 13.10.2010, NOTICE UN DER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 04.08.2011 AN D IN RESPONSE THERETO, THE ASSESSEE FILED A RETURN OF INCOME FOR A.Y. 2006 -07 ON 15.09.2011 DECLARING THE SAME TOTAL INCOME OF ` 2,51,382/- AS WAS DECLARED IN THE ORIGINAL RETURN. THE ASSESSING OFFICER (AO) COMPLET ED THIS ASSESSMENT UNDER SECTION 143(3) R.W.S. 153A OF THE ACT VIDE OR DER DATED 25.03.2013, WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T ` 38,72,630/- IN VIEW OF THE FOLLOWING ADDITIONS: - (I) LTCG TREATED AS UNEXPLAINED CASH CREDIT ` 34,49,139/ - (II) BOGUS COMMISSION ` 1,72,107/ - 3. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 25.03.20 13 FOR A.Y. 2006-07 PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-33, MUMBAI. T HE LEARNED CIT(A) VIDE THE IMPUGNED ORDER DATED 30.05.2014 ALLOWED THE ASS ESSEES APPEAL. THE LEARNED CIT(A), FOLLOWING THE DECISION OF THE SPECI AL BENCH OF THE ITAT, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LT D. 18 ITR 106 (MUMBAI) (SB), HELD THAT IN THE CASE ON HAND THE AO DID NOT HAVE THE POWER TO MAKE THE IMPUGNED ADDITIONS LISTED AT (I) AND (II) IN PR E PARA 2.2 (SUPRA), IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. IN THAT VIEW OF THE MATTER, THE LEARNED CIT(A) ANNULLE D THE ADDITIONS MADE IN THE ORDER OF ASSESSMENT FOR A.Y. 2006-07 PASSED UND ER SECTION 143(3) R.W.S. 153A OF THE ACT; THEREBY ALLOWING THE ASSESS EES APPEAL ON GROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ADDITIONS IN ASSESSMENT MADE FOR A.Y. 2006-07 VIDE ORDER DATED 25.03.2013. ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 3 4.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-39, MUMBAI DATED 30.05.2014 FOR A.Y. 2006-07, REVENUE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO T O DELETE THE ADDITION OF RS.34,49,139/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT U/S. 68 TREATING THE LTCG AS BOGUS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO T O DELETE THE ADDITION OF RS.1,72,107/- ON ACCOUNT OF UNACCOUNTED EXPENDITURE TOWARDS COMMISSION PAID ON BOGUS CAPITAL GAINS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED THAT ASSESSMENT COMPL ETED U/S. 143(3) R.W.S. 153A IS AGAINST THE PROVISIONS OF LAW AND AS SUCH LIABLE TO BE ANNULLED. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND AND / O R TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 4.2 THE ASSESSEE HAS ALSO RAISED CROSS OBJECTIONS ( CO); WHICH ARE AS UNDER: - 1.I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED IN DISPUTING THE DELETION OF AN AD DITION OF ` 34,39,139/- MADE BY HIM TO THE INCOME OF THE APPELL ANT ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 TREATING THE LONG TERM CAPITAL GAINS AS BOGUS AND AN ADDITION OF ` 1,72,107/- MADE BY HIM TO THE INCOME OF THE APPELLANT ON ACCOU NT OF UNACCOUNTED EXPENDITURE FOR THE REASON THAT THE LD. CIT(A) HAS NOT ADJUDICATED ON THE GROUND OF APPEAL SINCE THE A DDITION WAS OUT OF SCOPE OF SECTION 153A. II) THE LD. AO FAILED TO APPRECIATE THAT THE LD. CIT(A) HAS ONLY ADJUDICATED ON THE ISSUE OF VALIDITY OF THE ASSESSM ENT PASSED U/S. 143(3) R.W.S. 153A III) IN RAISING SUCH GROUNDS OF APPEAL THE LD. AO OMITTE D TO CONSIDER RELEVANT FACTORS, CONSIDERATIONS, PRINCIPLES AND EV IDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IR RELEVANT CONSIDERATIONS AND FACTORS. REVENUES APPEAL FOR A.Y. 2006-07 5. GROUND NO. 1 & 2 (I) LTCG TREATED AS BOGUS & (II) COMMISSION PAID ON BOGUS LTCG 5.1 AT THE ONSET, WE OBSERVE THAT THE AVERMENTS IN TWO GROUNDS ARE FACTUALLY INCORRECT. IN THE IMPUGNED ORDER, AT PARA 10 THEREOF THE LEARNED CIT(A) HAS STATED THAT HAVING DECIDED THE APPEAL ON THE VALIDITY OF THE ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 4 ADDITIONS MADE BY THE AO; AS BEING BEYOND THE SCOPE OF HIS POWERS AS PER THE PROVISIONS OF SECTION 153A OF THE ACT, SHE IS N OT ADJUDICATING THE OTHER GROUNDS 2 AND 3 RAISED ON THE MERITS OF THESE ADDIT IONS. 6. GROUND NO. 3 VALIDITY OF THE ADDITIONS MADE IN TH E ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 153A 6.1 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE LEAR NED D.R. FOR REVENUE AND THE LEARNED A.R. OF THE ASSESSEE AND PERUSED AN D CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRON OUNCEMENTS CITED. 6.2 THE LEARNED D.R. PLACED STRONG RELIANCE ON THE ORDER OF THE ASSESSING OFFICER AS BEING IN ORDER ON THIS ISSUE. 6.3.1 THE LEARNED A.R. OF THE ASSESSEE REITERATED T HE SUBMISSIONS MADE IN THIS REGARD BEFORE THE LEARNED CIT(A), WHICH ARE EX TRACTED HEREUNDER: - A) THE ISSUE OF LONG TERM CAPITAL GAINS HAS ALREADY BE EN ACCEPTED BY THE AO IN THE REGULAR ASSESSMENT COMPLETED UNDER S. 143(1) ON 25-9-2007. B) IT IS SUBMITTED THAT THE LEGISLATURE REQUIRES PENDI NG ASSESSMENT PROCEEDINGS TO ABATE AND ONLY SUCH YEARS FOR WHICH PROCEEDINGS ARE ABATED, MAY BE TREATED AS NORMAL ASSESSMENT PRO CEEDINGS. FOR OTHER YEARS, ADDITION CAN BE MADE ONLY ON THE B ASIS OF INCRIMINATING DOCUMENTS FOUND AS A RESULT OF SEARCH ON THE ASSESSEE. SECTION 153A REFERS TO A 'PENDING 'ASSES SMENT OR RE- ASSESSMENT' AND NOT 'ASSESSMENT ORDER. THE ASSESSM ENT MAY NOT BE PENDING, EVEN THOUGH THERE IS NO FORMAL ASSE SSMENT ORDER UNDER SECTION 143(1)(A). THE MOMENT THE RETURN IS F LED AND ACKNOWLEDGEMENT OR INTIMATION IS ISSUED, THE PROCEE DINGS INITIATED BY FILING THE RETURN ARE CLOSED, UNLESS T HEY ARE AGAIN TRIGGERED BY ISSUING NOTICE UNDER SECTION 143(2). E VEN IN A CASE WHERE NOTICE UNDER SECTION 143(2) IS NOT ISSUED, TH OUGH TIME PERIOD FOR ISSUING SUCH NOTICE IS AVAILABLE, IT CAN NOT BE SAID THAT ANY PROCEEDING IS PENDING. THE NOTICE UNDER SECTION 143(2) ONLY INITIATES ANOTHER PROCEEDING CALLED AS REGULAR ASSE SSMENT PROCEEDING. THE ISSUANCE OF NOTICE UNDER SECTION 14 3(2) IS DISCRETIONARY AND NOT MANDATORY. THEREFORE, MERE AV AILABILITY OF TIME TO ISSUE NOTICE UNDER SECTION 143(2) DOES NOT CREATE PENDENCY OF AN ASSESSMENT. C) IT IS SUBMITTED THAT THE ASSESSING OFFICER HAS NO POWER TO RE- EXAMINE THE ISSUE WHICH HAVE ALREADY BEEN EXAMINED IN THE EARLIER ASSESSMENT PROCEEDINGS COMPLETED U/S. 143(3 ). IT IS SETTLED LAW THAT IN CASE OF RE-ASSESSMENT PROCEEDINGS U/S. 147/148 CHANGE OF OPINION ON THE SAME SET OF FACTS IS NOT P ERMITTED AS HELD BY THE SC IN THE CASE OF CIT V/S. KELVINATOR OF INDIS LTD. 320 ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 5 ITR 561. THE REASSESSMENT PROCEEDINGS U/S. 153A ARE ALSO OF THE SAME NATURE AS REASSESSMENT PROCEEDINGS U/S. 14 7/148 AND THE RATIO SHOULD EQUALLY APPLIED WHILE FORMING ASSE SSMENT U/S. 153A D) IT IS FURTHER SUBMITTED THAT THE ASSESSMENT UND ER S. 153A CAN BE MADE ONLY ON THE BASIS OF ANY EVIDENCE, DOCUMENTS M ATERIAL OR INFORMATION FOUND DURING THE SEARCH ON AN ASSESSEE. THEREFORE NO ADVERSE INFERENCE CAN BE DRAWN AGAINST ANY ASSESSEE , WHICH ARE BASED ON CONJECTURE AND SURMISES OR ESTIMATES AND P RESUMPTIONS NOT SUPPORTED BY ANY VALID EVIDENCE, DOCUMENTS ETC, FOUND IN THE SEARCH ON THE ASSESSEE. IT IS FURTHER SUBMITTED THA T THE WHERE THE TRANSACTIONS ARE DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO SEARCH AND NO INCRIMINATING DOCUMENTS HAVE BEEN FOU ND AS A RESULT AND AS SUCH THIS ISSUE IS BEYOND THE SCOPE O F THE ASSESSMENT TO BE MADE UNDER S. 153A. SECTION 153A P ROVIDES THAT WHERE A SEARCH IS INITIATED UNDER S. 132 THE A O SHALL 'ASSESSEE OR REASSESS THE TOTAL INCOME OF SIX ASSES SMENT. YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH. THE SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE 1ST PROVISO STATES THAT THE AO SHALL 'ASS ESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESS MENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS' WHILE THE 2ND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS 'PENDING' ON THE DATE OF INITI ATION OF THE SEARCH UNDER 132 SHALL 'ABATE'. IN THE ASSESSEE'S C ASE, SEARCH ACTION WAS INITIATED AND ASSESSMENT UNDER S.153A WE RE FRAMED FOR SIX ASSESSMENT YEARS MAKING VARIOUS ADDITIONS. THE ADDITIONS WERE NOT TENABLE AS REGULAR RETURNS HAD BEEN FILED WHERE THE PARTICULARS RELATING TO THE ADDITIONS HAD BEEN DISC LOSED AND THE SAME HAD BEEN ACCEPTED U/S. 143(1) OR 143(3) AND AL SO THAT NO MATERIAL HAD BEEN FOUND DURING THE SEARCH TO JUSTIF Y THE ADDITIONS. SECTION 153A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT. WHILE UNDER THE 1ST PROVISO, THE A O IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE 2ND PROVISO, ONLY THE ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMP LETED ASSESSMENTS DO NOT ADATE. THERE CAN NOT BE TWO ASSE SSMENT FOR THE SAME ASSESSMENT YEAR. ASSESSMENTS WHICH ARE NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH BUT ARE PENDING BEFORE AN APPELLATE AUTHORITY WILL SURVIVE. AN ASSESSMENT CAN BE SAID TO BE 'PENDING' ONLY IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF A NOTICE U/S. 143(2) HAS BEEN ISSUED, T HE ASSESSMENT IS PENDING. HOWEVER, THE ASSESSMENT IN RESPECT OF A RE TURN PROCESSED U/S. 143(1) IS NOT PENDING' BECAUSE THE AO IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN . THE POWER GIVEN BY THE 1ST PROVISO TO 'ASSESS' INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DI SCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. AS THE RETURNS HAD BEEN ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 6 PROCESSED U/S. 143(1)/ASSESSMENTS MADE U/S. 143(3), THE ASSESSMENT WERE NOT 'PENDING AND AS NO MATERIAL WA S FOUND DURING THE SEARCH, THE ADDITIONS COULD NOT BE SUSTA INED. E) IT IS SUBMITTED THAT THE WORD 'PENDING' OCCURRI NG IN THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS SIGNIFICANT. IT IS QUALIFIED BY THE WORDS 'ON THE DATE OF INITIATION OF THE SEARCH' , AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR REASS ESSMENT PROCEEDINGS ARE LIABLE TO ABATE. IN OTHER WORDS, AS SESSMENTS WHICH ARE NOT PENDING I.E. COMPETED ASSESSMENTS AS ON THE DATE OF SEARCH WOULD HOLD THEIR BASE AND WOULD NOT ABATE . THUS ONLY PENDING ASSESSMENTS AS ON THE DATE OF SEARCH SHALL ABATE. F) IT IS THE FURTHER CONTENTION OF THE APPELLANT T HAT AS FAR AS COMPLETED ASSESSMENTS ARE CONCERNED, THEY DO NOT AB ATE AND PENDING APPEALS, ETC. IN RESPECT THEREOF CONTINUE T O EXIST NOTWITHSTANDING THE FACT THAT THE SEARCH HAS BEEN M ADE. THUS A COMPLETED ASSESSMENT BECOMES FINAL UNLESS SOME INCR IMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH. OTHERWIS E THE ASSESSING OFFICER WILL BE EMPOWERED TO UNDO WHAT HAS ALREADY BEEN COMPLETED AND HAS BECOME FINAL. G) IT IS FURTHER POINTED OUT THAT THE SECOND PROVI SO TO SECTION 153A IS INTENDED TO AVOID TWO ASSESSMENTS FOR THE SAME YEAR . THEREFORE, PROPER CONSTRUCTION WOULD BE THAT IN RESPECT OF COM PLETED ASSESSMENTS, THE ASSESSMENT SHALL BE MADE ONLY IF I NCRIMINATING DOCUMENTS ETC. ARE FOUND. THEREFORE, THE TERM ASSES S AND REASSESS APPEARING IN SECTION 153A(1)(B) MEANS THAT ASSESSMENT SHALL BE MADE IN CASE OF PENDING ASSESSMENTS AND REASSESSMENTS SHALL BE MADE IN RESPECT OF COMPLETED ASSESSMENTS WHERE INCRIMINATING MATERIAL IS FOUND. 6.3.2 THE LEARNED A.R. PLACED RELIANCE ON THE FOLLO WING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF THE ARGUMENTS PUT FORT H: - (I) ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (137 I TD 287) (SB-ITAT- MUMBAI). (II) CIT VS. ANILKUMAR BHATIA [24 TAXMANN.COM 98 (D EL)] 6.3.3 ON AN APPRECIATION OF THE FACTS OF THE CASE O N HAND, THE SUBMISSION/ CONTENTIONS PUT FORTH BY BOTH PARTIES, THE ORDERS O F THE AUTHORITIES BELOW AND JUDICIAL PRONOUNCEMENTS CITED, IT IS NOT DISPUT ED THAT THE ISSUE ON WHICH THE AO MADE ADDITION IN THE POST SEARCH ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S 153A OF THE ACT FOR A.Y. 2006-07, I.E. LTCG TREATED AS BOGUS CASH CREDIT ` 34,49,139/-, HAS ALREADY BEEN ACCEPTED BY THE AO IN THE REGULAR ORDER OF ASSESSMENT FOR A.Y. 2006-07 UNDER SECTION 143(1) OF THE ACT ON 25.09.2007, PRIOR TO THE SEARC H. THE LAW MANDATES ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 7 THAT ONLY PENDING ASSESSMENT PROCEEDINGS ABATE AND IT IS ONLY THOSE YEARS IN WHICH PROCEEDINGS HAVE ABATED THAT ARE TO BE TRE ATED AS NORMAL ASSESSMENT PROCEEDINGS. FOR OTHER YEARS, WHERE ASSE SSMENT PROCEEDINGS HAVE NOT ABATED THE AO IS EMPOWERED TO MAKE ADDITIO NS ONLY ON THE BASIS OF EVIDENCE, MATERIAL, INFORMATION OR INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF SEARCH ON AN ASSESSEE. IF AS ON THE DATE OF SEARCH, NO PROCEEDINGS ARE PENDING FOR ANY ASSESSMENT YEAR AND THE CONCERNED TRANSACTIONS HAVE BEEN DISCLOSED IN THE REGULAR BOO KS OF ACCOUNT PRIOR TO THE SEARCH, ADDITIONS IN RESPECT OF SUCH TRANSACTIO NS ARE BEYOND THE SCOPE OF ASSESSMENTS TO BE MADE UNDER SECTION 153A OF THE ACT AND THE AO IS NOT EMPOWERED TO DO SO. THEREFORE, IN OUR VIEW, THE AO IN THE CASE ON HAND WAS NOT EMPOWERED BY LAW TO MAKE THE ADDITIONS OF LTCG TREATED AS BOGUS CASH CREDIT AND CONSEQUENT BOGUS COMMISSION, IN THE POST SEARCH ASSESSMENT AS THE SAME WAS ALREADY ADMITTEDLY DISCL OSED IN THE ORIGINAL RETURN OF INCOME FILED FOR A.Y. 2006-07 WHICH WAS A SSESSED UNDER SECTION 143(1) OF THE ACT ON 25.09.2007 BEFORE THE SEARCH T OOK PLACE ON 13.10.2010. 6.3.4 THE LEARNED CIT(A), IN THE IMPUGNED ORDER, WH ILE ALLOWING THE ASSESSEES APPEAL ON THIS TECHNICAL ASPECT HELD AS UNDER AT PARAS 9 AND 10: 9. I HAVE CONSIDERED THE FACTS OF THE CASE, THE A SSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND THE CONTENTIONS AS RAISED BY THE APPELLANT. ADMITTEDLY THE ISSUE OF LONG TERM CA PITAL GAINS HAS ALREADY BEEN ACCEPTED BY THE ASSESSING OFFICER IN T HE REGULAR ASSESSMENT COMPLETED UNDER S.143(1) ON 25-9-2007 I. E. PRIOR TO THE SEARCH. THE LAW REQUIRES THAT ONLY PENDING PROCEEDI NGS ABATE AND ONLY SUCH YEARS FOR WHICH PROCEEDINGS ARE ABATED AR E TO BE TREATED AS NORMAL ASSESSMENT PROCEEDINGS. FOR OTHER YEARS, THE ADDITION IS BE MADE ON THE BASIS OF THE INCRIMINATING DOCUMENTS FOUND AS A RESULT OF SEARCH. THE ASSESSMENT UNDER S. 153A IS B E MADE ON THE BASIS OF ANY EVIDENCE, DOCUMENTS MATERIAL OR INFORM ATION FOUND DURING THE SEARCH ON AN ASSESSEE. WHERE THE TRANSAC TIONS ARE DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT PRIOR TO SEARCH AND NO INCRIMINATING DOCUMENTS HAVE BEEN FOUND AS A RESULT AND AS ON THE DATE OF SEARCH IF NO PROCEEDINGS ARE PENDING, SUCH MATTER IS BEYOND THE SCOPE OF ASSESSMENT TO BE MADE UNDER S. 153A. SECTION 153A PROVIDES THAT WHERE A SEARCH IS INITIATED UNDE R S. 132 THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOT AL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH I S CONDUCTED OR ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 8 REQUISITION IS MADE. THE 1ST PROVISO STATES THAT TH E ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS' WHILE THE 2ND PROVISO STATES THAT THE ASSESSMENT OR REASS ESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING' ON THE DATE OF INITIATION OF THE SEARCH UNDER 132 SHALL 'ABATE'. W HILE UNDER THE 1ST PROVISO, THE ASSESSING OFFICER IS EMPOWERED TO FRAM E ASSESSMENT FOR SIX YEARS, UNDER THE 2ND PROVISO, ONLY THE ASSE SSMENTS WHICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH ABA TE. THE EFFECT IS 'THAT COMPLETED ASSESSMENTS DO NOT ABATE. IN THE IN STANT CASE THE RETURN HAD BEEN PROCESSED UNDER S. 143(1); NO PROCE EDINGS WERE 'PENDING' ON THE DATE OF SEARCH; THE TIME TO ISSUE NOTICE UNDER S. 143(2) HAD EXPIRED AND NO MATERIAL WAS FOUND DURING THE SEARCH AS REGARDS THE ADDITION MADE WITH REGARD TO THE IMPUGN ED TRANSACTION IN SHARES. THE HON'BLE MUMBAI ITAT SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT 137 ITD 28 7 HAS HELD, ON THE SUBJECT MATTER, AS UNDER:- A) IN ASSESSMENTS THAT, ARE ABATED, THE ASSESSING OFFI CER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISD ICTION CONFERRED ON HIM UNDER S. 153A FOR WHICH ASSESSMENT S SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARA TELY; B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER S. 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN TH E CONTEXT . OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, O THER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PR ODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCL OSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 10. IN VIEW OF THE ABOVE DISCUSSION, FOLLOWING THE DECISION OF THE SPECIAL BENCH (OF THE HON'BLE MUMBAI TRIBUNAL IN TH E CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY CIT 18 ITR 106(MUMBAI (SB), IT IS HELD THAT IN THE INSTANT CASE THE ASSESSING OFFICER DID NOT HAVE THE POWER TO MAKE TH E IMPUGNED ADDITION IN ABSENCE OF ANY INCRIMINATING MATERIAL. THEREFORE IT FOLLOWS THAT BOTH THE ADDITIONS MADE BY THE ASSESSI NG OFFICER ARE BEYOND THE SCOPE OF SECTION 153A. GROUND 4 IS DECID ED IN FAVOUR OF THE APPELLANT. HAVING DECIDED ON THE VALIDITY OF THE ADDITIONS/ ASSESSMENT, I AM NOT ADJUDICATING ON GROUNDS 2 AND 3. 6.3.5 IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES O F THE CASE ON THIS ISSUE, AS DISCUSSED IN PARAS 6.3.1 TO 6.3.4 OF THIS ORDER (SUPRA), AND PLACING RELIANCE ON THE DECISION OF THE ITAT, MUMBAI SPECIA L BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS VS. DCIT (131 ITD 287), WE UPHOLD THE FINDING OF THE LEARNED CIT(A) THAT IN THE CASE ON HAND THE AO DID NOT HAVE THE POWER TO MAKE THE IMPUGNED ADDITIONS OF (I) LTCG TREATED AS UNEXPLAINED CASH ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 9 CREDITS ` 34,49,139/- AND (II) BOGUS COMMISSION EXPENDITURE ` 1,72,107/- IN THE ABSENCE OF ANY INCRIMINATING EVID ENCE, DOCUMENTS OR MATERIAL FOUND IN THIS REGARD IN THE COURSE OF SEAR CH OF THIS ASSESSEE AND THAT CONSEQUENTLY, BOTH THE AFORESAID ADDITIONS ARE BEYOND THE SCOPE OF THE PROVISIONS OF SECTION 153A OF THE ACT. THEREFORE, G ROUND NO. 3 OF REVENUES APPEAL IS DISMISSED. 7. SINCE WE HAVE UPHELD THE IMPUGNED ORDER OF THE LEAR NED CIT(A) ON THE VALIDITY OF ADDITIONS/ASSESSMENT FOR A.Y. 2006- 07 AND THEREBY DISMISSED REVENUES APPEAL ON THAT GROUND, WE DO NO T DEEM IT NECESSARY TO ADJUDICATE ON THE MERITS OF THE TWO ADDITIONS, R AISED IN GROUNDS 1 & 2 (SUPRA). 8. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2006-07 IS DISMISSED AS INDICATED ABOVE. ASSESSEES CROSS OBJECTIONS 9. IN VIEW OF OUR HAVING UPHELD THE ORDER OF THE LEARN ED CIT(A) AND THEREBY DISMISSED REVENUES APPEAL (SUPRA), THE ASS ESSEES CROSS OBJECTIONS RAISED AT S.NOS. (I) TO (III) (SUPRA), W HICH ARE IN SUPPORT OF THE IMPUGNED ORDER OF THE LEARNED CIT(A), ARE RENDERED INFRUCTUOUS AND ARE THEREFORE ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE ASSESSEES CROSS OBJECTIONS FOR A.Y. 2007-07 ARE DISMISSED. 11. TO SUM UP; BOTH REVENUES APPEAL FOR A.Y. 2006-07 A ND ASSESSEES CROSS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2016. SD/ - SD / - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD NOVEMBER, 2016 ITA 4962/M/2013 & CO 76/M/2016 SMT. USHA MITTAL 10 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -39, MUMBAI 4. THE CIT, CENTRAL - 2, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.