DCIT CEN CIR 2, MUMBAI V. HARESH R. MAJETHIA, MUMBAI

ITA 3771/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84207 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Bench Allotted: H
• Next Hearing Date: 13-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Court: TRIBUNAL
• Department Lawyers: K C PATNAIK
• Assessee Lawyers: MRS RITIKA AGARWAL
• Keywords: Search and seizure; Valuation report
• Section: 143(3); 153A; 14A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 3771/M/2011 (AY 2007 - 2008) DCIT - CENTRAL CIRCLE 2, OLD CGO BLDG, ANNEXE, 9 TH FLR, M.K. ROAD, MUMBAI 400 020. / VS. HARESH R. MAHETHIA, 1803, 18 TH FLOOR, TRIDEV TOWER, BHAKTI MARG, MULUND (W), MUMBAI 400 080. ( / APPELLANT) .. ( / RESPONDENT ) CROSS OBJECTION NO.191/M/2011 (ARISING OUT OF I.T.A. NO.3771/M/2011 (AY 2007 - 2008) HARESH R. MAHETHIA, 1803, 18 TH FLOOR, TRIDEV TOWER, BHAKTI MARG, MULUND (W), MUMBAI 400 080. PAN: AEQPM 5542 P / VS. DCIT - CENTRAL CIRCLE 2, OLD CGO BLDG, ANNEXE, 9 TH FLR,M.K. ROAD, MUMBAI 400 020. ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : MRS. RITIKA AGARWAL / REVENUE BY : SHRI K.C. PATNAI K , CIT - DR / DATE OF HEARING : 14.10.2014 / DATE OF PRONOUNCEMENT : 14 .11.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE 2 APPEALS UNDER CONSIDERATION. APPEAL ITA NO.3771/M/2011 IS FILED BY THE REVENUE AND CROSS OBJECTION NO.191/M/2011 IS FILED BY THE ASSESSEE INVOLVING THE ASSESSMENT YEAR 2007 - 08. SINCE, THE ISSUES RAISED IN THESE TWO APPEALS ARE CONNECTED, THEREFORE, FOR THE SAKE OF CONVENINENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. FIRSTLY, WE SHALL TAKE UP THE CROSS OBJECTION RAISED BY THE ASSESSEE FOR THE AY 2007 - 08 VIDE C.O. NO.191/M/2011 . IN THIS CROSS OBJECTION, THE ASSESSEE RAISED THE FOLLOWING GROUNDS AS WELL AS THE ADDITIONAL GROUND, WHICH READ AS UNDER: REGULAR GROUNDS OF APPEAL: THE IMPUGNED ORDER PASSED U/S 153A OF THE ACT IS INVALID, ILLEGAL AND WHOLE WITHOUT PREJUDICE . 1. BECAUSE, LD CIT (A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE VALIDITY OF SEARCH WHILE DISMISSING THE FINDING OF THE FACT OF THE AO THAT THE VERY BASIS OF INITIATION OF SEARCH 2 PROCEEDINGS U/S 132 OF THE ACT WAS NON - EXISTENCE AS ALSO THE DIRECTION OF THE H ONBLE HIGH COURT OF BOMBAY IN WRIT PETITION FILED BY THE RESPONDENT. 2. BECAUSE, LD CIT (A) ERRED IN LAW AND ON FACTS IN TREATING THE ORDER OF TRANSFER OF CASE U/S 127 OF THE ACT PASSED BY LD CIT ASSIGNING THE CASE TO LD ACIT, CC - 22, MUMBAI AS VALID. 3. BECAUSE , LD CIT (A) ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THERE BEING NO DETECTION OF ANY DISCLOSED INCOME OR ASSET FOR THE YEAR UNDER APPEAL NO JURISDICTION TO FRAME ASSESSMENT U/S 153A OF THE ACT COULD BE ASSUMED BY AO. ADDITIONS MADE ARE UNWARRAN TED: 4. BECAUSE, LD CIT (A) ERRED IN LAW AND ON FACTS IN DISALLOWING 10% OF MOTOR CAR EXPENSES TREATING THE SAME AS PERSONAL EXPENSES. 5. BECAUSE, ADDITIONS MADE ARE MERE REAPPRECIATION AND REVIEW OF THE INFORMATION ALREADY DISCLOSED BY THE APPELLANT IN REGULA R RETURNS AND ASSESSED BY THE REVENUE IN REGULAR ASSESSMENT PROCEEDINGS AND ARE TOTALLY CONNECTED WITH THE SEARCH ACTION U/S 132 OF THE ACT. ADDITIONAL GROUNDS OF APPEAL: 6. BECAUSE, THE LD CIT (A) FAILED TO OBSERVE THAT THE ASSESSMENT FOR IMPUGNED ASSESSMENT YEAR HAS ATTAINED FINALITY AND NO ADDITION UNDER SECTION 153A COULD BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH FOR RELEVANT ASSESSMENT YEAR. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND ENGAGED IN THE PROFESSION OF PROPERTY DEALER. ASSESSED FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 4,23,111/ - . A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE ACT WAS CONDUCTED AT THE PREMISES SITUATED AT MULUND (W), MU MBAI BY THE ADIT (INVESTIGATION). SUBSEQUENTLY, THE CASE WAS TRANSFERRED TO THE DCIT, CC - 2, MUMBAI , WHO ISSUED NOTICE U/S 153A CALLING FOR FILING OF THE RETURN OF INCOME FOR THE AYS 2003 - 04 TO 2008 - 09. IN THIS REGARD, ASSESSEE FILED A WRIT PETITION IN TH E BOMBAY HIGH COURT CHALLENGING THE VALIDITY OF THE SEARCH. ON THE SAID WRIT PETITION, THE HIGH COURT DIRECTED THE AO TO DEAL WITH ALL THE OB JECTIONS OF THE ASSESSEE REGARDING THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT; TRANSFER OF THE ASSESSEES CASE U/ S 127 OF THE ACT TO DCIT, CC - 2, MUMBAI ETC. IN THE ASSESSMENT ORDER DATED 30.12.2010, AO DISMISSED THE ASSESSEE S CONTENTIONS RELYING ON ASSESSEES OWN CASE AND HELD THAT THE ORDER U/S 127 AS WELL AS THE PROCEEDINGS U/S 153A ARE VALID. SUBSEQUENTLY, AO COMPLETED THE ASSESSMENT U/S 153A R.W.S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF RS.70,03,820/ - . AGGRIEVE D WITH THE ACTION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) UPHELD THE VALIDITY OF THE SEAR CH BY RELYING ON VARIOUS DECISIONS INCLUDING THE ORDER OF THE INDORE BENCH OF THE ITAT IN THE CASE OF RAJAT TRADECOM INDIA 120 ITD 48 (IND) WHICH IS RELEVANT FOR THE PROPOSITION THAT 3 ASSESSMENT GETS REOPENED FOR SIX YEARS EVEN IF NO INCRIMINATING MATERIAL IS FOUND. AGGRIEVED, WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS AND QUESTIONED THE ACTION OF THE AO IN MAKING THE ASSESSMENT U/S 153A OF THE ACT, IN THE ABSENCE OF ANY INCRIMINAT ING MATERIAL FOUND AS A RESULT OF SEARCH. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE LEGAL ISSUE RELATING TO THE VALIDITY OF THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT WITHOUT ANY INCRIMINATING MAT ERIAL IS DECIDED IN FAVOUR OF THE ASSESSEE BY VARIOUS HIGH COURTS AS WELL AS THE DECISIONS OF THE TRIBUNAL. IN THIS REGARD, HE RELIED ON VARIOUS DECISIONS NAMELY (I) THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. MURLI AGRO PRODUCTS LTD VIDE ITA NO. 36 OF 2009, DATED 29.10.2010; (II) JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT AT JODHPUR IN THE CASE OF JAI STEEL (INDIA) VS. ACIT [2013] 259 CTR (RAJ) 281; (III) DECISION OF THE ITAT, MUMBAI IN THE CASE OF CIT VS. PRATIBHA INDUSTRIES LTD [ 2013] 23 ITR 766; (IV) ANOTHER DECISION OF THE ITAT MUMBAI IN THE CASE OF ACIT VS. SHRI JAYENDRA P JHAVERI VIDE ITA NOS. 2141 TO 2144/M/2012 AND OTHERS, DATED 20.2.2014; (V) ITAT, MUMBAI BENCH DECISION IN THE CASE OF SHRI GOVIND AGARWAL VS. ACIT VIDE ITA N OS. I.T.A. NO.3389/M/2011 (AY: 2002 - 2003) AND I.T.A. NO.3390/M/2011 (AY: 2004 - 2005), DATED 10.01.2014 AND (VI) ITAT, DELHI BENCH DECISION IN THE CASE OF SANJAY AGARWAL VS. DCIT IN ITA NO.3184/DEL/2013 DATED 16.6.2014 WHICH ARE RELEVANT FOR THE PROPOSITION THAT THERE IS NO VALIDITY OF THE ASSESSMENTS U/S 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, IT IS PRAYED BY THE LD COUNSEL THAT CONSIDERING THE SETTLED NATURE OF THE LEGAL ISSUE, THE SAME MAY BE DECIDED IN FAVOUR OF THE ASSESSEE. 5. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WE LL AS THE JUDGMENT OF VARIOUS HIGH COURTS AND THE DECISIONS OF THE ITAT ALONG WITH THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE SAID JUDGMENTS AND THE DECISIONS OF THE TRIBUNAL, WE FIND THE LEGAL ISSUE RAISED BY THE ASSESSEE IS A SETTLED ONE IN HIS FAVOUR. THE DECISIONS CITED BY THE LD COUNSEL 4 SUPPORTS THE SAME. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE REPRODUCE HERE THE DECISION OF THE ITAT IN THE CASE OF GOVIND AGARWAL (SUPRA) WHEREIN ONE OF US (AM) IS A PARTY TO THE ORDER DATED 10.01.2 014 AND THE SAME READS AS UNDER: DECISION OF THE TRIBUNAL: 9. WE HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSUE RELATING TO THE SUSTAINABILITY OR VALIDITY OF THE ADDITIONS MADE IN THE ASSESSMENTS MADE U/S 153A READ WITH SECTION 143(3) OF THE ACT IN RESPECT OF COMPLETED ASSESSMENTS. 10. THE STAND OF THE REVENUE IS THAT THE FIRST PROVISO TO SECTION 153A EMPOWERS THE AO TO ISSUE NOTICE U/S 153A OF THE ACT IN RESPECT OF THE 6 AYS PRIOR TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TOOK PLACE. THE RELEVANCE OF THE EXISTENCE OF INCRIMINATING MATERIAL IS NOT PROVIDED IN THE SAID PROVISIONS. AS PER THE REVENUE THERE SHOULD NOT BE ANY DIFFERENCE QUA THE COMPLETED ASSESSMENTS AND THE ABATED ASSESSMENTS FOR ALL SIX AYS IN SO FAR AS THE POWERS OF THE AO IS CONCERNED AND HE IS EMPOWERED TO ISSUE NOTICE U/S 153A AND MAKE ADDITIONS EITHER BASED IN THE INCRIMINATING MATERIAL OR OTHERWISE. 11. PER CONTRA, THE CASE OF THE ASSESSEE IS THAT THE AO MAY BE EMPOWERED TO ISSUE NOTICES FOR ALL THE SIX AYS IN VIEW OF THE CITED DECISIONS IE JAI STEEL (INDIA) LTD (SUPRA), SCOPE (P) LTD (SUPRA) ETC. HOWEVER, IN CASE OF COMPLETED ASSESSMENTS, AO IS EMPOWERED TO MADE ADDITIONS ONLY BASED ON THE INCRIMINATING MATERIALS AND NOT OTHERWISE JAI STEEL (INDIA) LTD (SUPRA), LMJ INTERNATIONAL LTD (SUPRA) , GURINDER SINGH BAWA (SUPRA) E TC . FOR MAKING THE ROUTINE ADDITIONS, WHICH ARE NORMALLY DONE IN THE REGULAR ASSESSMENTS, THE COMPLETED ASSESSMENT NEED NOT BE DISTURBED BY INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IF NOT FOR REITERATING THE RETURNED OR ASSESSED INCOME AS THE CAS E MAY BE. JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD (SUPRA) SUPPORTS THE ABOVE LEGAL PROPOSITION. AS PER THE ASSESSEE, REGARDING THE CASES OF ABATED ASSESSMENTS, CONSIDERING THE SCHEME OF ASSESSMENTS U/S 153A, PER CONTRA, EVEN THE ROUTINE ADDITIONS ARE DONE IN THESE ASSESSMENTS. 12. WE HAVE HEARD THE PARTIES AND THEIR DIVERGENT STANDS ON THE LEGAL ISSUE AND THE VALIDITY OF THE INSTANT ASSESSMENT/REASSESSMENT WITH THE ROUTINE ADDITIONS U/S 68 AND SECTION 14A OF THE ACT BASED ON THE ACCOUNTED TRANSACTIONS . THE INSTANT CASE FOR THE AY 2002 - 03 DEALS WITH THE CASE OF DISTURBING THE COMPLETED ASSESSMENT. EARLIER THE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT. COMPLETENESS OF THE SUMMARY ASSESSMENT IS CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE VIDE MAN Y JUDGMENTS CITED ABOVE. IN THE ASSESSMENT U/S 153A, THE AO MADE (I ) ADDITION U/S 68 ON ACCOUNT OF ARTIFICIALLY INFLATED INVESTMENT IN HOUSE DULY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE RS.31,33,070/ - ; AND (II) DISALLOWANCE U/S 14A: RS. 23,31,469/ - . ADMITTEDLY, THERE IS NO INCRIMINATING MATERIAL BEFORE THE AO TO SUPPORT THE ABOVE ADDITIONS. THE VALUATION REPORT, WHICH IS GARNERED BY THE AUTHORITIES CONSTITUTES MERE ESTIMATES AND THE PROVISIONS OF SECTION 132 IS NOT REQUIRED TO OBTAIN SUCH REPORT FR OM THE DVO. AS SUCH, FOR MAKING AFORESAID ADDITIONS OF RS 31,33,070/ - , AO HAS NOT USED EVEN THE SAID VALUATION REPORT AND THE AO DISALLOWED WHAT IS REPORTED IN THE BOOKS. SIMILAR IS THE CASE WITH THE ADDITIONS U/S 14A OF THE ACT. THEREFORE, UNDISPUTEDLY, T HE IMPUGNED QUANTUM ADDITIONS ARE MADE MERELY BASED ON THE ENTRIES IN THE ACCOUNTED BOOKS AND CERTAINLY NOT BASED ON EITHER THE UNACCOUNTED BOOKS OF ACCOUNTS OF THE ASSESSEE OR BOOKS NOT PRODUCED TO THE AO EARLIER OR THE INCRIMINATING MATERIAL GATHERED BY THE INVESTIGATION WING OF THE REVENUE. CONSIDERING THE LEGAL PROPOSITIONS PLACE BEFORE US BY THE ASSESSEES COUNSEL, WE ARE OF THE OPINION, SUCH ASSESSMENTS OR ADDITIONS ARE UNSUSTAINABLE IN LAW. 13. FOR THE SAKE COMPLETENESS OF THE ASSESSEE, WE INSERT HE RE SOME OF THE EXTRACTS FROM RELEVANT JUDGMENTS AND THEY ARE: 5 A. [2013 36 TAXMANN.COM 523 (RAJASTHAN) IN THE CASE OF JAI STEEL (INDIA) VS. ACIT - FROM HELD PORTION: .THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE , WHICH WOULD REQUIRE MORE REITERATION AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQ UISITION UNDER SECTIONS 132 AND 132A, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STANDS ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A, THE ASSESSING OFFICER ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND ( C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE . .. THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSING OFFICER IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. PARA 26 OF THE JUDGMENT: THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSES SMENT OR REASSESSMENT OF THE TOTAL INCOME IN RESPECT 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 SECTION. 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 AN ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. B. [2012] 28 TAXMANN.COM 328 (MUMBAI TRIB.) IN THE CASE OF GURINDER SINGH BAVA VS. DCIT . WHETHER SINCE ASSESSMENT UNDER SECTION 153A WAS PASSED BY ASSESSING OFFICER ON BASIS OF MATERIAL AVAILABLE IN RETURN OF INCOME AND THERE WAS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURING SEARCH AND SINCE NO ASSESSMENT WAS ABATED, ASSESSMENT UNDE R SECTION 153A WAS TO BE QUASHED BEING MADE WITHOUT JURISDICTION AVAILABLE UNDER SECTION 153A - HELD, YES [PARA 6.2] [IN FAVOUR OF ASSESSEE] PARA 6.1 OF THE ORDER: THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. ( SUPRA ), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF I NCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MAD E ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 6 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PEN DING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. B. ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 4 4 [2012] 23 TAXMANN.COM 103 (MUM.) (SB) PARA 58 OF SB DECISIONS: THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : ( A ) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; ( B ) IN OTHER CASES , IN ADDITION TO THE 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 R ELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 14. THUS, IN CASE OF THE COMP LETED ASSESSMENTS EITHER U/S 143(1) OR 143(3), THE ABOVE EXTRACTS ARE UNIFORM IN ADVOCATING AGAINST MAKING ADDITIONS IN ROUTINE MANNER IN THE ASSESSMENTS MADE U/S 153A OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL GATHERED IN THE SEARCH ACTION. STATUT ORY NOTICE U/S 153A OF THE ACT CAN ALSO BE ISSUED TO REITERATE THE RETURNED INCOME OR FOR MAKING ADDITIONS BASED ON THE INCRIMINATING MATERIAL OR UNPRODUCED BOOKS OF ACCOUNT. OTHERWISE, ADDITIONS MADE IN ROUTINE MATTER AS IN THE PRESENT APPEAL ARE NOT SUS TAINABLE. FURTHER, FOR THE SAKE COMPLETENESS OF THE ORDER, WE HAVE PERUSED THE ORDERS/JUDGMENTS RELIED UPON BY LD DR FOR THE REVENUE AND FOUND THEY ARE D ISTINGUISHABLE ON FACTS FOR ONE REASON OR OTHER. TO START WITH, WE HAVE PERUSED THE JUDGMENT OF HONBLE HONBLE DELHI HIGH COURT IN THE CASE OF MADUGULA VENU (SUPRA) AND FIND THAT, THOUGH EXPLAINED THE PROVISIONS IN PLAIN LANGUAGE, IT DOES NOT DEALT WITH THE RELEVANCE OR FACTUM OF INCRIMINATING MATERIAL. FURTHER, THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LALBHADRUKA (SUPRA) IS NOT ON THE NOTICES ISSUED U/S 153A OF THE ACT AND THE SAME IS PRONOUNCED IN THE CONTEXT OF THE NOTICE U/S 153C OF THE ACT. FURTHER, ALSO, THE COORDINATE BENCH DECISION IN THE CASE OF SCOPE (P) LTD (SUPRA) HAS GRANTED RELIEF TO THE ASSESSEE THOUGH THE NOTICE ISSUED U/S 153A OF THE ACT WAS UPHELD. HOWEVER, THIS ORDER HAS NOT CONSIDERED THE THEN EXISTING DECISION OF THE COORDINATE BENCH DECISION IN THE CASE OF PRATIBHA INDUSTRIES LTD (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE COMPLETED ASSESSMENT MAY NOT BE DISTURBED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL SPECIFIC TO THE ASSESSEE. IN FACT, ALL THESE JUDGMENTS TAKE SPIRIT FROM THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBA L LOGISTICS LTD (SUPRA), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL SUCH AS BOOKS OF ACCOUNTS, OTHER DOCUMENTS FOUND IN THE SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESS MENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH. 15. WE ALSO FIND THAT THE CIT(A) MADE A REFERENCE TO THE INCRIMINATING MATERIAL, WHICH YIELDED DISCLOSURE OF SOME UNDISCLOSED INCOME. BUT, ON PERUSAL OF THE DOCUMENTS, WE FIN D THAT THE CIT(A) ENTERED INTO AN ERROR ZONE AND THE DISCLOSURE IS ONLY RS 5 CRORES IN THIS CASE AND THE SAME RELATES TO THE LANDS DEALS. IN PRINCIPLE THIS DISCLOSURE HAS NOTHING DO WITH THE IMPUGNED ADDITIONS U/S 68 OR 14A OF THE ACT. IN THE INSTANT CASE, SPECIFIC TO THE ASSESSEE, NO INCRIMINATING MATERIAL WITH THE DETAILS WAS REFERRED EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER OF THE CIT (A) FOR MAKING THE IMPUGNED ADDITIONS. AS PER THE CITED JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, THE ASSESSME NT U/S 153A IS ONLY FOR REITERATION RATHER THAN MAKING ANY ADDITIONS IN A ROUTINE MANNER WITHOUT THE STRENGTH OF THE INCRIMINATING MATERIALS. SIMILAR VIEW WAS TAKEN UP BY THE ITAT, DELHI H BENCH, IN THE CASE OF V.K. FISCAL SERVICES P LTD VS. DCIT VIDE IT A NOS.5460 TO 5465/DEL/2012 ( WWW.ITATONLINE.ORG ). IN THIS REGARD, PARA 13 FROM THE SAID ORDER OF THE ITAT DELHI BENCH (SUPRA) IS RELEVANT AND THE SAME READS AS UNDER: 7 13. APPLYING THE ABOVE CASE LAWS TO THE FACTS OF THE CASE, WE HAVE TO NECESSARILY QUASH THE ASSESSMENT PROCEEDINGS FOR AY 2004 - 2005, 2005 - 06, 2007 - 08, 2008 - 09 ON THE FOLLOWING GROUNDS. (A) NO BOOKS OF ACCOUNTS BELONGING TO THE ASSESSE WERE FOUND AND SEIZED IN THE PREMISES OF THE OTHER PERSON. WHAT WAS FOUND WAS IN THE HARD DISK WAS ONLY A CONFIRMATION OF ACCOUNT THAT AN ATTACHED ANNEXURES. SUCH DOCUMENTS CANNOT BE SAID TO BE BOOKS OF ACCOU NTS OR DOCUMENTS BELONGING TO THE ASSESSEE. (B) THE REVENUE HAS NOT PRODUCED THE RECORD OF THE SEARCHED PERSON TO DEMONSTRATE THAT SATISFACTION WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. GLOBAL REALITY VENTURES P. LTD. ON T HE DATE OF RECORDING OF SATISFACTION, FIRST NOTICE U/S 153(C) WAS ISSUED. THERE IS NO INDICATION WHATSOEVER, THAT THE ASSESSMENT PROCEEDINGS IN THE CASE OF GLOBAL REALITY VENTURES P. LTD WERE IN PROGRESS OR NOT, AT THE POINT OF TIME AND THAT THE AO DURING THE COURSE OF THAT PROCEEDINGS RECORDED THIS SATISFACTION. THE PROCEDURE CONTEMPLATED UNDER THE ACT WAS NOT FOLLOWED. (C) THE SATISFACTION IS RECORDED ON 23 RD JULY, 2010. THE RELEVANT AY WOULD BE 2011 - 12. THE SIX PRECEDING AYS RELEVANT TO THIS AY WOULD BE 2 005 - 06 / 2006 - 07 / 2007 - 08 / 2008 - 09 / 2010 - 11. THUS, THE NOTICE ISSUED U/S 153C FOR THE AY 2004 - 05 IS CLEARLY BARRED BY LIMITATION. (D) EVEN OTHERWISE, AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE AO SHOULD HAVE DROPPED THE PROCEEDINGS INITIATED U/S 153C OF THE ACT. (E) AS THERE IS NO DISPUTE THAT NO ASSESSMENT OR REASSESSMENT HAS ABATED IN THIS CASE FOR THE REASON, THAT THE DATE OF SEARCH, THE DATE OF SEARCH WHICH IN THE CASE ON HAND WOULD BE 25.3.2010, BY VIRTUE OF FIRST PROV ISO TO SECTION 153C, I.E., THE DATE OF PASSING AN ORDER U/S 127 TRANSFERRING THE CASES OF THE ASSESSEE TO THE PRESENT ASSESSING OFFICER NO ASSESSMENT OR REASSESSMENT WAS PENDING. WHEN NO ASSESSMENT HAS ABATED, THE QUESTION OF MAKING ANY ADDITION OR MAKI NG DISALLOWANCE WHICH ARE NOT BASED ON ONLY MATERIAL FOUND DURING THE SEARCH IS BAD IN LAW. 16. IN THESE CIRCUMSTANCES, WE HAVE NO DOUBT ABOUT THE ABSENCE OF ANY SEIZED MATERIAL WHICH ARE INCRIMINATING IN NATURE TO BACK THE ADDITIONS U/S 68 OR 14A O THE ACT MADE IN THE ASSESSMENT MADE U/S 153A OF THE ACT FOR THE AY UNDER CONSIDERATION. REGARDING THE DVOS REPORT GATHERED DURING THE SEARCH ACTION, WE FIND THAT THE REPORT SUFFERS FROM CERTAIN DEFICIENCIES QUA COST OF CONSTRUCTION OF RESIDENTIAL PROPERTY AN D THE LAND OBTAINED THERETO. THE SAID REPORT CONSTITUTES AN OPINION OF THE THIRD PARTY WHICH CANNOT BE USED BY THE AO FOR MAKING ADDITIONS AND SUCH ADDITIONS, IF ANY, CANNOT BE SUSTAINED LEGALLY. AS SUCH, WE FIND THAT THE AO HAS NOT USED THE SAID REPORT OF THE DVO ALSO FOR MAKING ADDITIONS OF RS. 31,33,007/ - , THE DIFFERENCE BETWEEN ACCOUNTED AMOUNT OF RS. 46,13,007/ - , CLAIMED AS THE AMOUNT SPENT ON CONSTRUCTION OF HOUSE AND ACQUISITION OF LAND AS ON 31.3.2002 MINUS RS. RS. 14.8 LAKHS, THE INVESTMENT MADE ON THE LAND PLOTS. AO MADE ADDITION FOR ASSESSEES FAILURE TO PROVIDE EVIDENCES / BILLS IN SUPPORT OF THE CLAIM OF EXPENDITURE ON THE CONSTRUCTION. IT THE PRESUMPTION OF THE AO THAT THE PLOTS SINCE ACQUIRED ONLY BY JULY 2001, THE ASSESSEE WOULD NOT HAVE SPEND RS. 31,33,007/ - BY 31.3.2002. THIS IS MERELY A PRESUMPTION RATHER CONCLUSION BASED ON ANY EVIDENCES. SUCH ADDITIONS ARE UNSUSTAINABLE IN LAW IN THE ASSESSMENTS MADE U/S 153A R.W.S 143(3) OF THE ACT. 17 . RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) (SUPRA), VIDE PARA 18, IT IS CATEGORICALLY MENTIONED THAT THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION (153A) HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A OF T HE ACT, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE, WHICH WOULD MORE REITERATION.. THUS, THE JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF JAI STEEL LTD, SUPRA AND ABOVE DECISIONS OF THE TRIBUNAL ARE CATEGORICAL IN CONCLUDING THAT, IN CASE OF THE CONCLUDED ASSESSMENTS LIKE THE PRESENT ONE, THE ADDITIONS ARE MADE ONLY BASED ON THE INCRIMINATING MATERIAL DISCOVERED DURING THE SEARC H ACTION. THE FACTS OF THE JAI STEEL LTD (SUPRA) ARE IDENTICAL TO THE PRESENT ONE IE AO MADE ADDITIONS BY REASSESSING U/S 153A ON THE COMPLETED 8 ASSESSMENT U/S 143(1) OF THE ACT. THUS, CONSIDERING THE JUDGMENT IN THE CASE OF THE JAI STEEL LTD (SUPRA), THE A RGUMENTS ON THE LEGAL ISSUE RAISED BEFORE US STANDS COVERED. THEREFORE, CONSIDERING THE RAJASTHAN HIGH COURTS JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, WE HAVE NO DIFFICULTY IN (I) UPHOLDING THE ISSUE OF NOTICE U/S 153A OF THE ACT AND (2) IN DISAPPRO VING THE MAKING OF THE IMPUGNED ADDITIONS U/S 68 AND 14A OF THE ACT, WHICH ARE NOT BACKED BY THE INCRIMINATING MATERIALS. IN THE ABSENCE OF INCRIMINATING MATERIAL, THE ROLE OF THE AO IS ONLY TO REITERATE THE RETURNED INCOME FILED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT. ACCORDINGLY, IN SUBSTANCE, THE COMMON LEGAL ISSUE RAISED IN THE GROUNDS FOR BOTH THE APPEALS OF THE ASSESSEE (ITA NO 3389&3390/M/2011 ) IS ALLOWED . 7. THUS, CONSIDERING THE JUDGMENT S IN THE CASE S OF THE JAI STEEL LTD (SUPRA) ; JUDGMENT OF THE NAGPUR BENCH OF BOMBAY HIGH COURT IN THE CASE OF M/S. MURLI AGRO PRODUCTS LTD (SUPRA); THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF GOVIND AGARWAL (SUPRA) PRATIBHA INDUSTRIES (SUPRA) AS WELL AS THE ITAT, DELHI BENCH DECISION IN THE CASE OF SANJAY AGARWAL (SUPRA) , THE ARGUMENTS ON THE LEGAL ISSUE RAISED BEFORE US STANDS COVERED. THEREFORE, CONSIDERING THE SAME, WE ARE OF THE OPINION THAT ANY ADDITION OR DISALLOWANCE MADE IN THE ASSESSMENT BASED ON ONLY THE DOCUMENTS AVAILABLE, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, DURING THE SEARCH ACTION IS BAD IN LAW. ACCORDINGLY, THE CROSS OBJECTION NO.1 AS WELL AS TH E ADDITIONAL GROUND OF CROSS OBJECTION STANDS ALLOWED IN FAVOUR OF THE ASSESSEE . 8. CONSIDERING OUR DECISION ON THE CORE ISSUE OF ASSESSMENT U/S 153A, WHICH IS ALLOWED IN FAVOUR OF THE ASSESSEE, WE FIND, THE ADJUDICATION OF THE OTHER CROSS OBJECTIONS AND T HE ADDITIONAL GROUND OF CROSS OBJECTION RAISED BY THE ASSESSEE AS WELL AS THE GROUNDS RAISED BY THE REVENUE IN ITS APPEALS VIDE ITA NO. 3771/M/2011 BECOME ACADEMIC EXERCISE. ACCORDINGLY, THEY ARE DISMISSED AS ACADEMIC . 9. IN THE RESULT, CROSS OBJECTION S RA ISED BY THE ASSESSEES ARE TREATED AS ALLOWED AND THE THREE APPEAL OF THE REVENUE IS TREATED AS DISMISSED . ORDER PRONOU NCED IN THE OPEN C OURT ON 1 4 T H NOVEMBER, 2014. S D / - S D / - ( VIJAY PAL RAO ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 4 /11/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 9 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI