V.R.Venkatachalam, CHENNAI V. ACIT, CHENNAI

ITA 1477/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9664 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 17-06-2015
• Court: TRIBUNAL
• Department Lawyers: M M BHUSARICIT
• Assessee Lawyers: S VIDYAC A
• Keywords: Revision of order; Search and seizure; Assessment record; Reassessment proceedings
• Section: 143(3); 153A; 263; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.1477 /MDS./2015 ( / ASSESSMENT YEAR :2012-13) SHRI V.R. VENKATACHALAM , NO.25, SIR C.V. RAMAN ROAD, ALWARPET, CHENNAI 600 018. [PAN: AADPV 3203H] ( *+ /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I(1), CHENNAI ( ,-*+ /RESPONDENT) / APPELLANT BY : MS. S.VIDYA,C.A / RESPONDENT BY : MR.M.M.BHUSARI,CIT, D.R / DATE OF HEARING : 03.03.2016 ! /DATE OF PRONOUNCEMENT : 13.04.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, CENTRAL-I, CHENNAI DATED 30.03.2015 PERTAINING TO THE ASSESSMENT YEAR 2012-1 3. ITA NO./MDS/2014 2 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO INVOKING THE PROVISIONS OF THE SECTION 263 OF THE A CT, THEREBY DIRECTING THE AO TO PASS FRESH ASSESSMENT ORDER WHICH IS COMP LETED U/S.153A R.W.S.143(3) OF THE ACT DATED 28.03.2014, THOUGH TH ERE WAS NO INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH U/S.132 OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT IN THIS CASE ORI GINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT FOLLOWED BY U /S.153A R.W.S. 143(3) OF THE ACT. CONSEQUENT TO SEARCH ACTION A T THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 18.11.2011. ACCORDING TO THE COMMISSIONER OF INCOME TAX THE ASSESSING OFFICER CO ULD NOT EXAMINE CERTAIN ISSUES RELATING TO INVESTMENT MADE BY THE ASSESSEE IN VARIOUS COMPANIES AND FIRMS AND THE INTEREST IN COME RECEIVED /RECEIVABLE FROM SOME OF THE DEBTORS. IT WAS ALSO N OTICED BY THE COMMISSIONER OF INCOME TAX THAT THE OPENING CAPITAL BALANCE FOR THE YEAR 2006-07 AND THE CAPITAL ACCOUNT FOR THE SUBSEQ UENT YEARS WAS NOT PROPERLY RECONCILED BY THE ASSESSEE DURING THE COURSE OF THE PROCEEDINGS U/S 153A R.W.S.143(3). IT WAS FURTHER N OTICED BY THE ITA NO./MDS/2014 3 COMMISSIONER OF INCOME TAX THAT THE CASH FLOW STAT EMENT FURNISHED BY THE ASSESSEE INDICATING DRAWINGS AND J USTIFYING THE CASH FOUND DURING THE COURSE OF SEARCH AT 14,50,000/- CANNOT BE ACCEPTED AS THE DRAWINGS REFLECTED IN SUCH CASH FLO W STATEMENT WOULD NOT HAVE BEEN ADEQUATE FOR THE ASSESSEE'S LIF E STYLE AND HAS ACCORDINGLY PROPOSED TO ESTIMATE THE DRAWINGS AT A HIGHER LEVEL AND THUS ADD BACK THE CASH FOUND DURING 'SEARCH AS UNEX PLAINED CASH SINCE NOT SUPPORTED BY THE CASH FLOW STATEMENT FILE D. FOR ALL THESE DEFICIENCIES, HE HAS PROPOSED THAT THE ASSESSMENT COMPLETED U/S 153A BE REVIEWED U/S 263 AS ASSESSING OFFICER COUL D NOT EXAMINE THE ISSUES DUE TO PAUCITY OF TIME AS THE INFORMATIO N WAS FILED BEFORE ASSESSING OFFICER ONLY ON 28.3.2014. 4 . FROM THE PROPOSALS SENT BY THE ASSESSING OFFICER , IT WAS NOTICED THAT THE ASSESSEE HAS FILED THREE STATEMENT OF AFFAIRS FOR THE YEAR- 2006-07 - I) STATEMENT OF AFFAIRS ALONG WITH THE RETURN U/S 139(1) II) DURING THE COURSE OF PROCEEDINGS U/S 143 (3) AND III) DURING THE PROCEEDINGS U/S 153A IN THE FINANCIAL YEAR 2013 -2014. ALL THE THREE STATEMENT OF AFFAIRS ARE DIFFERENT AMONG THEM SELVES. DURING THE COURSE OF THE PROCEEDINGS U/S 143(3) FINALIZED ON 31.12.2009, THE ITA NO./MDS/2014 4 ASSESSING OFFICER HAS ANALYZED THE STATEMENT OF AF FAIRS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 AND HAS MADE A DDITIONS IN THE ASST.YEAR 2007-08 AS BELOW:- THE ASSESSEES BUSINESS IS MONEY LENDING AND FILE D A STATEMENT OF AFFAIRS AS ON 31.03.2007 OPENING BALANCE OF CAPITAL I.E AS ON 31.03.2006 : 13,16,06,077/- NET PROFIT FOR THE FINANCIAL YEAR 2006-07 WAS : 1,87,00,173/- --------------------- 15,03,06,250/- CLOSING BALANCE OF CAPITAL AS ON 31.03.2007 : 15,2 5,96,482/- -------------------- DIFFERENCE IN THE CAPITAL ACCOUNT : 22,90,23 2/- --------------------- THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE VID E LETTER DATED 22.12.2009 BEFORE COMMISSIONER OF INCOME TAX HAS ST ATED THAT THE CLOSING BALANCE KEPT WITH INDIAN BANK PORUR ( 3,86,774/) BANK OF BARODA ( .12,12,517/-) AND SB ACCOUNT WITH EGMORE BENEFIT SO CIETY LTD ( 21,897/-) NOT REDUCED THAN THE CORRESPONDING CAPITA L ACCOUNT BALANCE FIGURE WOULD BE 15,09,75,204/-. THE DIFFERENCE OF 6,68,954/- OFFERED TO TAX. THE ASSESSEE'S REPRESENT ATIVE CONTENTION WAS NOT ACCEPTED BY ASSESSING OFFICER WHILE COMPLET ING ASSESSMENT U/S.143(3) OF THE ACT AS THE ASSESSEE'S BUSINESS IN MONEY LENDING, AND THE ASSESSEE HAS NOT CHARGING INTEREST FROM THE PERSON TO WHOM MONEY HAS BEEN LENT. ACCORDING TO THE ASSESSING OFF ICER IT CAN'T NOT ITA NO./MDS/2014 5 BE DISTINGUISHED WHETHER THAT PARTICULAR LOAN WAS I NTEREST BEARING OR NOT. HENCE, THE DIFFERENCE OF .22,90,232/- WAS ADDED TO THE RETURNED INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST ORIGIN AL ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT. 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) GIVEN RELIEF TO THE ASSESSEE. FURTHER ON CONTESTING BEFOR E THE ITAT, THE MATTER WAS SET ASIDE WITH THE DIRECTION TO THE ASSE SSING OFFICER TO RE- EXAMINE THE STATEMENT OF AFFAIRS VIDE THEIR ORDERS NO. 986/MDS/2012 DATED 12.09.2012. 6 . WHILE RE-EXAMINING, COMPARING AND CONTRASTING TH E TWO STATEMENT OF AFFAIRS FOR BOTH THE ASSESSMENT YEARS 2006-07 AN D 2007-08, THE ASSESSING OFFICER HAS NOTICED A SHORTAGE OF 1,01,97,722/- IN THE LIABILITY SIDE FOR THE ASSESSMENT YEAR 2006-07 AND 12,15,79,373/- FOR THE ASSESSMENT YEAR 2007-08. WHEN THESE DIFFERENCES WERE SOUGHT TO BE EXPLAINED BY THE ASSESSEE, THE ASSESSEE HAS C OME UP WITH ANOTHER REVISED STATEMENT OF AFFAIRS AS SUBSTANTIAL DIFFERENCES IN THE BALANCES OF ASSETS AND LIABILITIES. THUS, THERE WAS SUBSTANTIAL ITA NO./MDS/2014 6 DISCREPANCIES IN THE THREE STATEMENTS OF AFFAIRS WH ICH COULD NOT BE EXAMINED PROPERLY BY THE ASSESSING OFFICER DURING THE PROCEEDINGS U/S 153A FINALIZED ON 28.3.2014. THUS, THE ACCEPTAN CE OF THE REVISED STATEMENT OF AFFAIRS WAS SUFFERING FROM DEFECTS RES ULTING IN A ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF REVENUE. 6.1 THE ASSESSEE FILED REVISED STATEMENT OF AFFAIRS FOR ASSESSMENT YEAR 2005-06, FIGURES OF WHICH ARE BASIS FOR OPENI NG BALANCES OF ASSESSMENT YEAR 2006-07. FOLLOWING MAJOR DISCREPANC IES ARE AS UNDER (A) FIGURES OF LOANS RECEIVED HAS BEEN INCREASED TO .15,02,54,907/- FROM .8,70,17,359/- (DIFFERENCE .6,32,37,548/-. THE CREDIT APPEARING IN THE BOOKS O F ACCOUNTS OF ASSESSEE IS NOT EXPLAINED, THEREFORE ,IT WOULD HAVE BEEN COVERED U/S.68, AFTER ALLOWING THE ASSESSEE AN OPPO RTUNITY TO EXPLAIN BEING DIFFERENCE IN OPENING BALANCES FOR ASSESSMENT YEAR 2006-07. (B) FIGURES FOR OPENING BALANCE OF LOAN GIVEN FOR ASSES SMENT YEAR 2006-07 HAS BEEN INCREASED TO 43,25,53,096/- (28,97,14,166/- +65,78,171/-+ 1,00,000/-+13,61,60,759/-) FROM .21,06,23,375/- (DIFFERENCE 22,19,29,721/-) LIABLE TO BE CONSIDERED AS UN-EXPLAINED INVESTMENT. 6 .2. COMPARISON OF THREE STATEMENT OF AFFAIRS FOR A SSESSMENT YEAR 2006-2007 HAS SHOWN FOLLOWING DISCREPANCIES . A) THE FIRST SOA SHOWS LOAN RECEIVED (BALANCE) OF 15,83,40,723/-, THE SECOND DOES NOT SHOW ANY BALANCE ON THIS ACCOUN T AND IN THIRD SOA THE BALANCE OF LOAN RECEIVED HAS BEEN DEC REASED TO 5,32,54,907/-. IT IMPLIES THAT EITHER THE ASSESSEE HAS REPAID ITA NO./MDS/2014 7 10,50,85,816/- (IF COMPARED WITH THE SOA FILED ALON G WITH RETURN U/S 139) / REPAID 9,70,00,000/- (IF COMPARED WITH THE FINAL SOA FILED ON 28/03/2014) OR THE BALANCES SHOW N ARE NOT TRUE. THE SOURCES OF REPAYMENT HAVE NOT BEEN VERIFI ED DUE TO SCARCITY OF TIME. THE BANK BOOKS FILED BY THE ASSES SEE FOR ASSESSMENT YEAR 2006-07 DO NOT SHOW ANY SUCH REPAYM ENT OF LOAN. THEREFORE. IT MAY BE PRESUMED THAT THE ASSESS EE HAS REPAID FROM UNDISCLOSED SOURCES. IT MAY BE NOTED THAT THE ASSESSEE HAS NEVER PRODUCED COMPLETE BOOKS OF ACCOUNTS SO THAT T HE SOURCE COULD HAVE BEEN ASCERTAINED. B) ORI GINALLY THE TOTAL BALANCE OF LOAN PAID WAS SHOWN AT 28,55,32,805/-. IN SECOND STATEMENT OF AFFAIRS SHOW N LOAN PAID BALANCE AMOUNTING TO 11,69,94,360/- AND IT HAS NOW BEEN INCREASED TO 31,39,82,017/-(133369665+ 36578171 +100000+ 143934181). THE DIFFERENCE IS VISIBLE. THE ASSESSEE HAS EVEN CHANGED THE BALANCE WITH M/S. TCP WHICH WA S EARLIER SHOWN AS 11,69,94,360/- AND NOW IT IS SHOWN AT 13,33,69,665/-. THE FILED COPY OF ACCOUNT OF BANKS IN THE BOOKS OF ASSESSEE DOES NOT EXPLAIN THE DIFFERENCE AND THE SOURCE OF PAYMENT OF 11,85,71,079/- (43,25,53,096 31,39,82,017/- ) IS NOT EXPLAINABLE FROM THE BANK STATEMENTS. 6.3 COMPARISON OF THREE STATEMENT OF AFFAIRS FOR AS SESSMENT YEAR 2007-08 SHOWN FOLLOWING DISCREPANCIES.: (A) ORIGINALLY, THE STATEMENT OF AFFAIRS FOR AY 2007-08 SHOWED BALANCE OF LOAN RECEIVED OF 38,96,40,723/- (LIABILITY SIDE OF SOA). THE SECOND SOA DID NOT INCLUDE THIS ITEM AT A LL BUT IN THIRD STATEMENT OF AFFAIRS FILED ON 28/03/2014, THE BALANCE ON THIS ACCOUNT HAS BEEN SHOWN AT 33,70,54,907/-. ALTHOUGH THERE IS INCREASE IN LOAN RECEIVED BALANCES IF COMPARED W ITH THE SOA FOR AY 2006-07 FILED ON 28/03/2014, YET DIFFERENCE BALANCES SHOWN IN STATEMENT OF AFFAIRS ORIGINALLY FILED AND THE SOA FILED ON 28/03/2014 IS NOT EXPLAINABLE. (B) BALANCES OF LOAN PAID WAS SHOWN AT 52,45,95,954/- IN SOA ORIGINALLY FILED WHICH STOOD REDUCED TO 1,33,75,858/-. NOW IN THE STATEMENT OF AFFAIRS FILED ON 28/03/2014, IT HAS BEEN INCREASED TO 54,71,54,871/-. NO EXPLANATION IS FILED BY THE ASSESSEE FOR ITA NO./MDS/2014 8 SUCH DIFFERENCE AND SOURCES OF INVESTMENT (C) ON 11/04/2006, THERE IS A DEPOSIT OF 5,21,898/-. THE ASSESSEE HAS CREDIT IT AS 'OTHER INCOME' BUT IT IS NOT REFLE CTED FROM THE STATEMENT OF TAXABLE INCOME. THIS AMOUNT HAS ESCAPE D ASSESSMENT. SIMILARLY, THERE IS ANOTHER CREDIT OF 25,000/- ON 19/09/2006. (D) THE ASSESSEE HAD GIVEN LIST OF BALANCES OF LOAN REC EIVED AND PAID DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) TAKEN UP AGAINST RETURN FILED U/S 139(1). THE ASSESSEE HAS FURNISHED A LIST OF SUCH LOAN PAID AND LOAN RECEIVED BALANCES AS PER SOA FIL ED ON 28/03/2014. IT IS NOTICED THAT THERE IS HUGE DIFFERENCE IN THE TOT AL AS WELL AS INDIVIDUAL NAME WISE DETAILS OF LOAN REC EIVED AND PAID WHEN COMPARED WITH THE LIST GIVEN EARLIER. A COMPAR ISON IS GIVEN HEREUNDER:- DETAILS FOR LOANS RECEIVED AS PER OLD SOA FILED ALONGWITH RETURN U/S.139(1) AS PER NEW SOA FILED BALANCES AS ON 31.03.2007 1 A.KOTEEWARAN LOAN 500000 2 A. KUBERAN LOAN 1000000 3 APPU HOTELS LTD 2813000 4 BABA ENTERPRISES LOAN 5552000 5 KARNATAKA BREWERIES & DISTILLERIES P. LTD 8700000 8700000 6 MBDL LOAND 500000 7 N. NEELAVATHI LOAN 500000 8 POOVAIAMMAL LOAN 132243 9 SAPTHAGIRI ENTERPRISES LOAN 3000000 20000000 10 S. LAKSHMI NARAYANI AMMAL LOAN 450000 11 S. PUSHAPAVALLI LOAN 500000 12 THIRUMAGAL MILLS LOAN 592200 13 UDAYAR INVESTMENTS & CONSULTANCY CO. P. LTD 26893650 14 VIJAY TELEVISIONS LTD 5600000 15 VRV IMPORTS & EXPORTS P. LTD. 4740421 3448566 16 E.K LINGAMOORTHY 1500000 1500000 ITA NO./MDS/2014 9 17 KAVITHA NARENDRAN 600000 18 KMB GRANITES 22000000 22000000 19 K. NALLIAPPAN 700000 20 K. NEELAVATHY 2000000 2000000 21 KUMBAKONAM KANNAN 3740000 22 K. YUSUFF BASHA 3800000 3800000 23 MARRS GRANITIES 1000000 24 M.S.MEIYAPPAN 150000 25 NATARAJAN NANDAGOPAL 658458 26 N. CHANDRASEKAR 212410 27 P. YASODHA 3000000 3000000 28 RAGHAVA ENTERPRISES PL LTD 25300000 29 RAVIKUMAR INDUSTRIES 5000000 30 R.GANDHI 500000 31 R.G.NARENDRAN 400000 32 SALEM BASHA 14806341 13806341 33 SALEM KMB CONSTRUCTIONS 10000000 10000000 34 SHRI. RAMDHAS ESTATES P.LTD 11800000 11800000 35 SUNDARAM FINANCE LTD 130000000 1300000000 36 SUNDARAM HOME FIANCE LTD 700000000 70000000 37 SWASTI CHEM PVT. LTD 4000000 4000000 38 TRIDENT GRANITIES 2000000 39 V. KANNAN 15000000 40 D.K. AUDIKESHVULU 20000000 41 THE NARASIMHA MILLS LTD 10000000 42 SAPTHAGIRI ENTERPRISES 3000000 TOTAL 389640723 337054907 LOAN PAID BALANCE AS ON 31.03.2007 SL. NO DETAILS FOR LOANS RECEIVED AS PER OLD SOA FILED ALONG WITH RETURN U/S.139(1) AS PER NEW SOA FILED 1 7 TH CHANNEL COMMUNICATIONS 3600000 ITA NO./MDS/2014 10 2 AALWEL FABS 500000 3 ANCHOR BREWERIES LTD 20070 4 ANDAL LOAN 10770508 5 A.N. RAMESH BABU 500000 6 ARIHAN SHELTERS INDIA LTD 30000000 30000000 7 ARUDHATHI LOAN 46225777 8 A.S. THILLAINAYAM LOAN 504438 9 A.V.L. NARAYANSWAMY LOAN 100000 10 A.V.M . PRODUCTIONS 15000000 15000000 11 C.M.K. REDDY LOAN 300000 12 COSY REALTORS P. LTD 1080000 1371302 13 DIAMOND DISTRICT 405000 14 FREEZING PRODUCTS 165600 15 G. BABU LOAN 300000 300000 16 G. HEMADRI BABU 50000000 50000000 17 G. SULOCHANA LOAN 1500000 1500000 18 INDIRA M. KAMESWARAN LOAN 1000000 1000000 19 JAYSHREE HOLDINGS PVT. LTD 17000000 21297064 20 J.K. PURI LOAN 500000 21 KARUR MANOHARAN LOAN 500000 22 K.M. AMEENUDDIN LOAN 500000 23 MASTER HARI VENKATARAMAN 350000 24 MATRIX FOUNDATIONS P. LTD 1245600 3299571 25 MEERA PAPERS LTD 5000000 26 M.G. ENTERPRISES LOAN 4007762 27 M. NITHIYANDAM LOAN 300000 28 MOOKAMBIKA REALOTRS PVT LTD 14921500 19336595 29 M. RADHA LOAN 1075500 30 NAUZER NOWRAJI BANGALORE 3000000 3000000 31 N.P.V. RAMASAMY UDAYAR (HUF) 21296379 21176379 32 NVK ARUMUGAM LOAN 800000 33 PADMA LOAN 1570400 34 PROMOTERS CONTRIBUTION TO TCP LTD 57974008 35 RADHA VENKATACHALAM LOAN 53168130 53168131 36 RAMANIKLAL GOSALIA & CO 50000000 50000000 37 RAMRAJ ASSOCIATES LOAN 2489885 38 R. KALALAM LOAN 2022894 2022894 39 SABARI STEELS LOAN 900000 40 SAMYUKTHA LOAN 320000 5820000 41 SENGUTUVAN LOAN 2077502 21577502 42 SRI RAMACHANDRA EDUCATIONAL AND HEALTH TRUST 3817238 3817238 43 STERLING COMPUTER LOAN 2000000 ITA NO./MDS/2014 11 44 SUNIL YUNUS ZIA 10000000 10000000 45 S. K. VARATHARAJ LOAN 1000000 46 SWADESAMITRAN LTD LOAN 2785000 47 T. AMUDHA LOAN 5130758 48 TANCHEM IMPORTS & EXPORTS P. LTD 10052263 10052263 49 THIRUBALLA REALTORS P. LTD 6600000 62638850 50 THIRUBALLA REALTORS P. LTD 26706360 29360819 51 TRANSWORLD PROPERTIES P. LTD 5500000 52 TRIVITRON MEDICAL SYSTEMS P. LTD 5000000 5000000 53 TVRSS ENTERPRISES 18223932 54 VIVEK GOVER LOAN 1314450 55 WOODS INDIAN NEGOTIATIONS 550000 56 BINNY LTD 17500000 17500000 57 VIRION CHEMICALS & DISTILLERIES LTD 5425000 58 ADVANCE FOR LAND 37437564 59 TCP 18686728 60 THIRUVALLUVAR TEXTILES P. LTD 51878171 61 JAGATHRA HOLDINGS P. LTD 100000 62 FOUR SQUARE REALTORS P. LTD 15519 63 SUN BREEZE REALTORS P. LTD 15519 TOTAL 524595954 547154871 (F) THE ASSESSEE VIDE HIS LETTER DATED 26.03.2014 HAS S UBMITTED THAT THE IS NOT ABLE TO FURNISH EVIDENCES FOR SOURCES OF FUND INVES TED IN SHARES OF M/S. THIRUVALLUVAAR TEXTILES PRIVATE LTD. FOR THIS, HE HAS OFFERED 1,26,000/- FOR TAXATION. THIS ADDITION HAS NOT BEEN MADE. (G) THERE IS NO REASON FOR EXCLUSION OF CERTAIN PARTIES FROM THE LISTS MENTIONED ABOVE AND INCLUSION OF NEW ENTRIES. THERE IS ALSO NO REASON MENTIONED BY THE ASSESSEE TO DEVIATE FROM THE FIGURES ORIGINALLY SHOWN AS LOAN RECEIVED AND LOAN PAID. HENCE, THE C.I.T INVOKED THE PROVISIONS OF SEC.263 IN SETTING ASIDE THE ASSESSMENT AND HAD GIVEN DIRECTION TO A.O TO ARRIVE AT THE OPENING AND CLOSING BALANCE OF CAPITAL BASED UP ON THE RECONCILIATION FOR THE A.Y.2006-07. THE PROPOSALS O N INADEQUATE DRAWINGS AND TAX LIABILITY OF SEIZED JEWELLERY ARE DROPPED. ITA NO./MDS/2014 12 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE IDENTICAL ISSUE CAME BEFORE THIS TRIB UNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2006-07 TO 2011-12 I N ITA NOS.2634 TO 2639/MDS./2014 VIDE ORDER DATED 17.07.2015 AND T HE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY QUAS HING THE ORDER OF THE CIT BY OBSERVING AS FOLLOWS:- 17. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE FOR THE ASSESSMENT YEAR 2006- 07, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 28.11.2008. LATER ON, THERE WAS A SEARCH ACTION U/ S.132 OF THE ACT AT THE RESIDENTIAL PREMISES ON 18.11.2011. CON SEQUENT TO SEARCH ACTION THE ASSESSMENT FOR THE ASSESSMENT YEA R 2006-07 WAS FRAMED U/S.153A R.W.S.143(3) OF THE ACT VIDE OR DER DATED 28.03.2014, WHEREIN THE ASSESSING OFFICER COMPUTED ASSESSED INCOME AT 3,12,33,973/- AS HE DID IN U/S.143(3) OF THE ACT. IN OTHER WORDS, THERE WAS NO ADDITION OF WHATSOEVER TO THE RETURNED INCOME CONSEQUENT TO SEARCH ACTION. HOWEVER, AS EV IDENT FROM THE PARA ONE OF ORDER PASSED BY THE COMMISSIONER OF INCOME TAX PASSED U/S.263 OF THE ACT, THE ASSESSING OFFICE R COULD NOT EXAMINE CERTAIN ISSUES RELATING TO THE INVESTME NTS ITA NO./MDS/2014 13 MADE BY THE ASSESSEE IN VARIOUS COMPANIES AND FIRMS AND INTEREST INCOMES RECEIVED/ RECEIVABLE FROM SOME OF THE DEBTORS. IT WAS ALSO NOTICED THAT THE OPENING CAPI TAL BALANCE FOR THE YEAR 2006-07 AND THE CAPITAL ACCOUN T FOR THE SUBSEQUENT YEARS WAS NOT PROPERLY RECONCILED BY THE ASSESSEE DURING THE COURSE OF THE PROCEEDINGS U/S.1 53A R.W.S. 143(3). IT WAS FURTHER NOTICED BY THE ASSES SING OFFICER THAT THE CASH FLOW STATEMENT FURNISHED BY T HE ASSESSEE INDICATING DRAWINGS AND JUSTIFYING THE CAS H FOUND DURING THE COURSE OF SEARCH AT 14,50,000/- CANNOT BE ACCEPTED AS THE DRAWINGS REFLECTED IN SUCH CASH FLO W STATEMENT WOULD NOT HAVE BEEN ADEQUATE FOR THE ASSESSEES LIFE STYLE AND THE ASSESSING OFFICER HAS ACCORDINGLY PROPOSED TO ESTIMATE THE DRAWINGS AT A HIGHER LEVEL AND THUS ADD BACK THE CASH FOUND DURING SEARC H AS UNEXPLAINED CASH SINCE NOT SUPPORTED BY THE CASH FL OW STATEMENT FILED. FOR ALL THESE DEFICIENCIES, THE A SSESSING OFFICER HAS PROPOSED THAT THE ASSESSMENT COMPLETED U/S.153A BE REVIEWED U/S.263 BY COMMISSIONER OF INC OME TAX AS HE COULD NOT EXAMINE THE ISSUES DUE TO PAUCI TY OF ITA NO./MDS/2014 14 TIME AS THE INFORMATION WAS FILED BEFORE HIM ONLY O N 28.03.2014. 18. THUS BASED ON THE ABOVE PROPOSITION, THE ASSESSMENT RECORDED WAS CALLED FOR AND THE SAME WAS EXAMINED BY THE COMMISSIONER OF INCOME TAX AND ISSUED NOTICE U/S.26 3 ON 20.06.2014. AFTER THE PROPOSALS SENT BY THE ASSESS ING OFFICER, IT WAS NOTICED THAT THE ASSESSEE HAS FILED THREE STATEMENT OF AFFAIRS FOR THE YEAR- 2006-07 - I) STA TEMENT OF AFFAIRS ALONG WITH THE RETURN U/S 139(1) II) DURING THE COURSE OF PROCEEDINGS U/S 143(3) AND III) DURING THE PROCE EDINGS U/S 153A IN THE FINANCIAL YEAR 2013-2014. ALL THE THREE STATEMENT OF AFFAIRS ARE DIFFERENT AMONG THEMSELVES. DURING T HE COURSE OF THE PROCEEDINGS U/S 143(3) FINALIZED ON 31.12.20 09, THE ASSESSING OFFICER HAS ANALYZED THE STATEMENT OF AF FAIRS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 AND HAS MA DE ADDITIONS IN THE ASST.YEAR 2007-08 AS BELOW:- THE ASSESSEES BUSINESS IS MONEY LENDING AND FIL ED A STATEMENT OF AFFAIRS AS ON 31.03.2007 OPENING BALANCE OF CAPITAL I.E AS ON 31.03.2006 : 13,16,06,077/- NET PROFIT FOR THE FINANCIAL YEAR 2006-07 WAS : 1,87,00,173/- --------------------- 15,03,06,250/- CLOSING BALANCE OF CAPITAL AS ON 31.03.2007 15,25,96,482/- -------------- ------ DIFFERENCE IN THE CAPITAL ACCOUNT : 22,90,232/- --------------------- ITA NO./MDS/2014 15 THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE VID E LETTER DATED 22.12.2009 BEFORE THE COMMISSIONER OF INCOME TAX HAS STATED THAT THE CLOSING BALANCE KEPT WITH INDIA N BANK PORUR ( 3,86,774/-), BANK OF BARODA ( .12,12,517/-) AND SB ACCOUNT WITH EGMORE BENEFIT SOCIETY LTD ( 21,897/-) NOT REDUCED THAN THE CORRESPONDING CAPITAL ACCOUNT BALA NCE FIGURE WOULD BE 15,09,75,204/- THE DIFFERENCE OF 6,68,954/- OFFERED TO TAX. THE ASSESSEE'S REPRESENTATIVE CONTENTION WAS NOT BE ACCEPTED BY COMMISSIONER OF INCOME TAX AS THE ASSESSEE'S BUSINESS IN MONEY LEND ING, AND THE ASSESSEE HAS NOT CHARGING INTEREST FROM THE PERSON TO WHOM MONEY HAS BEEN LENT. ACCORDING TO THE COMMISSIONER OF INCOME TAX IT CAN'T NOT BE DISTINGU ISHED WHETHER THAT PARTICULAR LOAN WAS INTEREST BEARING O R NOT. HENCE, THE DIFFERENCE OF . 22,90,232/- WAS ADDED TO THE RETURNED INCOME. THUS, IT WAS ALSO ON RECORD THAT ORIGINAL ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT FOR T HE ASSESSMENT YEAR 2007-08 ON 31.12.2009 WAS SUBJECT MATTER OF THE APPEAL BEFORE THE COMMISSIONER OF IN COME TAX (APPEALS) AS WELL AS BEFORE THE TRIBUNAL. THE TRIBUNAL IN ITA NO.986/MDS/2012 VIDE ITS ORDER DATED 12.09.2 012, DIRECTED THE ASSESSING OFFICER TO RE-EXAMINE THE ST ATEMENT OF AFFAIRS FILED BY THE ASSESSEE. 19. INSPITE OF THIS, NOW THE COMMISSIONER OF INCOME TAX WANTED TO REVIEW THE ORDER OF THE ASSESSING OFFICER PASSED U/S.153A R.W.S 143(3) DATED 28.03.2014. FIRST OF A LL U/S.263 ITA NO./MDS/2014 16 OF THE ACT, THE COMMISSIONER OF INCOME TAX MUST CAL L FOR EXAMINING THE RECORDS OF THE PROCEEDINGS UNDER AC T AND AFTER EXAMINING THE SAME IF HE CAME TO A CONCLUSIO N THAT THE ORDER PASSED BY THE ASSESSING OFFICER TO BE ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF R EVENUE, THEN HE CAN REVISE THE ASSESSMENT ORDER U/S.263 OF THE A CT AND ISSUE NOTICE. THERE SHOULD BE INDEPENDENT APPLICAT ION OF MIND BY COMMISSIONER OF INCOME TAX HIMSELF. HE CAN NOT SOLELY ACT UPON THE PROPOSAL SENT BY ASSESSING OFFI CER SO AS TO RECTIFY ANY OMISSION ON THE PART OF THE ASSES SING OFFICER SINCE THE ASSESSING OFFICER HAS THE REMEDY TO RECTIFY THE SAME UNDER THE ACT. FROM THE PROCEEDING S U/S.263 OF THE ACT IN THE PRESENT CASE, IT IS EVIDE NT FROM THE FIRST PARA OF THE IMPUGNED ORDER THAT THE COMMISSIO NER OF INCOME TAX ACTED UPON THE PROPOSAL SENT BY THE ASSE SSING OFFICER WHICH IS NOT PERMITTED U/S.263 OF THE ACT. 20. FURTHER ISSUE RAISED BY THE COMMISSIONER OF IN COME TAX IS SUBJECT MATTER OF APPEAL IN RESPECT OF ORIG INAL ASSESSMENT PASSED U/S.143(3) OF THE ACT BEFORE THE TRIBUNAL FOR THE ASSESSMENT YEAR 2007-08. THE ORIGI NAL ASSESSMENT ORDER PASSED U/S.143(3) WAS SET ASIDE BY THE TRIBUNAL AND REMITTED BACK TO THE FILE OF THE ASSES SING OFFICER TO RE-EXAMINE VIDE TRIBUNAL ORDER IN ITA NO.986/MDS/2012, DATED 12.09.2012. SO THERE IS NO D OUBT WHATSOEVER AS REGARDS THE MATTER COVERED BY THE ASSESSMENT ORDER WHICH HAVE BEEN PERUSED BY THE ITA NO./MDS/2014 17 ASSESSEE IN APPEAL ON EARLIER OCCASION. THE POWER OF REVISION CONFERRED ON THE COMMISSIONER OF INCOME TA X WAS RESTRICTED TO THE ORDER PASSED BY THE ASSESSING OFF ICER. IT IS FURTHER TO BE NOTED THAT WHATEVER THE ORDER TRIBU NAL PASSED, THE ORDER OF THE ASSESSING OFFICER CEASES TO EXIST AND MERGES IN THE ORDER OF THE TRIBUNAL AND THEREAF TER, THE TRIBUNAL ORDER STANDS AND IS OPERATIVE AND NOT THE ORIGINAL ASSESSMENT ORDER. THEN IT IS TO BE NOTED THAT COMMISSIONER OF INCOME TAX THROUGH PROCEEDINGS U/S. 263 CANNOT SIT OVER ON THE ORDER OF THE TRIBUNAL SO AS TO DECIDE WHAT IS RIGHT OR WRONG. IN OTHER WORDS, IN RESPECT OF ANY ISSUE WHICH WAS SUBJECT MATTER OF THE APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL DECIDED IT ONE WAY OR OTH ER, THE COMMISSIONER OF INCOME TAX WOULD NOT TAKE UP THE SA ME ISSUE IN PROCEEDINGS U/S.263 OF THE ACT AS HELD BY JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. FARIDA PRIME TANNERY, 259 ITR 342 (MAD). THE COMMISSIONER OF INCOME TAX OBSERVED IN ITS ORDER AT PARA 5 THAT W HILE RE-EXAMINING, COMPARING AND CONTRASTING THE TWO STATEMENT OF AFFA IRS FOR BOTH THE ASSESSMENT YEARS 2006-07 AND 2007-08, THE ASSESSING OFFICER HAS NOTICED A SHORTAGE OF 1,01,97,722/- IN THE LIABILITY SIDE FOR THE ASSESSMENT YEAR 2006- 07 AND 12,15,79,373/- FOR THE ASSESSMENT YEAR 2007-08. WHE N THESE DIFFERENCES WERE SOUGHT TO BE EXPLAINED BY TH E ASSESSEE, THE ASSESSEE HAS COME UP WITH ANOTHER REV ISED STATEMENT OF AFFAIRS AS SUBSTANTIAL DIFFERENCES IN THE BALANCES OF ASSETS AND LIABILITIES. THERE WAS SUBST ANTIAL ITA NO./MDS/2014 18 DISCREPANCIES IN THE THREE STATEMENTS OF AFFAIRS WHICH COULD NOT BE EXAMINED PROPERLY BY THE ASSESSING OFFICER D URING THE PROCEEDINGS U/S 153A FINALIZED ON 28.3.2014. TH US, THE ACCEPTANCE OF THE REVISED STATEMENT OF AFFAIRS WAS SUFFERING FROM DEFECTS RESULTING IN A ASSESSMENT ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE COMMISSIONER OF INCOME TAX IN ITS ORDER U/S.263 WAN TED TO REVIEW THE GIVING EFFECT ORDER TO TRIBUNAL ORDER BY ASSESSING OFFICER WHICH IS NOT POSSIBLE. IF THERE I S ANY ERROR IN GIVING EFFECT ORDER BY THE ASSESSING OFFICER, T HAT ORDER IS TO BE REVIEWED AND NOT THE ORDER PASSED U/S.153A R.W.S.143(3) OF THE ACT. THERE IS NO DISPUTE THAT SECTION 153A IS APPLICABLE IN THIS CASE. HENCE, THE ASSESSING OFFICER IS OBLIGED TO ISSUE NOTICE UNDER SECTION 15 3A IN RESPECT OF SIX PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INITIATED. THEREAFTER, HE HAS TO ASSESS OR REASSESSES THE TOTAL INCOME OF THESE SIX YEARS. IT IS OBLIGATO RY ON THE PART OF THE ASSESSING OFFICER TO ASSESS OR REASSESS TOTAL I NCOME OF THE SIX YEARS AS PROVIDED IN SECTION 153A(1)(B) AND RE ITERATED IN THE 1ST PROVISO TO THIS SECTION. THE SECOND PROVISO STA TES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF I NITIATION OF THE SEARCH OR REQUISITION SHALL ABATE. THERE IS NO DIVERGENCE OF VIEWS IN SO FAR AS THE PROVISION CONTAINED IN SECTI ON 153A TILL THE 1ST PROVISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMEN T ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEAN S THAT AN ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF I NITIATION OF ITA NO./MDS/2014 19 SEARCH SHALL CEASE TO EXIST AND NO FURTHER ACTION S HALL BE TAKEN THEREON. THE ASSESSMENT SHALL NOW BE MADE UNDER SEC TION 153A. THE CASE OF THE ASSESSEE IS THAT NECESSARY CO ROLLARY TO THIS PROVISION IS THAT COMPLETED ASSESSMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FAR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH. ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE REVENU E THAT ABATEMENT OF PENDING ASSESSMENT IS ONLY FOR THE PUR POSE OF AVOIDING TWO ASSESSMENTS FOR THE SAME YEAR, ONE BEI NG REGULAR ASSESSMENT AND THE OTHER BEING ASSESSMENT UNDER SE CTION 153A. IN OTHER WORDS THESE TWO ASSESSMENTS MERGE INTO ONE ASSESSMENT. THE SECOND PROVISO DOES NOT CONTAIN ANY WORD OR WORDS TO THE EFFECT THAT NO REASSESSMENT SHALL BE M ADE IN RESPECT OF A COMPLETED ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITERAL INTERPRETED SHOUL D BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANIFESTLY ABS URD OR UNJUST RESULTS AS SECTION 153A(I)(B) AND THE FIRST PROVISO CLEARLY PROVIDE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSEES WHERE ONE OR MORE OF SUC H ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE D ATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVAN CE IN VIEW CLEAR AND UNAMBIGUOUS WORDS USED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESUL TS. THERE IS NO CASUS OMISUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISLATIVE INTENT AND AGAINST THE VERY RULE IN THI S BEHALF THAT IT SHOULD BE SUPPLIED FOR THE PURPOSE OF ACHIEVING LEG ISLATIVE INTENT. THE SUBMISSIONS ARE MANIFOLD, THE FOREMOST BEING T HAT THE ITA NO./MDS/2014 20 PROVISION UNDER SECTION. 153A SHOULD BE READ IN CON JUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), THE REAS ON BEING THAT THE LATER DEALS WITH SEARCH AND SEIZURE AND THE FO RMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TW O ARE INEXTRICABLY LINKED WITH EACH OTHER. 21. BEFORE PROCEEDING FURTHER, ONE MAY NOW EXAMINE THE PROVISIONS CONTAINED IN SUB-SECTION (2) OF SECTION 153. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUB-SECT ION (1) IS ANNULLED IN APPEAL ETC., THEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER NULLIFIED, TH E ASSESSMENT AGAIN ABATES. THE CASE OF THE ASSESSEE IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOOTING FROM THE PENDING ASSESSMENTS BECAUSE APPEAL S ETC. PROCEEDINGS CONTINUE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPENDS UPON SUBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, IT IS FOUND THAT THIS PROVISION ALSO MAKES IT CLEAR THAT THE ABATEMENT OF PENDING PROCEEDINGS IS NOT OF SUCH PE RMANENT NATURE THAT THEY CEASE TO EXIST FOR ALL TIMES TO CO ME. THE INTERPRETATION OF THE ASSESSEE, THOUGH NOT SPECIFI CALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMENT MADE UNDER SECTION 153(1), THE ASSESSING OFFICER GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EAR LIER INDEPENDENT OF THE SEARCH AND WHICH CAME TO AN END DUE TO INITIATION OF THE SEARCH. ITA NO./MDS/2014 21 22. THE PROVISION CONTAINED IN SECTION 132(1) EMPOWERS THE OFFICER TO ISSUE A WARRANT OF SEARCH OF THE PREMISE S OF A PERSON WHERE ANYONE OR MORE OF CONDITIONS MENTIONED THEREI N 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 TH E BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED THEREIN, OR (C ) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRE SENTS WHOLLY OR PARTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMEN T, EA LIED AS UNDISCLOSED INCOME OR PROPERTY. THE PROVISION IN SE CTION 132(1) DOES NOT USE THE WORD INCRIMINATING DOCUMENT: CLAUS ES (A) AND (B) OF SECTION 132(1) EMPLOY THE WORDS BOOKS OF ACCOUNT OR OTHER DOCUMENTS: FOR HARMONIOUS INTERPRETATION OF T HIS PROVISION WITH PROVISION CONTAINED IN SECTION 153A, ALL THE T HREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAVE TO BE TAKEN INTO ACCOUNT. 23. HAVING HELD SO, AN ASSESSMENT OR REASSESSMENT UNDER SECTION 153A ARISES ONLY 'WHEN A SEARCH HAS BEEN IN ITIATED AND CONDUCTED. THEREFORE, SUCH AN ASSESSMENT HAS A VITA L LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. A SEARCH CAN BE AUTHORIZED ON SATISFACTION OF ONE OF THE THREE COND ITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING T HE PROVISION CONTAINED IN SECTION 153A, ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, ONE PROCEEDS TO LITE RALLY INTERPRET TO ITA NO./MDS/2014 22 PROVISION IN SECTION 153A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINED IN SECTION 132(1 ) OF THE ACT. 24. THE PROVISION COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.05.2003. ON SATIS FACTION OF THIS CONDITION, THE ASSESSING OFFICER IS UNDER OBLIGATIO N TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE R ETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEAR CH. THE WORD USED IS SHALL AND, THUS, THERE IS NO OPTION BUT T O ISSUE SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS T OTAL INCOME OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USE D IS SHALL' AND, THEREFORE, THE ASSESSING OFFICER HAS NO OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE P ENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDI NG PROCEEDINGS WILL NOT BE PROCEEDED WITH THEREAFTER. THE ASSESSME NT HAS NOW TO BE MADE UNDER SECTION 153(1)(B) AND THE FIRST P ROVISO. IT ALSO MEANS THAT ONLY ONE ASSESSMENT WILL BE MADE UNDER THE AFORESAID PROVISIONS AS THE TWO PROCEEDINGS I.E. AS SESSMENT OR REASSESSMENT PROCEEDINGS AND PROCEEDINGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB-SECTIO N (1) IS ANNULLED IN APPEAL OR OTHER LEGAL P ROCEEDINGS, THEN THE ABATED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR REASSESSMEN T, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. ITA NO./MDS/2014 23 25. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASS ESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER SECTION I53A( 1)(B) AND THE FIRST PROVISO? FOR ANSWERING THIS QUESTION, GUI DANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF ANY BOOKS OF A CCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND F OUND IN THE COURSE OF SEARCH, SUCH BOOKS OF ACCOUNT OR OTHER DO CUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSM ENT OR REASSESSMENT OF TOTAL INCOME UNDER T HE AFORESAID PROVISION PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE W HERE 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 UNDER SECTION 15 3A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMEN T YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDIN GS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE ASSESSING OFFICER, (B) IN RESPECT OF NON-ABA TED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BAS IS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVER ED IN THE COURSE OF SEARCH. 26. THE INTERPRETATION IS TO BE MADE CONSIDERING THE PRINCIPLES ITA NO./MDS/2014 24 OF LITERAL INTERPRETATION AND READING THE RELEVANT PROVISIONS TOGETHER. THIS INTERPRETATION DOES NOT IN ANY MANNE R GIVE RESULTS WHICH CAN BE SAID TO BE ULTRA VIRES. IT ALSO DOES NOT GIVE ANY ABSURD OR UNJUST RESULTS. 27. THUS IN ASSESSMENT THAT ARE ABATED, THE ASSE SSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY AND IN OTHER CASES, IN ADD IT ION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT, , OTHER DOCUMENT, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 28. THE ABOVE VIEW WAS TAKEN BY SPECIAL BENCH, M UMBAI IN THE CASE OF CIT VS. ALL CARGO GLOBAL LOGISTICS L TD (SUPRA). 28.1 FURTHER, IT IS TO BE NOTED THAT FOR THE AS SESSMENT YEAR 2006-2007 ASSESSMENT WAS COMPLETED U/S.143(3) OF T HE ACT ON 31.12.2009 AND LATER ON ASSESSMENT WAS REOPENED CO NSEQUENT TO SEARCH ACTION U/S.153A OF THE ACT ON 28.03.2014. THE ASSESSEE FILED STATEMENT OF AFFAIRS THAT ORIGINAL R ETURN FILED U/S.139(1) OF THE ACT AND ALSO SAME WAS REVISED DUR ING THE COURSE OF PROCEEDINGS U/S.143(3) OF THE ACT. LATER ONCE AGAIN ITA NO./MDS/2014 25 DURING THE ASSESSMENT PROCEEDINGS U/S.153A OF THE A CT, THE COMMISSIONER OF INCOME TAX OBSERVED THAT THERE WER E DIFFERENCE BETWEEN THREE STATEMENTS FILED BY THE AS SESSEE WHEN COMPARED TO EACH OTHER. THE COMMISSIONER OF INCOME TAX WANTED TO BRING DIFFERENCE BETWEEN THESE STATEMENTS FOR TAXATION. THUS, IT MEANS THAT THERE WAS NO INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH ACTION U/S.132 OF THE ACT. 28.2. IN VIEW OF THE ABOVE, THE ORIGINAL ASSESSMEN T ORDER FOR THE ASSESSMENT YEAR 2006-2007 WAS ALREADY COMPL ETED U/S.143(3) OF THE ACT. HENCE THE ASSESSMENT U/S.15 3A TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHI CH MEANS BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN T HE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. IT WAS ADMITT ED FACT IN THIS CASE THAT THERE WAS NO INCRIMINATING MATERIAL DISCOVERED IN THE COURSE OF SEARCH ACTION. THERE WA S ALSO NO ALLEGATION THAT THE ASSESSEE HAS FAILED TO PRODU CE BOOKS OF ACCOUNTS AND DOCUMENTS IN THE COURSE OF ORIGINAL DOCUMENTS. IT IS ALSO A FACT THAT RECORDED BY COMM ISSIONER OF INCOME TAX THAT THE ASSESSING OFFICER FAILED TO EXAMINE THE BOOKS OF ACCOUNTS PRODUCED BY HIM DUE TO PAUCIT Y OF TIME AND THE ASSESSING OFFICER PROPOSED THE COMMISS IONER OF INCOME TAX TO REVIEW THE ORDER U/S.153A OF THE A CT. 29. IN OUR OPINION, THE COMMISSIONER OF INCOME TAX ITA NO./MDS/2014 26 WANTED TO DO THE THINGS INDIRECTLY WHICH CANNOT BE DONE DIRECTLY. FURTHER, HE MENTIONED IN THE ORDER THAT T HE ASSESSING OFFICER EXAMINED THE STATEMENT OF AFFAIRS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 DURING THE COU RSE OF ASSESSMENT U/S.143(3) OF THE ACT FINALISED ON 31 .12.2009 AND HE WANTED TO REVIEW THE SAME WHICH IS NOTHING B UT CAUSING ROVING INQUIRY WHICH IS NOT PERMITTED U/S.263 OF THE ACT. 30. TO CONCLUDE, THE COMMISSIONER OF INCOME TAX HAS NOT INDEPENDENTLY ARRIVED SATISFACTION WITH THE ORDER O F THE ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. THE COMMISSIONER OF INCOME TAX U/S.263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAK E OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACT ED. IN THE PRESENT CASE THERE IS NO INCORRECT ASSUMPTION OF FA CTS OR AN INCORRECT APPLICATION OF LAW BY THE ASSESSING OFFIC ER. THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE SEIZE D MATERIAL WHILE FRAMING ASSESSMENT FOR THE YEAR 2006-07 U/S.1 53A OF THE ACT. THE COMMISSIONER OF INCOME TAX CANNOT EXPECT T O CORRECT THE ASSESSMENT ORDER PASSED U/S.153A OF THE ACT DUL Y CONSIDERED THE SEIZED MATERIAL AND IN THE PRESENT C ASE THE COMMISSIONER OF INCOME TAX WANTED TO CONSIDER THE S TATEMENT OF AFFAIRS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT U/S.153A THOUGH IT WAS NOT PART OF THE SEIZED MATER IAL AND IT CANNOT BE CONSIDERED FOR FRAMING ASSESSMENT U/S.153 A OF THE ACT AS ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 H AS ITA NO./MDS/2014 27 ALREADY BEEN COMPLETED U/S.143(3) AND RE-ASSESSMENT U/S.153A BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIA L FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT. IN THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX CATEGORICALLY OBSERVED WHATEVER STATEMENTS ON R ECORD WERE ALREADY PRODUCED BY THE ASSESSEE BOTH IN THE COURSE OF ORIGINAL ASSESSMENT U/S.143(3) AND ALSO IN ASSESSMENT PROCEE DINGS U/S.153A OF THE ACT. THE ASSESSING OFFICER ADOPTED ONE OF THE COURSE PERMISSIBLE UNDER LAW AND HE HAS TAKEN ONE V IEW THAT THE COMMISSIONER OF INCOME TAX DOES NOT AGREE WHI CH CANNOT BE TREATED AS ERROR UNLESS THE VIEW TAKEN BY THE AS SESSING OFFICER IS UNSUSTAINABLE UNDER LAW. MOREOVER, WHIL E MAKING ASSESSMENT THE ASSESSING OFFICER EXAMINED THE ACCOU NTS, MADE ENQUIRIES, APPLIED HIS MIND TO THE FACTS AND CIRCUM STANCES OF THE CASE AND DETERMINED THE INCOME, THE COMMISSIONER OF INCOME TAX WHILE EXERCISING HIS POWER U/S.263 IS NOT PERMI TTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE I NCOME ESTIMATED BY THE ASSESSING OFFICER. IN OUR OPINION , THE ASSESSING OFFICER EXERCISES QUASI-JUDICIAL POWER VE STED IN HIS HANDS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVE AT A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER OF INC OME TAX WANTED TO DO FURTHER ENQUIRY AS HE HAS NOT SATISF IED WITH THE ENQUIRY MADE BY THE ASSESSING OFFICER. IN THE PRES ENT CASE, THE ASSESSING OFFICER MADE ENQUIRY BOTH IN THE COURSE O F ORIGINAL ASSESSMENT U/S.143(3) FOR THE ASSESSMENT YEAR 2006- 07 AND ALSO DURING THE COURSE OF ASSESSMENT U/S.153A OF TH E ACT AND ITA NO./MDS/2014 28 THE ASSESSEE HAS GIVEN A DETAILED EXPLANATION TO AS SESSING OFFICER TO CONSIDER THE SAME AFTER BEING SATISFIED BY THE EXPLANATION GIVEN BY THE ASSESSEE, HE ADOPTED NOT T O MAKE ANY ADDITION. 31. FURTHER, AS HELD BY JURISDICTIONAL HIGH COURT I N THE CASE OF MARIAM AYSHA VS. COMMISSIONER OF AGRICULTURAL INCOM E TAX 104 ITR 381 THAT CONSENT CANNOT GIVE JURISDICTION IS AN ESSENTIAL PRINCIPLE OF LAW. THE TAXING AUTHORITY CAN ACT ONL Y IF THERE IS POWER UNDER THE STATUTE TO DO SO. BEING SO, THE CON TENTION OF THE DEPARTMENTAL REPRESENTATIVE CANNOT BE ACCEPTED THAT BEFORE THE COMMISSIONER OF INCOME TAX, THE ASSESSEE HAS CO NCEDED THAT THE STATEMENT OF AFFAIRS NEEDS TO BE EXAMINED, SO THAT REVISION OF JURISDICTION U/S.263 IS APPROPRIATE. IN OUR OPINION THIS IS NOT A FIT CASE FOR REVISION U/S.263 OF THE ACT A ND WE ARE CANCELLING THE ORDER PASSED U/S.263 FOR THE YEAR 20 06-07. 32. THE REVISION ORDER PASSED FOR THE ASSESSMENT Y EARS 2007- 08, 2008-09, 2009-10, 2010-11 AND 2011-12 WERE MERE AFTERMATH TO THE ORDER PASSED U/S.263 FOR THE ASSES SMENT YEAR 2006-07. THE COMMISSIONER OF INCOME TAX HIMSELF AG REED THAT FINDINGS FOR ASSESSMENT YEAR 2006-07 HAVING CASCADI NG EFFECT ON THE SUBSEQUENT ASSESSMENT YEARS I.E FROM 2007-08 TO 2012- 2013. SINCE, WE HAVE CANCELLED THE REVISION ORDER FOR THE ASSESSMENT YEAR 2006-07 ON THE BASIS ON WHICH REVIS ION ORDER FOR THE OTHER ASSESSMENT YEAR WAS FRAMED, THESE ORD ERS CANNOT STAND ON THEIR OWN LEG, IN VIEW OF THE CANCELLATION OF THE REVISION ITA NO./MDS/2014 29 ORDER OF THE ASSESSMENT YEAR 2006-07. THUS, ALL TH E OTHER ORDERS PASSED U/S.263 BY COMMISSIONER OF INCOME TAX ARE ANNULLED. 33. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NOS. 2634 TO 2639/MDS/2014 ARE ALLOWED. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO QUASH THIS REVISION ORDER PASSED U/S.263 OF THE ACT BY TH E COMMISSIONER OF INCOME TAX. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON WEDNESDAY , THE 13 TH OF APRIL,2016 AT CHENNAI. SD/- SD/- ' # $ . % & ' ( DUVVURU RL REDDY ) ) ( ( ( ) * + ) ) ' CHANDRA POOJARI ', JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH APRIL,2016 . K S SUNDARAM. -.,, /0,10 /COPY TO: , 1. /APPELLANT 2. /RESPONDENT 3. , 2,'' /CIT(A) 4. , 2 /CIT 5. 034, 5 /DR 6. 4,6 /GF