Anjali Jewellers, Kolkata V. PCIT, Central-1, Kolkata

ITA 140/KOL/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4823 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 19-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVI SHARAN SINGH
• Keywords: Revision of order; Depreciation; Search and seizure; Principle of natural justice; Additional depreciation; Surrender of tenancy right; Revised return; Documents seized; Capital expenditure; Set aside
• Section: 143(3); 142(1); 153A; 139(5); 143(1); 201; 143(2); 264; 13; 153; 153C; 148; 263; 132; 139

Judgement Text

1 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI P. M. JAGTAP, VICE PRESIDENT (KZ) & S HRI A. T. VARKEY, JUDICIAL MEMBER ] I.T.A. NO. 140/KOL/2021 ASSESSMENT YEAR: 2014-15 M/S ANJALI JEWELLERS (PAN: AAIFA 3096 J) VS . PCIT, CENTRAL-1, KOLKATA APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 02.09.2021 DATE OF PRONOUNCEMENT 30.09.2021 FOR THE APPELLANT SHRI S. K. TULSIYAN, ADOVATE SMT. PUJA SOMANI, CA FOR THE RESPONDENT SHRI DEVI SHARAN SINGH, CIT ORDER PER SHRI A. T. VARKEY, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE COMPANY AG AINST THE ORDER OF LD. PCIT, CENTRAL-1, KOLKATA DATED 25.03.2021 PASSED U /S 263 OF INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2014-15. 2. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SHR I S.K. TULSIYAN, ADVOCATE SUBMITTED THAT HE IS ASSAILING THE DECISION OF THE LD. PCIT-1, KOLKATA TO HAVE INVOKED THE REVISIONAL JURISDICTION U/S 263 OF THE ACT WITH OUT SATISFYING THE CONDITION PRECEDENT AS PRESCRIBED BY THE STATUTE I.E. WITHOUT VALIDLY HOLDING THAT THE ORDER OF THE AO WA S ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE . 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE HAS FILED ITS ORIGINAL RETURN OF INCOME FOR AY 2014-15 ON 30.11.2014 DISCLOSING ITS TOTAL I NCOME OF RS. 11,56,94,090/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/ S 143(2) OF THE ACT AND THEREAFTER THE AO MADE CERTAIN DISALLOWANCES AND THUS THE TOTAL IN COME WAS ASSESSED ORIGINALLY ON 3 RD SEPTEMBER, 2016 AT RS. 11,69,65,820/-. 2 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 4. THEREAFTER THE SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 8 TH NOVEMBER, 2016 PURSUANT TO WHICH NOTICE U/S 153A WAS INITIATED AGAINST IT. THE AO ISSUED NO TICE U/S 153A DATED 22.05.2017 AND IN RESPONSE THE ASSESSEE FILED THE RETURN OF INCOME BY REITERATING ORIGINALLY RETURNED INCOME AT RS. 11,56,94,090/-. THEREAFTER THE AO ISS UED STATUTORY NOTICES U/S 143(2) DATED 25.07.2017 AND 142(1) DATED 10.01.2018. THE A O NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF JEWELLERIES AND THAT ASSESSMENT ORIGINALLY WAS FRAMED U/S 143(3) ON 03.08.2016 DETE RMINING TOTAL INCOME OF RS. 11,69,65,820/- BY MAKING A DISALLOWANCE OF LOSS ON SALE ON SALE OF FIXED ASSETS AMOUNTING TO RS. 5,59,038/-, DISALLOWANCE OF EXPENS E ON SURRENDER OF TENANCY RIGHT OF RS. 2,50,000/-, DISALLOWANCE OF CAPITAL EXPENDITURE TO THE TUNE OF RS. 31,448/- AND DISALLOWANCE OF DEPRECIATION OF RS. 4,38,244/-. THE REAFTER THE AO NOTES THAT THE LD. A.R. OF THE ASSESSEE HAD APPEARED ALONG WITH ACCOUN TANT OF THE ASSESSEE AND HAD PRODUCED BOOKS OF ACCOUNTS AND SUPPORTING DOCUMENTS ALONG WITH BANK STATEMENT AND FINANCES AS REQUISITIONED BY HIM. AND THE AO ACKNOW LEDGES THAT HE HAS GONE THROUGH THE DETAILS AND DOCUMENTS VIS--VIS THE SEIZED DOCU MENTS AND AFTER PERUSAL OF THE SAME, HE HAS KEPT IT ON RECORD AND THEREAFTER THE AO REI TERATED THE INCOME AS ASSESSED AS PER ORDER U/S 143(3) OF THE ACT DATED 3.8.2016 I.E. AT RS. 11,69,65,820/-. THIS ACTION OF THE AO DATED 29.06.2018 PASSED U/S 153A/143(3) OF THE A CT HAS BEEN INTERDICTED BY THE LD. PCIT BY PASSING IMPUGNED ORDER DATED 25.03.2021, WH ICH HAS BEEN ASSAILED BEFORE US ON THE LEGAL ISSUE THAT THE AO HAD RIGHTLY NOT MADE ANY ADDITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION [AY 2014-15] WHICH IS AN UNABAT ED ASSESSMENT YEAR BECAUSE ON THE DATE OF SEARCH [8 TH NOVEMBER, 2016], THIS ASSESSMENT YEAR WAS NOT PEND ING BEFORE THE AO; AND THEREFORE IN THE ABSENCE OF ANY INCRIMINAT ING MATERIAL UNEARTHED DURING SEARCH QUA THE ASSESSEE QUA THE ASSESSMENT YEAR UNDER CONSIDERATION, AS PER TH E SETTLED POSITION OF LAW, NO ADDITION/DISALLOWANCE WAS LEGALLY PERMIS SIBLE AND SO, THE ACTION OF AO IN NOT MAKING ANY ADDITION IN THIS ASSESSMENT YEAR, CANNOT BE HELD TO BE ERRONEOUS AND THEREFORE THE LD PCITS IMPUGNED ACTION OF INVOKING JURISDICTION U/S 263 OF THE ACT, WAS WITHOUT JURISDICTION. 5. ACCORDINGLY TO LD. A.R SHRI S.K. TULSIYAN THE AO RIGHTLY DID NOT MAKE ANY ADDITION IN THE LIGHT OF THE WELL SETTLED POSITION OF LAW THAT IN PROCEEDING UNDER SECTION 3 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 153A OF THE ACT, IN AN UNABATED ASSESSMENT, THE AO CAN MAKE THE ADDITION/DISALLOWANCE ONLY ON THE STRENGTH /AID OF INCRIMINATING MATERIAL SEIZED DURING SEARCH PROCEEDINGS AS HELD BY THE HONBLE DELHI HIG H COURT IN THE CASE OF CIT VS.. KABUL CHAWLA REPORTED IN 380 ITR 573 (DEL) WHICH DE CISION HAS NOT BEEN DISTURBED BY THE HONBLE SUPREME COURT AND THE SLP PREFERRED BY THE REVENUE HAS BEEN DISMISSED. THEREFORE ACCORDING TO LD. A.R, WHEN THE AO COULD N OT HAVE MADE ANY ADDITION IN THE UNABATED ASSESSMENT YEAR IN THE ABSENCE OF INCRIMIN ATING MATERIAL UNEARTHED DURING SEARCH QUA THE ASSESSEE QUA THE ASSESSMENT YEAR, THEN THE LD. PCIT COULD NOT H AVE IN THE FIRST PLACE HOLD THE ACTION OF AO TO BE ERRONEO US AS WELL AS PREJUDICIAL TO THE REVENUE, SINCE THE AOS ACTION WAS IN LINE WITH THE SETTLED POSITION OF LAW AS DISCUSSED SUPRA. AND SECONDLY, WHEN THERE WAS NO INCRIMINATIN G MATERIAL FOUND/UN-EARTHED DURING SEARCH QUA THE ASSESSEE QUA THE ASSESSMENT YEAR, THEN WHEN THE AO COULD NOT MA KE ANY OTHER ADDITIONS/DISALLOWANCES, OR WHEN IT WAS LEGAL LY IMPERMISSIBLE FOR AO TO DO SO DIRECTLY, THEN THE QUESTION IS WHETHER THE LD PCIT CAN DO INDIRECTLY WHAT THE AO COULD NOT HAVE DONE DIRECTLY. ACCORDING TO LD. A.R. ADMIT TEDLY AY 2014-15 IS AN UNABATED ASSESSMENT BECAUSE THERE WAS NO ASSESSMENT PROCEEDI NGS IN RESPECT OF AY 2014-15 PENDING BEFORE THE AO ON THE DATE OF SEARCH ON 8 TH NOVEMBER, 2016 BECAUSE THE SCRUTINY ASSESSMENT FOR AY 2014-15 WAS COMPLETED BY THE AO ON 3.8.2016, SO THEREFORE THE ASSESSMENT OF THE ASSESSEE FOR AY 201 4-15 WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH ON 08.11.2016. SINCE THE ASSE SSMENT FOR AY 2014-15 WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH I.E. 8 TH NOVEMBER, 2016, IN THE ABSENCE OF INCRIMINATING MATERIALS UNEARTHED DURING SEARCH, QUA ASSESSEE QUA THE ASSESSMENT YEAR 2014-15, THE AO COULD NOT HAVE MADE ANY ADDITION A S PER THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. KABUL CHAWLA (SUPRA), PCIT VS. KURELE PAPER MILLS PVT. LTD. IN 380 ITR 571, HONBLE CALCUTTA HIGH COURT DE CISION IN CIT VS. VEERPRABHU MARKETING LTD. IN 388 ITR 574 (CAL), WHEREIN THE CA LCUTTA HIGH COURT APPROVED AND AGREED WITH THE VIEW EXPRESSED BY THE HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT VS. IBC KNOWLEDGE PARK PVT. LTD. REPORTED IN 385 IT R 346 AND HELD THAT WE ARE IN AGREEMENT IN THE VIEWS EXPRESSED BY THE HONBLE HIG H COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE POWER COULD HAVE BEEN E XERCISED U/S 153C READ WITH SECTION 153A OF THE ACT . FURTHER, ACCORDING TO LD. A.R. THE HONBLE CALCUT TA HIGH COURT 4 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 FOLLOWED THE SAME DECISION IN VEERPRABHU MARKETING LTD. (SUPRA) IN THE CASE OF PCIT VS. SALASAR STOCK BROKING LTD. GA NO. 1929 OF 2016/ ITAT NO. 264 OF 2016 DATED 24.08.2018. THEREAFTER HE BROUGHT TO OUR NOTICE SIM ILAR VIEW WAS TAKEN BY THE HONBLE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) VS. ACIT REPORTED IN 259 CTR 281 (RAJ) AND THE DECISION OF HONBLE KERALA HIGH COURT IN THE CA SE OF CIT VS. PAUL JOHN, DELICIOUS CASHEW CO. REPORTED IN 200 TAXMAN 154 (KER) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT VS. SOFTWARE CONSULTANTS, REPORTE D IN 341 ITR 240 (DEL). THUS ACCORDING TO LD AR, WHEN THE AO HAS TAKEN THE SAME VIEW WHICH WERE UP-HELD BY THE AFORESAID BINDING JUDICIAL PRECEDENTS, THE LD. PCIT COULD NOT HAVE INVOKED HIS REVISIONAL JURISDICTION WITHOUT VALIDLY HOLDING THA T THE AOS ORDER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE. AND ACCORDING TO HIM , EVEN IF THE LD. PCIT HAD DIFFERENT VIEW HE COULD NOT HAVE EXERCISED HIS REVISIONAL JUR ISDICTION UNLESS HE COULD HOLD ON THE FACTS OF THE CASE THAT THE AOS ORDER IS UNSUSTAINABLE IN LAW . THEREFORE, ACCORDING TO LD AR, SINCE THE LD. PCIT COULD NOT HOLD SO IN THE IMP UGNED ORDER, HE COULD NOT HAVE EXERCISED THE REVISIONAL JURISDICTION AND THEREFORE THE IMPUGNED ORDER PASSED BY THE LD. PCIT IS WITHOUT JURISDICTION AND THEREFORE NEED TO BE QUASHED. 6. PER CONTRA, THE LD. CITDR DEVI SARAN SINGH VEHEM ENTLY OPPOSED THE PLEA OF THE LD. A.R AND SUBMITTED THAT THE STATUTE DOES NOT IMP OSE SUCH CONDITION THAT ONLY ON THE BASIS OF INCRIMINATING MATERIAL UNEARTHED THAT ANY ADDITION CAN BE MADE U/S 153A OF THE ACT. ACCORDING TO HIM, THE REQUIREMENT OF INCRIMINA TING MATERIALS FOR MAKING ADDITION U/S 153A OF THE ACT HAS BEEN CHALLENGED BY THE REVE NUE AND THE HONBLE SUPREME COURT HAS ADMITTED SLP IN PCIT-AGRA VS. DEVI DASS GARG (2 020) 114 TAXMANN.COM 552 (SC) AND IN THE CASE OF PCIT VS. GAHOI FOODS PVT. LTD. ( 2020) 117 TAXMANN.COM 118 (SC) AND THEREFORE SINCE THE LEAVE HAS BEEN GRANTED BY T HE HONBLE SUPREME COURT IN THE AFOREMENTIONED SLP CASES, THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF INCRIMINATING MATERIALS NO ADDITION COULD HAVE BEEN MADE SHOULD N OT BE ACCEPTED. AND THEREFORE, WE SHOULD NOT INTERFERE WITH THE ORDER OF LD PCIT. 7. BEFORE WE ADVERT TO THE FACTS AND LAW INVOLVED I N THIS LIS BEFORE US, LET US REVISIT THE LAW GOVERNING THE LEGAL ISSUE BEFORE US. THE ASSESSEE HAS CHALLENGED IN THE FIRST PLACE, THE VERY USURPATION OF JURISDICTION BY LD. P RINCIPAL CIT TO INVOKE HIS REVISIONAL 5 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 POWERS ENJOYED U/S 263 OF THE ACT. THEREFORE, FIRST WE HAVE TO SEE WHETHER THE REQUISITE JURISDICTION NECESSARY TO ASSUME REVISIONAL JURISDI CTION IS EXISTING IN THIS CASE BEFORE THE PR. CIT RIGHTFULLY EXERCISED HIS REVISIONAL POWER. FOR THAT, WE HAVE TO EXAMINE AS TO WHETHER IN THE FIRST PLACE THE ORDER OF THE ASSESSI NG OFFICER FOUND FAULT BY THE PRINCIPAL CIT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTE REST OF THE REVENUE. FOR THAT, LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DOWN BY THE HONBLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(S C) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE CIT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE . IN THE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) IF THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT ; OR (II) INCORRECT APPLICATION OF LAW ; OR (III)ASSESSING OFFICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE ; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING O FFICER WITHOUT APPLICATION OF MIND ; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM; [ BECAUSE AO HAS TO DISCHARGE DUAL ROLE OF AN INVESTI GATOR AS WELL AS THAT OF AN ADJUDICATOR ] THEN IN AFORESAID ANY EVENT, THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO THE SE COND LIMB, WHICH IS REQUIRED TO BE EXAMINED AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE SUPREME CO URT IN THE CASE OF MALABAR INDUSTRIES (SUPRA) HELD THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HELD THAT IT HAS TO BE REMEMBERED TH AT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO T HE REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 6 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 8. WHEN TESTED ON THE TOUCHSTONE OF THE AFORESAID J UDICIAL PRECEDENT AS DISCUSSED SUPRA, WHEN WE EXAMINE THE LEGAL ISSUE AS TO WHETHE R THE LD. PCIT HAD JURISDICTION TO EXERCISE REVISIONAL JURISDICTION U/S 263 OF THE ACT . WE NOTE THAT IN THIS CASE THE ORIGINAL ASSESSMENT UNDER SCRUTINY U/S 143(3) OF THE ACT WAS FRAMED ON 3 RD SEPTEMBER, 2016 MAKING THE ADDITION OF [RS.11,69,65,820 RS. 11, 56,94,090] RS. 12,71,730/- ( REFER PAGE 1 TO 6 OF PB). THEREAFTER PURSUANT TO A SEARCH CONDUCTED ON 8 TH NOVEMBER, 2016 PROCEEDINGS U/S 153A OF THE ACT WAS INITIATED AGAIN ST THE ASSESSEE AND THEREAFTER THE AO FRAMED THE ASSESSMENT ORDER U/S 153A/143(3) OF THE ACT DATED 29.06.2016 WHEREIN THE AO REITERATED THE TOTAL INCOME ASSESSED U/S 143(3) OF THE ACT DATED 3 RD AUGUST, 2016 AT RS. 11,69,65,820/- ( REFER PAGE NO. 7 TO 12 OF PB). THEREAFTER SHOW CAUSE NOTICE (SCN) U/S 263 OF THE ACT WAS ISSUED BY THE LD. PCIT DATED 5 TH MARCH, 2020 ( REFER PAGE 13 TO 16 OF PB) WHEREIN THE LD. PCIT HAS CONVEYED HIS DESIRE T O INTERFERE WITH THE ASSESSMENT ORDER PASSED BY THE AO DATED 29.6.2018 U/S 143(3)/1 53A OF THE ACT WHEREIN HE OBSERVES THAT WHILE GOING THROUGH THE ASSESSMENT RE CORDS OF THE ASSESSEE IT WAS FOUND THAT WHILE COMPUTING THE TOTAL INCOME, INTEREST PAI D/PAYABLE ON LOAN TAKEN IN RESPECT OF TWO OF THE PROPERTIES (LOVELOCK PROPERTY AND MANDEV ILLA GARDEN PROPERTY) WHICH WAS SHOWN AS CAPITAL WORK-IN-PROGRESS AND WHICH WERE NOT PUT TO USE TILL 31.3.2017, THE ASSESSEES CLAIM OF INTEREST EXPENDITURE WAS ERRONE OUSLY ALLOWED BY THE AO, SO HE ISSUED SCN U/S 263 OF THE ACT. PURSUANT TO SCN OF T HE LD. PCIT, THE ASSESSEE OBJECTED TO THE EXERCISE OF REVISIONAL JURISDICTION BY POINT ING OUT THAT SINCE AY 2014-15 WAS AN UNABATED ASSESSMENT YEAR, THE AO WHILE FRAMING THE ASSESSMENT U/S 153A/143(3) OF THE ACT, NOTICING THAT THERE WAS NO INCRIMINATING MATER IALS UNEARTHED AGAINST THE ASSESSEE QUA AY 2014-15, SO THE AO HAS RIGHTLY NOT MADE ANY ADDITION AND REITERATED THE ASSESSMENT FRAMED IN THE ORIGINAL SCRUTINY PROCEEDI NG FRAMED ON 3 RD SEPTEMBER, 2016. THEREFORE, ACCORDING TO ASSESSEE, THE AO HAS RIGHTL Y NOT MADE ANY ADDITION AS HELD BY VARIOUS HONBLE HIGH COURTS INCLUDING THE JURISDICT IONAL HIGH COURT AND THEREFORE IT WAS CONTENTED THAT LD PCIT COULD NOT HELD THE VIEW OF AO TO BE ERRONEOUS; AND FURTHER IT WAS POINTED OUT THAT THE LD. PCIT COULD NOT HAVE DONE INDIRECTLY, WHAT THE AO COULD NOT DO DIRECTLY IN AN ASSESSMENT ORDER FRAMED U/S 1 53A OF THE ACT. HOWEVER, THE LD. PCIT NOT SATISFIED WITH THE CONTENTION OF THE ASSES SEE, WENT AHEAD AND WAS PLEASED TO SET ASIDE THE ORDER OF THE AO PASSED U/S 153A/143(3 ) DATED 29.6.2018 AND DIRECTED THE 7 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 AO TO FRAME FRESH ASSESSMENT AFTER GIVING OPPORTUNI TY OF HEARING TO THE ASSESSEE. THIS IMPUGNED ACTION OF LD PCIT IS UNDER CHALLENGE BEFOR E US ON THE LEGAL ISSUE THAT LD PCIT WITHOUT MAKING OUT A VALID GROUND THAT AOS OR DER FRAMED U/S 143A/143(3) OF THE ACT DATED 29.6.2018, WAS ERRONEOUS AS WELL AS PREJU DICIAL TO THE REVENUE, COULD NOT HAVE INVOKED REVISIONAL JURISDICTION U/S 263 OF THE ACT, AND THEREFORE HIS ACTION IS AB- INITIO VOID. 9. WE NOTE THAT THE SEARCH WAS CONDUCTED ON THE ASS ESSEE ON 8 TH NOVEMBER, 2016. IT IS AN ADMITTED FACTS THAT THE ORIGINAL SCRUTINY ASS ESSMENT IN RESPECT OF ASSESSEE FOR AY 2014-15 WAS FRAMED ON 3 RD SEPTEMBER, 2016, WHICH MEANS THE ASSESSMENT IN RESP ECT OF THE ASSESSEE FOR AY 2014-15 WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH (8 TH NOVEMBER, 2016). THE SETTLED POSITION OF LAW IS THA T WHEN AN ASSESSMENT PERTAINING TO AN ASSESSMENT YEAR WHICH FALLS IN THE KEN OF SECTIO N 153A OF THE ACT, WAS NOT PENDING FOR ASSESSMENT BEFORE THE AO ON THE DATE OF SEARCH, THEN, THE ASSESSMENT FOR SUCH YEAR IS NOT ABATED [ I.E, UN-ABATED ASSESSMENT ] BY VIRTUE OF SECOND PROVISO TO SECTION 153A OF THE ACT. CONSEQUENTLY, FOR AN UN-ABATED ASSESSMENT YEAR LIKE THAT OF THIS ASSESSEE I.E, AY 2014-15, THE AO COULD NOT HAVE MADE ANY ADDITIO N/DISALLOWANCES, WITHOUT THE AID OF INCRIMINATING MATERIALS UN-EARTHED DURING SEARCH QUA THE ASSESSEE QUA THE ASSESSMENT YEAR I.E, AY 2014-15. FOR THAT WE RELY ON THE FOLL OWING JUDGMENTS: I) HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.. KABUL CHAWLA REPORTED IN 380 ITR 573 (DEL) (II) PCIT VS. KURELE PAPER MILLS PVT. LTD. IN 380 I TR 571, (III) HONBLE CALCUTTA HIGH COURT DECISION IN CIT V S. VEERPRABHU MARKETING LTD. IN 388 ITR 574 (CAL), (IV) PCIT VS. SALASAR STOCK BROKING LTD. GA NO. 1 929 OF 2016/ITAT NO. 264 OF 2016 DATED 24.08.2018. 8 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 10. THE HONBLE DELHI HIGH COURT IN THE CASE OF KA BUL CHAWLA (SUPRA) HAS SUMMED UP THE LEGAL POSITION IN PARA 37 OF ITS ORDER. FOR READY REFERENCE THE SAME IS RE- PRODUCED AS UNDER:- SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER : (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YE ARS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WH ICH THE SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS W ILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE. (III) THE ASSESSING OFFICER WILL EXERCISE NORMAL AS SESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMEN T YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSES S 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 O NE ASSESSMENT ORDER IN RESPECT OF'EACH OF THE SIX ASSESSMENT YEARS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITI ONS 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 ASSESSIN G OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE AS SESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF THE SEIZED MATERIAL.' (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, T HE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATE D PROCEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSE SS' TO THE COMPLETED ASSESSMENT PROCEEDINGS. (VI) IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCE RNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY F OR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER. 9 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOV ERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT . CONCLUSION 38. THE PRESENT APPEALS CONCERN THE ASSESSMENT YEA RS 2002-03, 2005-06 AND 2006-07. ON THE DATE OF THE SEARCH THE SAID ASSESSM ENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURIN G THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED . [EMPHASIS SUPPLIED] 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. JAI STEEL (INDIA) VS. ACIT (2013) 259 CTR 281 (RAJ) THE PROVISIONS OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE BEYOND PROVISION S OF SECTIONS 139 (RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (IN COME ESCAPING ASSESSMENT) AND 263 (REVISION OF ORDERS) OF THE ACT. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS T HE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN R ESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECT ION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF A N ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PRO CEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIA TION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS . [EMPHASIS SUPPLIED] CIT VS. PAUL JOHN, DELICIOUS CASHEW CO. (2011) 200 TAXMAN 154 (KER.) IN THIS CASE THE QUESTION RAISED BY THE DEPARTMENT WAS WHETHER THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE ORDER PASSED BY THE C.I .T. U/S. 263 OF THE ACT DIRECTING THE A.O. TO DISALLOW AND TO BRING TO TAX EXPENDITUR E WRONGLY CLAIMED BY THE ASSESSEE AND ALLOWED IN ORIGINAL ASSESSMENT. THE SA ID DEPARTMENTAL APPEAL WAS DISMISSED ON THE PROPOSITION THAT THE BAR WHICH APP LIES TO THE ASSESSING OFFICER EQUALLY APPLIES TO THE CIT, FOR THE PURPOSES OF SEC TION 263 OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOFTWARE CONSULTANTS REPORTED IN (2012) 341ITR 240 (DEL) HELD THE FOLLOWING: IN THIS CASE, THE AO INITIATED PROCEEDINGS U/S 147 ON THE ISSUE OF TAXABILITY OF CERTAIN FDRS, WHICH WERE FOUND IN POSSESSION OF A D IRECTOR OF THE COMPANY. 10 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 HOWEVER, THE DIRECTOR CLAIMED THAT THE FDRS, IN HER NAME, ACTUALLY BELONGED TO THE ASSESSEE. THIS STAND WAS ACCEPTED BY CIT(A) IN THE APPEAL FILED BY THE SAID DIRECTOR. THEREAFTER, THE AO IN THE CASE OF THE ASS ESSEE ISSUED NOTICE U/S 148 OF THE ACT AND PASSED ASSESSMENT ORDER ACCEPTING THAT THE ASSESSEE HAD ESTABLISHED AND PROVED THE SOURCE AND THEIR CAPACITY TO INVEST RS. 20 LACS AND, ACCORDINGLY, NO ADDITION WAS MADE ON THIS COUNT. THE RETURN FILED B Y THE ASSESSEE, SHOWING LOSS OF RS. 1,02,756/- WAS ACCEPTED. SUBSEQUENTLY, THE LD. CIT VIDE ORDER U/S 263 DIRECTED THE AO TO CONDUCT FURTHER ENQUIRIES IN RES PECT OF SHARE APPLICATION MONEY OF RS. 47 LACS. THE ITAT QUASHED THE ORDER U/S 263 , INTER ALIA, ON THE GROUND THAT SINCE NO ADDITION COULD HAVE BEEN MADE ON THE ISSUE OF SHARE APPLICATION MONEY, THE ASSESSMENT ORDER COULD NOT BE REGARDED AS ERRON EOUS. AFFIRMING THE DECISION OF THE ITAT, THE HON'BLE DELHI HIGH COURT IN THE SA ID CASE HELD AS UNDER BY STATING THAT SINCE AO COULD NOT HAVE MADE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY, THE ASSESSMENT ORDER WAS NOT ERR ONEOUS AND CIT COULD NOT HAVE EXERCISED JURISDICTION U/S 263 OF THE ACT: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD HELD THAT THE ORDER OF THE ASSESSING OFFICER COULD NOT BE REGARDED AS ERRONEOU S EVEN IF THE ASSESSING OFFICER HAD FAILED TO CARRY OUT NECESSARY VERIFICAT ION AND REQUIRED ENQUIRIES IN RESPECT OF THE SHARE APPLICATION MONEY, AS NO ADDIT ION HAD BEEN MADE ON ACCOUNT OF THE REASONS FOR REOPENING, WHICH WERE RECORDED B EFORE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. IT HAD HELD THAT THE ASSESS ING OFFICER COULD NOT HAVE MADE AN ADDITION ON ACCOUNT OF THE SHARE APPLICATION MON EY AS NO ADDITION HAD BEEN MADE ON ACCOUNT OF FIXED DEPOSITS OF RS. 20 LAKHS. THE TRIBUNAL HAD NOTICED AND RECORDED THAT IN THE REASONS FOR REOPENING IT WAS M ENTIONED THAT THE ASSESSEE HAD MADE INVESTMENT IN THE FORM OF FIXED DEPOSITS OF RS . 20 LAKHS BUT IN THE ASSESSMENT ORDER PASSED UNDER SECTION 147 /143(3) O F THE ACT IT HAD BEEN HELD THAT THE ASSESSEE HAD BEEN ABLE TO SHOW AND ESTABLISH TH E GENUINENESS AND CAPACITY OF THE SHARE APPLICANTS TO MAKE THE INVESTMENT. THE AS SESSING OFFICER DID NOT MAKE ANY ADDITION FOR THE REASONS RECORDED AT THE TIME O F ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THIS POSITION WAS NOT DISPUTED OR D ISTURBED BY THE COMMISSIONER IN HIS ORDER UNDER SECTION 263 OF THE ACT. THE ASSE SSMENT ORDER WAS NOT ERRONEOUS. THUS, THE COMMISSIONER COULD NOT HAVE EX ERCISED JURISDICTION UNDER SECTION 263 OF THE ACT. 11. FURTHER, RELIANCE IS PLACED ON THE FOLLOWING DE CISIONS OF THIS TRIBUNAL WHICH SQUARELY APPLIES IN THE CASE OF THE ASSESSEE: (I) M/S. INDIAN ROADWAYS CORPORATION LTD. VS PRINCIPAL CIT, CENTRAL - 1 , [ITANO.787/KOL/2018] DATED 12 SEPTEMBER, 2018: IN THIS CASE, THIS TRIBUNAL HELD AS UNDER ;- 26. WE ARE AWARE OF THE FACT THAT THE ASSESSING OF FICER'S ROLE WHILE FRAMING AN ASSESSMENT IS NOT ONLY AN ADJUDICATOR. THE AO HAS A DUAL ROLE TO DISPENSE WITH I.E. HE IS AN INVESTIGATOR AS WELL AS AN ADJUDICATOR; THEREFOR E, IF HE FAILS IN ANY ONE OF THE ROLE AS AFORE-STATED, HIS ORDER WILL BE TERMED AS ERRONEOUS . WE NOTE THAT IN THIS CASE SINCE THERE WAS NO INCRIMINATING MATERIAL UNEARTHED DURING THE SEARCH, THE ASSESSING OFFICER HAS NOT MADE ANY ADDITIONS IN HIS ASSESSMENT ORDER DATED 31 .03.2016, BASED ON INCRIMINATING MATERIAL SINCE THERE WAS NONE UNEARTHED. WE TAKE NO TE THAT IT IS NOT THE CASE OF ID. PRINCIPAL CIT THAT AO FAILED TO MAKE ANY ADDITIONS/ DISALLOWANCES BASED ON INCRIMINATING 11 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 MATERIAL SEIZED/UNEARTHED DURING SEARCH. ON THIS FI NDING OF FACT BY US, WE CANNOT TERM THE ASSESSMENT ORDER PASSED BY THE AO U/S 153A/143(3) D ATED 31.03.2016 AS ERRONEOUS. IT IS IMPORTANT HERE TO NOTE THAT REVISION U/S 263 OF THE INCOME TAX ACT, 1961 HAS TO BE MADE WITHIN WELL-DEFINED LIMITS SUBJECT TO SATISFACTION OF PRE- CONDITIONS, AS EXPLAINED BY US ABOVE, AND THEREFORE, SIMILAR LIMITATION MAY HAVE T O BE READ IN THE INSTANT PROVISION. IN RELATION TO THE YEARS WHOSE ASSESSMENT IS COMPLETED , IT IS LAID DOWN BY LAW THAT IN SUCH SITUATIONS OF COMPLETED ASSESSMENT, ASSESSMENT U/S 153A OF THE INCOME TAX ACT, 1961 HOWEVER SHALL BE TO THE EXTENT OF UNDISCLOSED INCOM E WHICH IS FOUND DURING THE COURSE OF SEARCH WITH REFERENCE TO THE VALUABLE ARTICLES OR T HINGS FOUND OR DOCUMENTS SEIZED DURING THE SEARCH WHICH ARE NOT DISCLOSED IN THE ORIGINAL ASSESSMENT. THE POWER GIVEN BY THE 1ST PROVISO OF SECTION 153A OF THE INCOME TAX ACT, 1961 TO 'ASSESS' INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS U/S 153A WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF TH E DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. A SEARCH ASSESSMENT UNDER SECTION 153A SHOULD BE EVIDENCE BASED. THEREFORE, WE ARE OF THE VIEW THAT ASSESSMENT ORDER PASSED BY THE AO U/S 153A/143(3) DATED 31.03.2016 IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF THE REVENUE AND THEREFORE, ID. PR. CIT ERRED IN EXERCISING HIS REVI SIONAL JURISDICTION U/S 263 OF THE ACT AND THEREFORE, WE QUASH THE IMPUGNED ORDER OF ID. PR. C IT PASSED UNDER SECTION 263 OF THE ACT. (II) M/S.GARG BROTHERS PVT. LTD. V DCIT, CC-3(2), KOLKAT A, ITA NO- 2519/KOL/2017 & M/S.CLIFF TREXIRN PVT. LTD. V DCIT, CC-3(2), KOLK ATA, ITA NO.2520/KOF217 & M/S.SPAN FOUNDATION PVT. LTD. V DCIT, CC-3(2), KOLKATA, ITA NO.2521/KOL/2017 DATED 18/04/2018: IN THIS CASE, THIS TRIBUNAL HELD AS UNDER: 61. SO FROM THE AFORESAID DICTUM OF LAW LAID BY TH E HONBLE HIGH COURT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL UNEARTHED DURING FIRS T SEARCH ON 29/05/2012, WE HAVE NO HESITATIONS TO HOLD THAT FOR A.Y. 2009-10, THE AO C OULD HAVE ONLY REITERATED THE ASSESSMENT INTIMATED U/S. 143(1) OF THE ACT, BECAUS E THE TIME FOR ISSUANCE OF SCRUTINY NOTICE U/S. 143(2) EXPIRED ON 30/09/2010 AND THE AS SESSMENT FOR THIS RELEVANT ASSESSMENT YEAR, THEREFORE, WAS NOT PENDING BEFORE THE AO ON T HE DATE OF SEARCH ON 29/05/2012 AND, THEREFORE, IS AN UNABATED ASSESSMENT. THEREFORE, AS PER THE LAW LAID DOWN BY THE HON BLE HIGH COURT, THE AO COULD NOT HAVE DISTURBED THE ASS ESSMENT ALREADY EXISTING WITHOUT THE AID OF INCRIMINATING MATERIALS SEIZED DURING SEARCH ON 29/05/2012 (FIRST SEARCH). THEREFORE, THE ORDER OF THE AO CANNOT BE HELD TO BE ERRONEOUS ORDER. THEREFORE, WITHOUT FINDING THE ORDER OF THE AO CANNOT BE HELD TO BE ER RONEOUS ORDER. THEREFORE, WITHOUT FINDING THE ORDER OF THE AO TO BE ERRONEOUS, THE LD . PRINCIPAL C1T LACKS JURISDICTION TO USURP THE REVISIONAL JURISDICTION U/S. 263 OF THE A CT. 65. IN ANY EVENT, WE NOTE THAT THE ASSESSING OFFICE R HAS ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND EVEN IF IT HAS RESULTED IN L OSS TO THE REVENUE, THE SAID DECISION OF THE ASSESSING OFFICER CANNOT BE TREATED AS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS HELD BY HON BLE SUPREME COURT IN MALABA R INDUSTRIES LTD. VS. CIT (SUPRA). SINCE THE ORDER OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO, THE INTEREST OF THE REVENUE, IN THE FACTS AND CIRCUMSTANCES NARRATED ABOVE, THE USURPATION OF JURISDICTION EXERCISING REVISIONA L JURISDICTION BY THE PRINCIPAL CIT IS NULL IN THE EYES OF LAW AND, THEREFORE, WE ARE IN CLINED TO QUASH THE VERY ASSUMPTION OF JURISDICTION TO INVOKE REVISIONAL JURISDICTION U/S. 263 BY THE PRINCIPAL CIT. THEREFORE, WE QUASH ALL THE ORDERS OF THE PRINCIPAL CIT DATED 15/ 03/2017 BEING AB INITIO VOID (III) M/S.UJJAL TRANSPORT AGENCY VS CIT , CENTRAL-II , ITA(SS) NO.58/KOL/2013, DATED 19-10-2016: 12 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 IN THE SAID CASE, THIS TRIBUNAL HELD AS UNDER : 16. HAVING HELD THAT THE SCOPE OF THE PROCEEDINGS U/S,153A IN RESPECT OF ASSESSMENT YEAR FOR WHICH ASSESSMENT HAVE ALREADY BEEN CONCLUD ED AND WHICH DO NOT ABATE U/S.L53A OF THE ACT, THAT THE ASSESSMENT WILL HAVE TO BE CON FINED TO ONLY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, THE QUESTION TO BE DEC IDED IS AS TO WHETHER THE PROCEEDINGS U/S. 143(1) OF THE ACT CAN BE SAID TO BE ASSESSMENT PROCEEDINGS CONCLUDED THAT HAVE NOT ABATED U/S.!53A OF THE ACT. SECTION 153A OF THE ACT , USES THE EXPRESSING 'PENDING ASSESSMENT OR REASSESSMENT'. WHEN A RETURN IS FILED AND ACKNOWLEDGEMENT OR INTIM ATION ISSUED U/S. 143(1), THE PROCEEDINGS INITIATED BY FILING THE RETURN ARE CLOS ED, UNLESS A NOTICE U/S 143(2) OF THE ACT IS ISSUED. IN THE PRESENT CASE, THE PERIOD FOR ISSU ING THE NOTICE U/S 143(2) ELAPSED. THEREFORE THE PROCESS HAS ATTAINED THE FINALITY WHI CH CAN ONLY BE ASSAILED U/S 148 OR 263 OF THE ACT. IT CAN THUS BE CONCLUDED THAT MAKING OF AN ADDITION IN AN ASSESSMENT UNDER SECTION 153A OF THE ACT, WITHOUT THE BACKING OF INC RIMINATING MATERIAL, IS UNSUSTAINABLE EVEN IN A CASE WHERE THE ORIGINAL ASSESSMENT ON THE DATE OF SEARCH STOOD COMPLETED UNDER SECTION 143(1) OF THE ACT, THEREBY RESULTING IN NON -ABATEMENT OF SUCH ASSESSMENT IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT . 17. IN THE LIGHT OF THE DISCUSSION ABOVE, OUR CONCL USION IS THAT IN THE PRESENT CASE, THE ISSUE WITH REGARD TO ADDITIONAL DEPRECIATION COULD NOT AND OUGHT NOT TO HAVE BEEN EXAMINED BY THE AO IN THE ASSESSMENT PROCEEDINGS U/ S.153A OF THE ACT AS THE SAID ISSUE STOOD CONCLUDED WITH THE ASSESSEE'S RETURN OF INCOM E BEING ACCEPTED U/S. 143(1) OF THE ACT PRIOR TO THE DATE OF SEARCH AND NO NOTICE HAVIN G BEEN ISSUED U/S. 143 (2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THAT SECTION WHI CH TIME LIMIT AS PER THE LAW PREVAILING ON THE DATE WHEN THE ASSESSEE FILED RETURN OF INCOM E I.E., 30.10.2007, WOULD EXPIRE ON 31.12.2008. SUCH ASSESSMENT U/S.143(1) OF THE ACT D ID NOT ABATE ON THE DATE OF SEARCH WHICH TOOK PLACE ON 15.1.2009. IN RESPECT OF ASSESS MENTS COMPLETED PRIOR TO THE DATE OF SEARCH THAT HAVE NOT ABATED, THE SCOPE OF PROCEEDIN GS U/S,153A OF THE ACT HAS TO BE CONFINED ONLY TO MATERIAL FOUND IN THE COURSE OF SE ARCH. SINCE NO MATERIAL WHATSOEVER WAS FOUND IN THE COURSE OF SEARCH, THE QUESTION OF ALLOWING ADDITIONAL DEPRECIATION OR NOT COULD NOT HAVE BEEN SUBJECT MATTER OF PROCEEDINGS U /S.L53A OF THE ACT. CONSEQUENTLY, THE CIT IN EXERCISE OF HIS POWERS U/S.263 OF THE ACT OU GHT NOT TO HAVE OR COULD NOT HAVE DIRECTED EXAMINATION OF THE SAID ISSUE AFRESH BY TH E AO. THUS GROUND NO.I RAISED BY THE ASSESSEE IS ALLOWED. THE PROCEEDINGS U/S.263 OF THE ACT IS ACCORDINGLY QUASHED. IN VIEW OF THE ABOVE CONCLUSION, THE OTHER GROUND OF APPEAL RAISED BY THE ASSESSEE DOES NOT REQUIRE ANY CONSIDERATION. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 12. IN THE CASE OF PCIT VS. SALASAR STOCK BROKING L TD. IN GA NO. 1929 OF 2016 /ITAT NO. 264 OF 2016 THE HONBLE CALCUTTA HIGH COU RT HELD AS UNDER: SUBJECT MATTER OF CHALLENGE IS A JUDGMENT AND ORDER DATED 18TH DECEMBER, 2015 BY WHICH THE LEARNED TRIBUNAL DISMISSED AN APPEAL PREF ERRED BY THE REVENUE REGISTERED AS ITA N0.1775/K0I/2012 AND ALLOWED A CROSS-OBJECTION REGISTERED AS CO-30/K0I/2013 BOTH PERTAINING TO THE ASSESSMENT YEAR 2005-06. THE LEARNED TRIBUNAL WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICT ION UNDER SECTION 153A OF THE INCOME TAX ACT TO REOPEN THE CONCLUDED CASES WHEN T HE SEARCH AND SEIZURE DID NOT 13 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW, THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT[A] VS. KABUL CHAWLA IN ITA NO,707/2014 DATED 28TH AUGUST, 2014. THE AGGRIEVED REVENUE HAS COME UP IN APPEAL. MR. BAGARIA, LEARNED ADVOCATE APPEARING FOR THE ASS ESSEE, SUBMITTED THAT MORE OR LESS AN IDENTICAL VIEW WAS TAKEN BY THIS BENCH IN ITA 66 1/2008 [CIT VS. VEERPRABHU MARKETING LTD.] WHEREIN THE FOLLOWING VIEWS WERE EX PRESSED 'WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY TH E KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE- REQUISITE BEFORE P OWER COULD HAVE BEEN EXERCISED UNDER SECTIONI53C READ WITH SECTION 153A. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MA DE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED UNDER SECTION 153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFIC ER WERE UPHELD-BY THE CIT(A) BUT THE LEARNED TRIBUNAL DELETED THOSE DISALLOWANCES.' IN THAT VIEW OF THE MATTER, WE ARE UNABLE TO ADMIT THE APPEAL. THE APPEAL IS, THEREFORE, DISMISSED. 13. IN THE LIGHT OF THE AFORESAID BINDING JUDICIAL PRECEDENTS ON THE ISSUE OF FRAMING OF ASSESSMENT U/S. 153A/143(3) PURSUANT TO A SEARCH U/ S. 132 OF THE ACT, WE NOTE THAT THE AO WHILE FRAMING AN ASSESSMENT U/S. 153A IN RESPECT OF A UNABATED ASSESSMENT ( LIKE IN THIS CASE ) CAN MAKE ADDITIONS/DISALLOWANCES ONLY ON THE BASI S OF INCRIMINATING MATERIAL UNEARTHED DURING SEARCH QUA THE ASSESSEE QUA THE RELEVANT ASSESSMENT YEAR. HERE IN THIS CASE SEARCH U/S. 132 OF THE ACT TOOK PLACE 8 TH NOVEMBER, 2016 AND THE ORIGINAL ASSESSMENT U/S. 143(3) WAS ALREADY COMPLETED ON 3 RD SEPTEMBER, 2016 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.11,69,65,820/-. THEREFORE, THE ASSESSMENT IN RESPECT OF THIS RELEVANT ASSESSMENT YEAR (AY 2014-15) WAS NOT PENDING BEFORE THE AO ON THE DATE OF SEARCH. THEREFORE, AS PER 2 ND PROVISO TO SECTION 153A OF THE ACT, THIS ASSESSMEN T YEAR (AY 2014-15) IS AN UNABATED ASSESSMENT AND, THEREFORE, THE AO WHILE FRAMING TH E ASSESSMENT U/S. 153A OF THE ACT ON 29.06.2018 TAKI NG NOTE THAT THERE WAS NO INCRIMINATING MATERIALS SEIZED DURING SEARCH AGAINS T ASSESSEE QUA THE RELEVANT ASSESSMENT YEAR, RIGHTLY REITERATED THE ASSESSMENT FRAMED ORIG INALLY ON 3 RD SEPTEMBER, 2016 DETERMINING TOTAL INCOME AT RS.11,69,65,820/- AS HE LD BY THE HONBLE DELHI HIGH COURT IN KABUL CHAWLA (SUPRA) WHEREIN THE HONBLE HIGH CO URT HELD AT PARA 37 (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL 14 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHI CH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. THIS DECISION OF THE HONBLE DELHI HIGH COURT WAS CHALLENGED BY THE REVE NUE BEFORE THE HONBLE SUPREME COURT BY PREFERRING AN SLP, WHICH WAS DISMISSED. F URTHER, WE NOTE THAT THE VIEW OF THE HONBLE DELHI HIGH COURT HAS BEEN APPROVED BY THE J URISDICTIONAL HIGH COURT IN THE CASE OF M/S. SALASAR STOCK BROKING LTD. (SUPRA). THERE FORE, THE VIEW TAKEN BY THE AO IN THE ASSESSMENT FRAMED U/S. 153A/143(3) DATED 29.06.2016 IS A VIEW TAKEN IN CONSONANCE WITH THE DECISION OF THE HONBLE DELHI HIGH COURT IN KAB UL CHAWLA WHICH HAS BEEN APPROVED BY THE HONBLE CALCUTTA HIGH COURT (SUPRA). THEREF ORE, THIS ORDER CANNOT BE BRANDED BY THE LD. PR. CIT AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. WE FURTHER TAKE NOTE OF THE FACT THAT IT IS NOT THE CASE OF LD . PR. CIT THAT AO FAILED TO MAKE ANY ADDITIONS/DISALLOWANCES BASED ON INCRIMINATING MATE RIAL SEIZED/UNEARTHED DURING SEARCH. ON THIS FINDING OF FACT OF OURS, WE CANNOT TERM THE ASSESSMENT ORDER PASSED BY THE AO U/S. 153A/143(3) DATED 29.06.2018 AS ERRONEOUS. BE IT NOTED THAT REVISION U/S. 263 OF THE ACT HAS TO BE MADE WITHIN THE WELL DEFINED LIMITS S UBJECT TO SATISFACTION OF PRECONDITIONS, AS EXPLAINED IN THE JUDICIAL PRECEDENTS (SUPRA) AND THIS SIMILAR LIMITATIONS HAVE TO BE READ IN THE INSTANT PROVISION. AND EVEN AT THE COST OF R EPETITION WE REITERATE THAT WHEN AN ASSESSMENT IS COMPLETED BEFORE THE SEARCH (UNABATED ASSESSMENT) THEN ADDITION/DISALLOWANCE CAN BE MADE ONLY TO THE EXTEN T OF UNDISCLOSED INCOME WHICH IS FOUND DURING THE COURSE OF SEARCH WITH REFERENCE TO VALUABLE, ARTICLE OR THINGS FOUND OR DOCUMENTS SEIZED DURING THE SEARCH WHICH ARE NOT DI SCLOSED IN THE ORIGINAL ASSESSMENT. THE POWER GIVEN BY THE 1 ST PROVISO TO SECTION 153 OF THE ACT TO ASSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNE ARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS EXCEPT THAT OF ABATED ASSESSMENT YEARS. IN UNABATE D ASSESSMENT YEARS, ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS U/S. 153A OF THE ACT WHEN NO INCRIMINATING MATERIALS WERE FOUND IN RESPECT OF TH E FAULT/ISSUE POINTED OUT BY THE LD. PR. CIT. EXCEPT THAT OF ABATED ASSESSMENT YEARS, A SEA RCH ASSESSMENT U/S. 153A OF THE ACT SHOULD BE EVIDENCE BASED OF UNDISCLOSED INCOME, THE REFORE, WE ARE OF THE VIEW THAT ASSESSMENT ORDER PASSED BY THE AO U/S. 153A/143(3) DATED 29.03.2016 IS NEITHER 15 ITA NO140/KOL/2021, M/S ANJALI JEWELLERS, AY 2014-15 ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND THEREFORE, LD. PR. CIT ERRED IN EXERCISING HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT AND THEREFORE, WE ARE OF THE VIEW THAT HE INVOKED REVISIONAL JURISDICTION WITHOUT SAT ISFYING THE ESSENTIAL PRE-CONDITION AS STIPULATED IN SEC. 263 OF THE ACT. THEREFORE, THE I MPUGNED ACTION OF THE LD. PR. CIT LACKS JURISDICTION AND THEREFORE, AB INITIO VOID AND THUS ASSESSEE SUCCEEDS ON THE LEGAL ISSUE RAISED BEFORE US. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2021. SD/- SD/- (P. M. JAGTAP) (A. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED: 30 TH SEPTEMBER, 2021 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- M/S ANJALI JEWELLERS , 522-C, DIAMOND HA RBOUR ROAD, BEHALA, KOLKATA-700034. 2. RESPONDENT PCIT, CENTRAL-1, KOLKATA 3. CIT(A)- KOLKATA (SENT THROUGH E-MAIL) 4. CIT, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY/DDO ITAT, KOLKATA BENCHES, KOLKATA