M/s Vaibhav Empire Private Limited, Visakhapatnam V. THE DCIT, CENTRAL CIRCLE-1, Visakhapatnam

ITA 197/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6384 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Search and seizure; Block assessment; Notional interest; Revised return
• Section: 143(3); 142(1); 153A; 132

Judgement Text

ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.196, 197 & 222/VIZAG/2014 ( / ASSESSMENT YEARS: 2005-06, 2006-07 & 2007-08) M/S. VAIBHAV EMPIRE PVT. LTD. VISAKHAPATNAM DCIT, CENTRAL CIRCLE - 1, VISAKHAPATNAM [PAN NO. AABCV8928J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI R. GOVINDARAJAN, DR / DATE OF HEARING : 30 .03.2017 / DATE OF PRONOUNCEMENT : 31.03.2017 / O R D E R PER SHRI MANJUNATHA, ACCOUNTANT MEMBER: THESE 3 APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (A)-1, HYDERABAD DATED 19.2.2014 FOR THE ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08. SINCE, THE FACTS ARE IDENTICAL AND ISSU ES ARE COMMON, THEY ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 2 ARE CLUBBED, HEARD TOGETHER AND DISPOSED OFF BY THI S ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN GOLD AND JEWELLERY. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX, 1961 (HEREINAFTER CALLED AS THE ACT) WAS CONDUCTE D ON 9.1.2009 IN THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COUR SE OF SEARCH & SEIZURE OPERATIONS, CERTAIN INCRIMINATING DOCUMENTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. CONSEQUENT TO THE SEARCH, THE CASE HAS BEEN CENTRALIZED TO THE DCIT (CENTRAL CIRCLE)-1 , VISAKHAPATNAM VIDE PROCEEDINGS OF THE CIT, RAJAHMUNDRY IN F.NO.62/JURI S/CIT/RJY/2009-10 DATED 15.6.2009. ACCORDINGLY, NOTICE U/S 153A OF T HE ACT DATED 1.1.2010 WAS ISSUED REQUESTING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09. IN RESPON SE TO NOTICE, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 ON 5.3.2010. 3. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCO RDINGLY, NOTICES U/S 143(2) & 142(1) OF THE ACT, ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO THE NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED TH E BOOKS OF ACCOUNTS AND OTHER INFORMATION AS CALLED FOR. THE ASSESSMENT FOR THE ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 3 ASSESSMENT YEARS 2005-06 TO 2007-08 HAVE BEEN COMPL ETED U/S 143(3) R.W.S. 153A OF THE ACT, ON 30.12.2010. IN THE ASSE SSMENTS, THE A.O. HAS MADE ADDITIONS TOWARDS NOTIONAL INTEREST ON INTERES T FREE ADVANCES GIVEN OUT OF INTEREST BEARING FUNDS BORROWED FROM BANKS A ND FINANCIAL INSTITUTIONS. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS CHALLENGED THE ADDITIONS MADE BY THE A.O. ON THE GR OUND THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS OUT OF IT S OWN FUNDS AND INTEREST BEARING FUNDS HAS NOT BEEN DIVERTED, THERE FORE, THE A.O. WAS INCORRECT IN MAKING ADDITION TOWARDS NOTIONAL INTER EST. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE CONFIR MED ADDITIONS MADE BY THE A.O. AND DISMISSED APPEAL FILED BY THE ASSES SEE FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE ASSESSEE HAS FILED COMMON GROUNDS FOR ALL TH E THREE ASSESSMENT YEARS. FROM THESE GROUNDS OF APPEALS, T HE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE BY THE A.O., TOWARDS NOTIONAL INTEREST ON INTEREST FREE ADVANCES GIVEN TO SISTER CONCERNS. T HE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUND ON 6. 6.2016, RAISING A LEGAL GROUND CHALLENGING ADDITIONS MADE BY THE A.O. TOWAR DS NOTIONAL INTEREST ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 4 ON INTEREST FREE ADVANCES IN THE CONCLUDED ASSESSME NTS FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08, WHICH READS AS FOLLOWS: 1. ASSESSMENT IN THE CASE OF THE PETITIONER FOR THE A .Y 2005-06 WAS COMPLETED ON 30.12.2010 U/S 143(3) R.W.S. 153A OF T HE ACT BY MAKING ADDITION OF RS 5,76,59/- TOWARDS NOTIONAL IN TEREST. THEREBY, THE INCOME OF THE APPELLANT WAS DETERMINED AT RS 1,31,17,199/- AS AGAINST THE RETURNED INCOME OF RS 1,25,40,940/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CON FIRMED THE ABOVE ADDITION VIDE ORDER DT 19.02.2014. BEING AGGR IEVED, THE PETITIONER PREFERRED AN APPEAL BEFORE THE HON'BLE IN COME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM. 3. FROM THE FACTS ON RECORD WHICH ARE CLEARLY STATED I N THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ABOVE ADDI TION MADE WAS NOT BASED ON ANY MATERIAL FOUND DURING THE SEARCH. IT HAS BEEN CONSISTENTLY HELD BY VARIOUS HON'BLE BENCHES OF THE ITAT AND ALSO THE HIGH COURTS (INCLUDING HON'BLE VISAKHAPATNAM BE NCH IN THE CASE OF L.G. TRINADHA RAO IN ITA NO 306/V/2011 VIDE ORDER DT 19.04.2016) THAT WITH REGARD TO AN ASSESSMENT YEAR FOR WHICH THERE ARE NO PENDING PROCEEDINGS, ADDITIONS CAN BE MADE IN THE ASSESSMENT U/S 143(3) R.W.S. 153A ONLY AS WITH REFE RENCE TO SEIZED MATERIAL. 4. THE DATE OF SEARCH IN THE CASE OF THE APPELLANT IS 09.01.2009 AND THE APPELLANT FILED THE ORIGINAL RETURN OF INCOME F OR A.Y. 2005-06 ON 30.11.2006. THEREFORE, AS ON THE DATE OF SEARCH, THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) EXPIRED ALREADY AND AS SUCH THERE ARE NO PENDING PROCEEDINGS FOR THIS ASSESSMENT YEAR . THEREFORE, THE ASSESSING OFFICER IS PRECLUDED FROM MAKING ANY ADDITION WITHOUT REFERENCE TO SEIZED MATERIAL. 5. HOWEVER, THE ABOVE GROUND WAS NOT RAISED BEFORE THE LOWER AUTHORITIES DUE TO INADVERTENCE. THEREFORE, IT IS RESPECTFULLY PRAYED THAT THE FOLLOWING ADDITIONAL GROUND OF APPE AL MAY KINDLY BE ADMITTED AND ADJUDICATED, SINCE ALL THE MATERIAL FACTS RELATING TO THIS GROUND ARE ALREADY ON RECORD AND THE OMISSI ON TO TAKE THIS GROUND OF APPEAL WAS DUE TO BONA FIDE REASONS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE ADDITION OF ` 5,76,259/- MADE TOWARDS DISALLOWANCE OF NOTIONAL I NTEREST FROM THE INTEREST PAYMENTS CLAIMED BY THE APPELLANT IS OUTSI DE THE SCOPE OF ASSESSMENT COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT? ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 5 6. DURING THE COURSE OF HEARING, THE LD. A.R. FOR T HE ASSESSEE, SUBMITTED THAT ALL THE MATERIAL FACTS RELEVANT TO T HE LEGAL ISSUE ARE ALREADY ON RECORD AND THE ISSUE AS TO SCOPE OF ADDI TIONS THAT CAN BE MADE IN AN ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT, IS PURELY A LEGAL ISSUE, WHICH CAN BE RAISED AT ANY TIME BEFORE THE TRIBUNAL. THEREFORE, REQUESTED TO ADMIT ADDITIONAL GROUND OF APPEAL AND PASS SUCH ORDERS AS MAY BE APPROPRIATE IN THE INTEREST O F RENDERING SUBSTANTIAL JUSTICE. THE LD. D.R. ON THE OTHER HAN D, STRONGLY OPPOSED ADMISSION OF ADDITIONAL GROUND RAISED BY THE ASSESS EE. 7. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATER IAL ON RECORD, WE FIND THAT FACTS WHICH ARE NECESSARY FOR ADJUDICA TION OF LEGAL ISSUE RAISED BY THE ASSESSEE ARE ALREADY ON RECORD AND NO NEW MATERIAL OR EVIDENCE IS RELIED UPON TO CHALLENGE THE LEGAL ISSU E. THEREFORE, WE ARE OF THE VIEW THAT ADDITIONAL GROUND RAISED BY THE AS SESSEE CAN BE ADMITTED FOR ADJUDICATION AND ACCORDINGLY, WE ADMIT ADDITIONAL GROUND RAISED BY THE ASSESSEE AND PROCEED TO DISPOSE OF TH E APPEAL. 8. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON BY WAY OF ADDITIONAL GROUNDS OF APPEAL IS WHETHER ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE, THE A.O. IS RIGHT IN MAK ING ADDITIONS TOWARDS NOTIONAL INTEREST ON INTEREST FREE ADVANCES GIVEN O UT OF INTEREST BEARING FUNDS FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08, WHERE THE ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 6 ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED AND NO P ROCEEDINGS WERE PENDING AS ON THE DATE OF SEARCH? THE LD. A.R. FOR THE ASSESSEE, REFERRING TO THE DECISION OF ITAT, VISAKHAPATNAM BE NCH IN THE CASE OF L. SURYAKANTHAM VS. ACIT IN ITA NOS.300 TO 305/VIZAG/2 012, SUBMITTED THAT IN THE CASE OF CONCLUDED ASSESSMENTS THE A.O. HAS NO JURISDICTION TO MAKE ADDITIONS TOWARDS RETURNED INCOME IN THE ABSEN CE OF INCRIMINATING MATERIAL. THE A.R. FURTHER SUBMITTED THAT IN THE C ASE OF ABATED ASSESSMENT AND ASSESSMENTS, WHICH ARE PENDING AS ON THE DATE OF SEARCH, THE A.O. CAN ASSUME JURISDICTION TO ASSESS/ RE-ASSESS TOTAL INCOME, WHICH IS FOUND DURING THE COURSE OF SEARCH. IN THIS CASE, THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2005-06 TO 200 7-08 ARE ALREADY CONCLUDED AND NO PROCEEDINGS ARE PENDING AS ON THE DATE OF SEARCH AND HENCE, THE A.O. IS PRECLUDED FROM MAKING ADDITIONS IN THE ABSENCE OF SEIZED MATERIALS. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED ORDER OF THE CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHE THER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE A.O. IS RIGHT IN MAKING ADDITIONS WITHOUT ANY SEIZED MATERIALS IN RESPECT OF ASSESSME NT YEARS FOR WHICH THE ASSESSMENT PROCEEDINGS HAVE BEEN CONCLUDED AS O N THE DATE OF ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 7 SEARCH. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED T HAT THE ISSUE HAS BEEN ALREADY CONSIDERED BY THE COORDINATE BENCH OF VISAKHAPATNAM ITAT IN THE CASE OF L. SURYAKANTHAM VS. ACIT (SUPRA ), WHEREIN IT HAS BEEN OBSERVED THAT THE A.O. HAS NO JURISDICTION TO MAKE ADDITIONS IN THE ASSESSMENT U/S 153A OF THE ACT, FOR THE ASSESSMENTS WHICH ARE NOT PENDING AS ON THE DATE OF SEARCH. THE RELEVANT POR TION OF THE ORDER IS EXTRACTED BELOW: 19. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE FACTUAL MATRIX OF THE CASE IS THAT THERE WAS A SEARCH ACTIO N U/S 132 OF THE ACT. DURING THE COURSE OF SEARCH, INCRIMINATING DOCUMENT S FOUND REVEALS THAT THE ASSESSEE HAS INFLATED LABOUR CHARGES FOR THE AS SESSMENT YEARS 2008- 09 & 2009-10. BASED ON THE DOCUMENTS FOUND DURING SEARCH, THE ASSESSEE HAS ACCEPTED THAT HE HAS INFLATED 10% LABO UR CHARGES AND WHICH IS COMMON IN THIS LINE OF BUSINESS. CONSEQUENT TO SEARCH ACTION U/S 132 OF THE ACT, THE ASSESSEE CASE HAS BEEN CENTRALIZED AND ACCORDINGLY FRESH ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED BY ISSUI NG NOTICE U/S 153A/153C OF THE ACT FOR THE SIX ASSESSMENT YEARS I MMEDIATELY PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE ASSESSEE HAS FILED REVISED RETURNS IN RESPONSE TO NOTICE U/S 153 A OF THE ACT AND ADMITTED THE ADDITIONAL INCOME DISCLOSED DURING THE COURSE OF SEARCH. THE CASE HAS BEEN SELECTED FOR SCRUTINY. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE BOOK S OF ACCOUNTS AND RELEVANT BILLS & VOUCHERS IN SUPPORT OF EXPENDITURE CLAIMED. IN RESPONSE, THE ASSESSEE FILED WRITTEN SUBMISSION AND STATED TH AT THE BOOKS OF ACCOUNTS ARE NOT AVAILABLE AND HENCE CANNOT BE FURN ISHED. THEREFORE, THE A.O. ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAI N WHY THE NET PROFIT FROM THE BUSINESS SHALL NOT BE ESTIMATED. IN RESPON SE TO SHOW CAUSE NOTICE, THE ASSESSEE HAS FILED A WRITTEN REPLY AND CONTENDED THAT THE INCOME FOR THE ASSESSMENT YEAR 2004-05, 2005-06 AND 2007-08 CANNOT BE TINKERED WITH, AS THERE WAS NO INCRIMINATING MATERI AL FOUND DURING THE COURSE OF SEARCH FOR THE ABOVE ASSESSMENT YEARS AND AS SUCH NO ADDITIONS CAN BE MADE TO THE RETURNED INCOME. IT IS FURTHER S UBMITTED THAT AS PER SEC. 153A OF THE ACT, DE-NOVO ASSESSMENT CAN BE MAD E ONLY IN RESPECT OF THE ASSESSMENT YEAR FOR WHICH THE ASSESSMENT PROCEE DINGS HAD BEEN ABATED AND THAT IN RESPECT OF ASSESSMENT YEARS FOR WHICH THE ASSESSMENT HAD ALREADY BEEN REACHED A FINALITY, SUCH ASSESSMEN T COULD NOT BE MADE U/S 153A OF THE ACT UNLESS THERE WAS SEIZED MATERIA LS. ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 8 20. THE A.O. HAS PASSED REASSESSMENT ORDERS U/S 153 A/153C OF THE ACT FOR ALL THE SIX ASSESSMENT YEARS IMMEDIATELY PRECED ING THE YEAR IN WHICH SEARCH WAS CONDUCTED. ACCORDING TO THE A.O., AS PE R THE PROVISIONS OF SECTION 153A OF THE ACT, THERE IS NO LIMITATION OR RESTRICTION PROVIDED IN THE NEW PROCEDURE OF SEARCH ASSESSMENTS ON THE POWERS O F A.O. FOR MAKING ASSESSMENT/REASSESSMENT AND THE A.O. IS NOT REQUIRE D TO CONFINE HIS ASSESSMENTS ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH AS WAS THE CASE IN THE OLD PROCEDURE OF BLOCK ASSESSMENTS. TH E NEW PROCEDURE OF BLOCK ASSESSMENT WAS EXPLAINED BY WAY OF PROVISIONS OF SECTION 153A OF THE ACT. AS PER SECTION 153A OF THE ACT, THE A.O. SHALL ASSESS OR REASSESS THE TOTAL INCOME OF THE SPECIFIED SIX ASSESSMENT YE ARS IRRESPECTIVE OF THE FACT THAT THE ASSESSMENT OF THE SAID YEARS WERE COM PLETED OR PENDING AS ON THE DATE OF SEARCH. THEREFORE, THE A.O. HAS REA SSESSED THE INCOME OF SIX ASSESSMENT YEARS AND RECOMPUTED THE PROFITS AFR ESH AFTER CONSIDERING THE RELEVANT FACTS AVAILABLE ON RECORD. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE A.O. CANNOT DISTURB THE COMPLETED ASSESSMENTS UNLESS THERE WAS A SEIZED MATERIAL. THE ASSESSEE FURTHER C ONTENDED THAT WHERE ASSESSMENTS ARE NOT PENDING AS ON THE DATE OF SEARC H AND TIME LIMIT FOR ISSUE OF NOTICES U/S 143(2) OF THE ACT HAS BEEN EXP IRED, IRRESPECTIVE OF THE FACT THAT THOSE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(1) OR 143(3) OF THE ACT, THEN THE A.O. HAS NO POWER TO REASSESS THE INCOME OF THOSE COMPLETED ASSESSMENT YEARS. 21. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ISSUE NO LONGER RES INTEGRA, AS THE ISSUE HAS B EEN ALREADY DECIDED BY THE ITAT, SPECIAL BENCH AND HELD THAT WHERE THE ASS ESSMENTS ARE NOT PENDING AS ON THE DATE OF SEARCH, THE A.O. LOSSES J URISDICTION U/S 153A OF THE ACT TO REASSESS THE INCOME OF THOSE COMPLETED A SSESSMENTS. THOUGH THE PROVISIONS OF SECTION 153A OF THE ACT DOES NOT SPECIFY ABATED AND COMPLETED ASSESSMENTS, THE NATURAL MEANING ASSIGNED TO IT SHOULD BE GIVEN TO INTERPRET THE PROVISIONS IN SUCH A WAY THA T WHICH SHALL NOT CAUSE UNDUE HARDSHIP TO THE TAX PAYERS. THE PROVISIONS OF SECTION 153A OF THE ACT EXPLAINED THE PROCEDURE OF ASSESSMENTS, ABATED ASSESSMENTS AND THE MANNER IN WHICH THE ASSESSMENT SHOULD BE FRAMED, WH ICH WAS FURTHER SUPPORTED BY CIRCULAR NO.7 OF 2003 ISSUED BY THE CB DT. WHEN THE LAW HAS EXPLAINED THE POSITION OF ABATED ASSESSMENTS, THEN THE SAME WAY THE COMPLETED ASSESSMENT SHOULD BE TREATED SO AS TO UND ERSTAND THAT THOSE ASSESSMENTS ARE REACHED FINALITY AND WHICH CANNOT B E TINKERED WITH UNLESS THERE WAS A SEIZED DOCUMENT. THEREFORE, WE ARE OF T HE CONSIDERED OPINION THAT WHERE SEARCH IS INITIATED, ALL PENDING ASSESSM ENTS ARE MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SH ALL BE MADE SEPARATELY ON THE BASIS OF FINDINGS OF SEARCH AND O THER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE A.O. IN RESPECT OF NON ABA TED OR COMPLETED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BAS IS OF BOOKS OF ACCOUNTS OR OTHER RELEVANT DOCUMENTS FOUND DURING T HE COURSE OF SEARCH, BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSME NT. ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 9 22. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE D OCUMENT AVAILABLE ON RECORD, WE FIND THAT THE ASSESSMENT FOR THE ASSE SSMENT YEAR 2004-05 TO 2007-08 WERE NOT PENDING AS ON THE DATE OF SEARC H. THE FACT THAT THE ASSESSMENT HAS BEEN COMPLETED U/S 143(1) & 143(3) O F THE ACT ARE NOT MATERIAL. THE TIME LIMIT FOR ISSUE OF NOTICE U/S 14 3(2) OF THE ACT HAS BEEN EXPIRED. ON FURTHER VERIFICATION OF THE DOCUMENTS A VAILABLE ON RECORD, WE FIND THAT THERE WAS NO INCRIMINATING DOCUMENTS FOUN D DURING THE COURSE OF SEARCH IN RESPECT OF ASSESSMENT YEAR 2004-05 TO 200 7-08. THEREFORE, WE ARE OF THE OPINION THAT THE A.O. WAS NOT CORRECT IN REASSESSING THE TOTAL INCOME OF THE ASSESSMENT YEAR 2004-05 TO 2007-08 IN THE ABSENCE OF ANY SEIZED MATERIALS. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE ADDITIONS MADE FOR THE ASSESSMENT YEAR 2004-05, 2005-06 & 200 7-08. 23. IT IS PERTINENT TO DISCUSS HEREIN THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE ASSESSEE HAS RELIED UPON THE ITAT, S PECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 287. THE COORDINATE BENCH OF THIS TRIBUNAL, WHILE DECIDI NG THE ISSUE IN FAVOUR OF THE ASSESSEE HELD AS UNDER: IN ASSESSMENTS THAT ARE ABATED, THE AO ARETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. IN OTHER CASES, IN ADDITION TO T HE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT , OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PR ODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 24. THE ASSESSEE RELIED UPON, A.P. HIGH COURT DECIS ION IN THE CASE OF CIT VS. M/S. AMR INDIA LTD. IN ITTA NO.354 OF 2014 D ATED 12.6.2014. THE HONBLE HIGH COURT HELD THAT THE A.O. HAS NO JURISD ICTION TO RE-AGITATE THE ASSESSMENTS WHICH WERE ALREADY COMPLETED AND SUBSID ING. THE RELEVANT PORTION IS EXTRACTED BELOW: WE HAVE HEARD SRI J.V. PRASAD, LEARNED COUNSEL FOR THE APPELLANT, AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER O F THE LEARNED TRIBUNAL. IT APPEARS THAT THE LEARNED TRIBUNAL FOUND ON FACT T HAT AFTER COMPLETION OF ASSESSMENT PROCEEDINGS AND AFTER REAC HING FINALITY THEREON, THE ASSESSING OFFICER TRIED TO REAGITATE T HE ASSESSMENTS. ACCORDING TO US, THE LEARNED TRIBUNAL HAS RIGHTLY H ELD THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO REAGITATE THE ASSESSMENTS WHICH WERE ALREADY COMPLETED AND SUBSISTING. WE TH EREFORE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED IN THIS APPEA L. HENCE, THE APPEAL IS DISMISSED. THERE WILL BE NO O RDER AS TO COSTS. ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 10 25. THE ASSESSEE HAS RELIED UPON THE COORDINATE BEN CH DECISION OF ITAT, VISAKHAPATNAM IN THE CASE OF A.T. RAYUDU IN I TA NO.373 TO 379/VIZAG/2014. THE COORDINATE BENCH, UNDER SIMILAR CIRCUMSTANCES HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION IS REPRODUCED HEREUNDER: 22. IN THIS REGARD, IT IS ALSO PERTINENT TO REFER TO THE FOLLOWING OBSERVATIONS MADE BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA):- 57 (F) IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (106 JTR 57)(SC), IT HAS BEEN MENTIONED IN THE LAST PARAGRAP H OF THE JUDGMENT THAT THE COURT HAS TO BEAR IN MIND THAT THE POLICY OF LA W IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT ST ALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPS E OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICI AL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. OUR DECISION IS IN CONSONANCE WITH THIS OBSERVATION. THE DECISION RENDERED BY THE SPECIAL BENCH THAT THE ASSESSING OFFICER CAN MAKE ADDITIONS IN THE CASE OF CONCLUDED ASSESSM ENTS ON THE BASIS OF INCRIMINATING MATERIALS IS ALSO BASED UPON THE DECI SION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WOR KS CO. LTD (SUPRA). 23. WE HAVE EARLIER NOTICED THAT THE HON'BLE JURIS DICTIONAL ANDHRA PRADESH HIGH COURT HAS ALSO UPHELD BY THE ORDERS PASSED BY THE TRIBUNAL BY FOLLOWING THE DECISION RENDERED BY THE SPECIAL BENCH IN THE C ASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA) IN THE FOLLOWING CASES: - (A) SREE LALITHA CONSTRUCTIONS (J1TA NO 368 OF 2014) (B) M/S. HYDERABAD HOUSE PVT LTD (ITTA NO.266 OF 2 013) (C)M/S. AMR INDIA LTD (FITA NO.357 /V/2014) FURTHER WE AGREE WITH THE CONTENTIONS OF THE ASSESS EE THAT THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT IN THE CA SE OF GOPAL DAS BHADRUKA (SUPRA) HAVE BEEN RENDERED ON THE FACTS PREVAILING IN THOSE CASES, SINCE THE ISSUE RELATING TO CONCLUDED ASSESSMENTS AND PENDING ASSESSMENTS WAS NOT BEFORE THE I1ON'BLE ANDHRA PRADESH HIGH COURT ON TH E CONTRARY, THE ABOVE SAID THREE DECISIONS OF THE JURISDICTIONAL HIGH COU RT COMES TO THE SUPPORT OF THE ASSESSEE'S CONTENTIONS WITH REGARD TO THE LEGAL PROPOSITION AGITATED BEFORE US, BESIDES THE DECISIONS RENDERED BY VARIOU S OTHER HIGH COURTS. ACCORDINGLY, WE ARE OF THE VIEW THAT THE SCOPE OF E NQUIRY IN THE CASE OF UNABATED ASSESSMENTS, I.E., THE ASSESSMENT YEARS IN WHICH PROCEEDINGS ARE NOT PENDING, IS THAT THE UNDISCLOSED INCOME SHOULD BE ASCERTAINED ONLY ON THE BASIS OF MATERIALS FOUND DURING THE COURSE OF S EARCH. IF NO INCRIMINATING MATERIAL SHOWING ANY UNDISCLOSED INCOME WAS FOUND I N THE CASE OF CONCLUDED PROCEEDINGS, THEN THE QUESTION OF MAKING ANY ADDITION DOES NOT ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 11 ARISE. IN THAT CASE, THE ASSESSING OFFICER SHOULD C OMPLETE THE ASSESSMENT OF THOSE YEARS BY DETERMINING THE VERY SAME TOTAL INCO ME THAT WAS ASSESSED IN THE EARLIER PROCEEDING. 24. IN VIEW OF THE ABOVE, WE ARE UNABLE TO AGREE W ITH THE CONTENTIONS OF LD STANDING COUNSEL THAT THE ASSESSI NG OFFICER WOULD GET UNFETTERED POWERS IN THE CASE OF UNABATED ASSESSMEN TS, ONCE THEY WERE REOPENED US 153A OF THE ACT. IN OUR VIEW, IN THE CA SE OF UNABATED ASSESSMENTS, THE TOTAL INCOME SHOULD BE DETERMINED BY THE ASSESSING OFFICER BY COMBINING THE INCOME ALREADY ASSESSED/DI SCLOSED IN THE RETURN OF INCOME AND THE UNDISCLOSED INCOME, IF ANY, FOUND DURING THE COURSE OF SEARCH PROCEEDING. EVEN OTHERWISE, IT IS SETTLED PR OPOSITION OF LAW THAT THE ASSESSEE IS ENTITLED TO TAKE SUPPORT OF THE DECISIO N IN HIS FAVOUR, WHEN TWO CONTRADICTORY VIEWS HAVE BEEN EXPRESSED BY THE HIGH COURTS. IN THE INSTANT CASE THE HONBLE JURISDICTIONAL HIGH COURT COMES TO THE SUPPORT OF THE ASSESSEE IN RESPECT OF THE LEGAL PROPOSITION IN ADDITION TO THE DECISION RENDERED BY THE HON'BLE BOMBAY HIGH COURT. ACCORDIN GLY, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE ON THE LEGAL ISS UE. 26. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N IN THE CASE OF ALL CARGO LOGISTICS PVT. LTD. (SUPRA), WE ARE OF THE OP INION THAT THE A.O. HAS MADE REASSESSMENT U/S 153A/153C OF THE ACT ON THE B ASIS OF INFORMATION/MATERIAL AVAILABLE IN THE RETURN OF INC OME, WITHOUT REFERRING TO ANY SEIZED MATERIAL. THEREFORE, FOLLOWING THE SPEC IAL BENCH DECISION (SUPRA) WE HOLD THAT THE A.O. HAD NO JURISDICTION T O MAKE ADDITIONS U/S 153A OF THE ACT FOR THE ASSESSMENTS WHICH ARE NOT P ENDING AS ON THE DATE OF SEARCH. IN THIS CASE, THE SEARCH WAS CONDUCTED ON 14.7.2009. THE ASSESSMENT FOR THE ASSESSMENT YEARS 2004-05 TO 2007 -08, WERE NOT PENDING AS ON THE DATE OF SEARCH. THE TIME LIMIT F OR ISSUE OF NOTICE UNDER SEC. 143(2) HAS BEEN EXPIRED. THEREFORE, THE A.O. H AS NO JURISDICTION TO REASSESS THE INCOME FOR THE ASSESSMENT YEAR 2004-05 TO 2007-08 IN THE ABSENCE OF ANY INCRIMINATING MATERIALS. HENCE, WE DELETE THE ADDITIONS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 2004-05, 2 005-06 & 2007-08. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS A LLOWED. 10. IN THIS CASE, SEARCH WAS TAKEN PLACE ON 9.1.200 9. AS ON THE DATE OF SEARCH, THE ASSESSMENT FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 WERE ALREADY CONCLUDED AND THERE ARE NO PROCEEDINGS PENDING FOR THOSE ASSESSMENT YEARS. THE TIME LIMIT FOR ISSUE OF NOTI CE U/S 143(2) OF THE ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 12 ACT, FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08 HA S BEEN EXPIRED. THE A.O. MADE ADDITIONS TOWARDS NOTIONAL INTEREST O N INTEREST FREE ADVANCES GIVEN TO SISTER CONCERNS WITHOUT ANY INCRI MINATING MATERIALS AND BASED ON THE BOOKS OF ACCOUNTS AND FINANCIAL ST ATEMENTS, WHICH WERE ALREADY PART OF REGULAR RETURN OF INCOME FILED BY THE ASSESSEE U/S 139(1) OF THE ACT FOR THOSE ASSESSMENT YEARS. THER EFORE, WE ARE OF THE VIEW THAT THE A.O. HAS NO JURISDICTION TO MAKE ADDI TIONS IN RESPECT OF CONCLUDED ASSESSMENTS IN THE ABSENCE OF ANY INCRIMI NATING MATERIALS. HENCE, WE DIRECT THE A.O. TO DELETE ADDITIONS TOWAR DS NOTIONAL INTEREST ON INTEREST FREE ADVANCES GIVEN TO SISTER CONCERNS FOR THE A.Y. 2005-06 TO 2007-08. 11. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS MADE BY THE A.O. TOWARDS NOTIONAL INTEREST ON INTER EST FREE ADVANCES GIVEN TO SISTER CONCERNS. SINCE, WE HAVE ALREADY D ELETED ADDITIONS MADE BY THE A.O., ON THE GROUND THAT THE A.O. HAS NO JUR ISDICTION TO MAKE ANY ADDITIONS IN RESPECT OF CONCLUDED ASSESSMENTS IN TH E ABSENCE OF INCRIMINATING MATERIALS, THE ISSUE RAISED BY THE AS SESSEE ON MERITS IS PURELY ACADEMIC IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION AT THIS POINT OF TIME. THEREFORE, WE DID NOT ADJUDICATE TH E ISSUE RAISED BY THE ASSESSEE ON MERITS. ITA NOS.196, 197 & 222/VIZAG/2014 M/S. VAIBHAV EMPIRE PVT. LTD., VISAKHAPATNAM 13 12. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E FOR THE ASSESSMENT YEARS 2005-06, 2006-07 & 2007-08 ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 31 ST MAR17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 31.03.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. VAIBHAV EMPIRE PVT. LTD., 4 7-10-19, 2 ND LANE, DWARAKANAGAR, VISAKHAPATNAM 2. / THE RESPONDENT THE DCIT, CENTRAL CIRCLE-1, VIS AKHAPATNAM 3. + / THE CIT (CENTRAL), HYDERABAD 4. + ( ) / THE CIT (A)-1, HYDERABAD 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM