M/s Aggarwal Sales, Zirakpur V. DCIT, CC, Patiala

ITA 1442/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0063 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Block assessment
• Section: 143(3); 153A; 263; 15

Judgement Text

ITA NOS. 1442 & 1443-CHD-2018- AGGARWAL SALES, ZIRAKPUR 9 VARIOUS DECISIONS OF THE HIGH COURTS HOLDING THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 17. WE FIND, THAT THE ISSUE FIRST CAME UP FOR CONSI DERATION BEFORE THE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. M/S MURLI AGRO PRODUCTS LTD. (SUPRA), WHEREIN ON THE IS SUE OF EXERCISE OF REVISIONARY POWERS BY THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT, ON THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 153A, IT WAS CONTEN DED BY THE REVENUE THAT THE IMPUGNED ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE TH E ASSESSING OFFICER HAD ONLY DETERMINED THE UNDISCLOSED INCOME AND NOT THE TOTAL INCOME WHICH IS THE MANDATE OF SECTION 15 3A .THE HON'BLE HIGH COURT, WHILE ADJUDICATING THE ISSUE, D EALT AT LENGTH WITH THE PURPOSE OF INTRODUCTION OF THE NEW SEARCH ASSESSMENT PROCEDURES, AS AGAINST THE EARLIER BLOCK ASSESSMENT PROCEDURES AND THEN WENT ON TO INTERPRET THE PROVISO TO SECTION 153A(1) , AND HELD THAT IT IS ON LY PENDING PROCEEDINGS WHICH ARE ABATED ON INITIATION OF PROCE EDINGS UNDER SECTION 153A OF THE ACT, WHILE THE ASSESSMENT S WHICH HAVE ATTAINED FINALITY CANNOT BE DISTURBED UNLESS M ATERIALS GATHERED IN THE COURSE OF PROCEEDINGS UNDER SECTION 153A OF THE ACT ESTABLISHED OTHERWISE. 18. THEREAFTER, THE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA 352 ITR 493, INTERPRETED THE PROV ISIONS OF SECTION 153A OF THE ACT AT LENGTH, AND HELD THAT AS AGAINST THE EARLIER BLOCK ASSESSMENT PROCEDURE WHICH ROPED IN O NLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCE EDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS, UNDER THE PRESENT ASSESSMENT PROCEDURES PRESCRIBED UNDER SEC TION 153A/B/C OF THE ACT, ONLY ONE ASSESSMENT ORDER IN R ESPECT OF EACH OF THE SIX ASSESSMENT YEARS HAD TO BE PASSED. THE HON'BLE HIGH COURT HELD THAT THIS WAS SOUGHT TO BE ACHIEVED IN CASE OF THOSE ASSESSMENT YEARS WHERE ASSESSMENT PROCEEDINGS WERE PENDING ON THE DATE OF SEARCH BY A BATING THEM AND FRAMING FRESH ASSESSMENT INCLUDING INCOMES RELATING TO INCRIMINATING MATERIAL FOUND DURING SEA RCH. IN CASE OF THOSE ASSESSMENT YEARS WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED UNDER SECTION 143(1)(A) OR 143(3), THOSE ASSESSMENTS COULD BE REOPENED AND THE TOTAL I NCOME REASSESSED TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY UNEARTHED DURING SEARCH, THE FETTERS TO REOPENING, BEING REMOVED BY INSERTION OF THE NON-OBSTANTE CLAUSE TO SECTION ITA NOS. 1442 & 1443-CHD-2018- AGGARWAL SALES, ZIRAKPUR 11 SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR REL EVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL 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 WHI CH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED S IX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RE SPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A 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 INF ORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEI ZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PEND ING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE D ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIA L EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 21. THE DELHI HIGH COURT FURTHER REITERATED THE PRO POSITION LAID DOWN IN KABUL CHAWLA (SUPRA) IN THE CASE OF CI T VS. ITA NOS. 1442 & 1443-CHD-2018- AGGARWAL SALES, ZIRAKPUR 13 3. THAT THE WORDS 'ASSESS' OR 'REASSESS' HAS BEEN U SED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONI OUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO THE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND 'REASSESS' HAS BE EN USED FOR COMPLETED PROCEEDINGS WHICH WOULD NOT ABAT E AS THEY ARE NOT PENDING ON THE DATE OF INITIATION O F SEARCH OR MAKING OF REQUISITION. 23. WE MAY ADD THAT THAT THE REQUIREMENT OF THE SEC TION IS LIMITED TO OPENING OR REOPENING OF THE CASES FOR TH E PURPOSE OF MAKING ASSESSMENT OR REASSESSMENT OF THE TOTAL I NCOME OF PRECEDING SIX ASSESSMENT YEARS PRIOR TO THE YEAR OF SEARCH. IT DOES NOT CONTAIN ANY PROVISION REGARDING THE CONCEP T OF MAKING ASSESSMENT OF UNDISCLOSED INCOME AS WAS THER E IN THE EARLIER BLOCK ASSESSMENT REGIME UNDER CHAPTER XIVB. IT DOES NOT SPECIFICALLY CONTAIN ANY PROVISION REGARDING TH E NATURE OF ADDITION WHICH CAN BE MADE UNDER THIS SECTION. THE SECTION HAS PROVIDED, FOR THE REMOVAL OF DOUBTS ,BY WAY OF INSERTION OF EXPLANATION AT THE END OF THE SECTION THAT SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AN D SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO ASSESSMENT MADE UNDER THIS SECTION. THIS IMPLIES TH AT NATURE OF ASSESSMENT OR REASSESSMENT MADE UNDER THIS SECTI ON SHALL BE GOVERNED BY THE NORMAL PROVISIONS OF THE ACT. IN CASE IT IS AN ASSESSMENT MADE FOR THE FIRST TIME, ALL PROVISIO NS OF ASSESSMENT WHICH ARE APPLICABLE TO ASSESSMENTS MADE U/S 143(3) SHALL APPLY AND IN CASE IT IS A REASSESSMENT BEING MADE ALL PRINCIPLES OF REASSESSMENT WHICH ARE APPLI CABLE IN CASE OF PROCEEDINGS U/S 147/148 SHALL BECOME APPLIC ABLE . THUS IN CASES WHERE ASSESSMENTS HAVE ALREADY BEEN M ADE ADDITION TO BE MADE IN PROCEEDINGS U/S 153A IS TO B E RESTRICTED TO INCRIMINATING MATERIAL FOUND IF ANY. 24. IT IS AMPLY EVIDENT FROM THE ABOVE THAT THE ISS UE IS SETTLED, WITH A NUMBER OF DECISIONS OF THE HIGH COU RTS HOLDING THAT IN THE CASE OF COMPLETED ASSESSMENTS, NO ADDITION CAN BE MADE IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL. THOUGH WE DO AGREE THAT THERE ARE DECISIO NS OF HIGH COURTS WHICH HOLD OTHERWISE AND STATE THAT U/S 153A, ADDITION IN CASE OF COMPLETED ASSESSMENTS NEED NOT BE RESTRICTED TO INCRIMINATING MATERIAL, BUT IN VIEW O F THE APEX COURT DECISION IN CIT VS VEGETABLE PRODUCTS LTD.(19 73) 88 ITR 192 WHICH STATES THAT WHERE THERE ARE TWO REASO NABLE CONSTRUCTIONS OF A STATUTE ,THE CONSTRUCTION FAVOUR ING THE ASSESSEE SHOULD BE ADOPTED, WE HOLD THAT IN CASE OF COMPLETED ASSESSMENTS UNDER SECTION 143(3)/143(1) OF THE ACT, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER HAS NO JURI SDICTION TO MAKE ANY ADDITION UNDER SECTION 153A OF THE ACT.