GERMAN EXPRESS SHIPPING AGENCY (I) P.LTD, MUMBAI V. DCIT CEN CIR 6(4), MUMBAI

ITA 4181/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3082 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Keywords: Business expenditure; Search and seizure; Retraction; Reason to believe
• Section: 143(3); 142(1); 153A; 143(1); 143(2); 264; 139(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH , AM ITA NO. 4181/ MUM/20 16 TO 4187/MUM/2016 ( ASSESSMENT YEAR : 2006 - 07 TO 2012 - 13 ) M/S. GERMAN EXPRESS SHIPPING AGENCY (I) P. LTD. , C/O. KALYANIWALLA & MISTRY ARMY & NAVY BUILDING, 3 RD FLOOR, 148, M.G. ROAD FORT, MUMBAI 400 001 VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 6(4), (FORMERLY ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 39) AIR INDIA BUILDING, 19 TH FLOOR, N ARIMAN POINT MUMBAI 400 021 PAN/GIR NO. AABCG0117C ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI NITESH JOSHI REVENUE BY SHRI B B RAJENDRA PRASAD DATE OF HEARING 27/02/2019 DATE OF PRONOUNCEMENT 06 / 03 /201 9 O R D E R PER BENCH : THESE APPEALS FILED BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 54 [HEREINAFTER REFERRED TO AS THE LD CITA] DATED 16/04/2014 FOR A.Y.2006 - 07 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961. SINCE IDENTICAL 2 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. 2. LET US FIRST TAKE UP THE APPEALS OF THE ASSESSEE IN ITA NOS. 4181 TO 4185/MUM/2016 FOR THE ASST YEARS 2006 - 07 TO 2010 - 11. WITH THE CONSENT OF BOTH THE PARTIES, THE APPEAL OF ASST YEAR 2006 - 07 IS TAKEN AS THE LEAD CASE AND THE DECISION RENDERED THEREON WOULD APPLY TO ASST YEARS 2007 - 08 TO 2010 - 11 IN VIEW OF IDENTICAL FACTS EXCEPT WITH V ARIANCE IN FIGURES. 3. THE PRELIMINARY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS 26,29,982/ - TOWARDS DISALLOWANCE OF EXPENSES ALREADY REFLECTED IN THE REGULAR CASH BOOK OF THE ASSESSEE IN THE SEARCH ASSESSMENT FRAMED U/S 153A/143(3) OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH TO THAT EFFECT. 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 13 2 OF THE ACT ON J.M.BAXI & CO. GROUP ON 20.3.2012. THE ASSESSEE IS ONE OF THE COMPANIES IN THE SAID GROUP. CONSEQUENT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED AND FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED A LETTER DATED 3.9.2012 TO TREAT THE ORIGINAL RETURN OF INCOME FILED ON 31.10.2006 U/S 139(1) OF THE ACT DISCLOSING TOTAL INCOME OF RS 16,24,63,299/ - AS A RETURN IN RESPONSE TO NOTICE U/S 153A OF THE ACT DATED 25.7.2012. THE ASSESSEE STATED THAT AGAINST THE ORIGINAL RETURN FILED O N 31.10.2006, AN ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED IN THE HANDS OF THE ASSESSEE FOR THE ASST YEAR 2006 - 3 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 07 ON 18.3.2008 ACCEPTING THE INCOME RETURNED. FOR THE ASST YEARS 2007 - 08 TO 2009 - 10, THE ASSESSMENTS AGAINST THE ORIGINAL RETURN OF INCOME FI LED U/S 139(1) OF THE ACT WERE COMPLETED BY THE REVENUE U/S 143(3) OF THE ACT. FOR THE ASST YEAR 2010 - 11, THOUGH THE ASSESSEE HAD FURNISHED ITS ORIGINAL RETURN OF INCOME U/S 139(1) OF THE ACT, THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HA D EXPIRED ON 30.9.2011. HENCE AS ON THE DATE OF SEARCH ON 20.3.2012, THE ASSESSMENTS FOR THE ASST YEARS 2006 - 07 TO 2010 - 11 FALL UNDER THE CATEGORY OF COMPLETED / UNABATED ASSESSMENTS AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED U NLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO SUCH ASSESSMENT YEAR. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR ASST YEARS 2006 - 07 TO 2010 - 11 IN THE COURSE OF SEARCH WITH REGARD TO DISALLO WANCE OF CERTAIN EXPENSES AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINALLY ASSESSED INCOME, WHICH IS SAME AS THE RETURNED INCOME. 5. THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDER ARE AS UNDER: - 5.1. M / S J M BAXI GROUP WAS FOUNDED IN 1916. IT IS THE LARGEST SHIPPING AGENCY HOUSE IN INDIA. THE COMPANY HAS A STRONG PRESENCE IN ALL ITS BUSINESS ACTIVITIES AND LEADERSHIP IN SEVERAL OF THE SHIPPING SUPPORT SERVICES. CURRENTLY, OVER 200 NATIONAL AND INTERNATIONAL SHIPPING COMPANIES AVAIL THEIR SERVICES , THE GROUP HAS OVER 70 OFFICES IN ALL MAJOR AND MINOR PORT CITIES AND OTHER BIG CITIES. THE COMPANY HAS SET UP A STRONG MARKETING NETWORK VIA VARIOUS GROUP COMPANIES / AFFILIATES OPERATING ACROSS THE GLOBE. THE GROUP COMPANIES OF J M BAXI HAVE THEIR MARKE TING OFFICES LOCATED AT LONDON, DUBAI AND SINGAPORE. THE MAJORITY OF THE BUSINESS ACTIVITIES ARE DONE THROUGH THESE MARKETING CHANNELS. THE GROUP IS OWNED BY SHRI NARESH J KOTAK AND HIS NEPHEW SHRI KRISHNA B KOTAK. THE TWO SONS OF SHRI KRISHNA B KOTAK ARE ALSO ACTIVELY INVOLVED IN THE BUSINESS. THE OTHER KEY PERSON IS SHRI S K PARIKH, CFO OF THE GROUP. 4 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 5.2. COMPANY IS OPERATING AS LICENSED CUSTOM HOUSE AGENTS AT MOST INDIAN PORTS. M/S J M BAXI & CO. AND ITS GROUP PROVIDE CLEARING AND FREIGHT FORWARDING SER VICES INCLUDING CUSTOM CLEARANCE, COMPLIANCE WITH IMPORT / EXPORT REGULATIONS AND COMPREHENSIVE MULTI NODAL 'POINT TO POINT' SERVICE COMPRISING LAND, RAIL, AIR AND SEA TRANSPORT AND WAREHOUSING. 5.3. THEY HAVE RECENTLY DIVERSIFIED INTO SETTING UP OF CONTAINER FREIGHT STATIONS (CFS) AND INLAND CONTAINER DEPOTS (ICDS). THE MAIN ACTIVITIES OF THE ASSESSEE COMPANIES ARE: SHIPPING AGENCY CONTAINER TRANSPORT MANAGEMENT BOAT DEVELOPMENT & TERMINAL MANAGEMENT PROJECT LOGISTICS DIVISION * T ANKER OPERATIONS CHARTERING BROKERS WAREHOUSING AND FREIGHT STATION INTERNATIONAL FREIGHT FORWARDING 5.4. THE ASSESSEE, M/S GERMAN EXPRESS SHIPPING AGENCY (INDIA) PVT. LTD. IS ONE OF THE BENNCHMARK COMPANIES OF THIS GROUP. SHRI KRISHNA B. KOTAK AND SHRI NARESH B. KOTAK ARE DIRECTORS HI THE COMPANY. THE ASSESSEE COMPANY IS HANDLING AGENCY WORK ON VESSELS SUCH AS RETAINER. THE COMPANY IS A GENERAL AGENT IN INDIA FOR HAPAG - LYOD, A GERMAN BASED SHIPPING COMPANY, TO LOOK AFTER IMPORT/ EXPORT OF CARGOES A N D ALL RELATED ACTIVITIES. THE OP ERATION ALSO INCLUDES HANDLING OF PASSENGER VESSEL CALLING AT VARIOUS PORTS. THE COMPANY ALSO HAS LICENSE TO OPERATE PUBLIC MOBILE RADIO TRUNKING SERVICE FOR NAVI MUMBAI & NEW DELHI SITES. FURTHER, THE COMPANY HAS ALSO DERIV ED INCOME FROM LETTING OUT OF SOME OF ITS EQUIPMENTS AND ALSO ITS GODOWNS. 6. THE LD AO OBSERVED IN HIS ORDER AS UNDER: - 6. PERSONAL EXPENSES: 6.1. DURING THE COURSE OF SEARCH PROCEEDINGS, IT WAS NOTICED THAT SHRI NARESH J KOTAK, ONE OF THE DIRECTOR S AND KEY PERSON OF THE ASSESSEE GROUP IS STAYING AT, CARLTON TERRACE, BHULABHAI DESAI ROAD, NEAR MAHALAXMI 5 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., TEMPLE, MUMBAI. THE PREMISES CONSIST OF FOUR FLOORS. IT WAS SEEN THAT VARIOUS EXPENSES PERTAINING TO THIS BUILDING WERE BOOKED IN THE COMPANY'S ACCO UNTS AS BUSINESS EXPENDITURE. SINCE, THE EXPENDITURE PERTAINING TO THIS BUILDING REPRESENTED PERSONAL EXPENDITURE OF SHRI NARESH J KOTAK, THE SEARCH PARTY CONFRONTED THE SAME TO THE DIRECTORS OF THE COMPANY. RELEVANT PORTION OF THE STATEMENT GIVEN BY SHRI KRISHNA B. KOTAK UNDER SECTION 132(4) ON 21 - 03 - 2012 IS REPRODUCED BELOW (THE SAME STATEMENT WAS RATIFIED BY SHRI NARESH J KOTAK ALSO): 'Q - 8 : IT IS SEEN FROM THE BOOKS FOUND AND SEIZED, THAT THE FOLLOWING AMOUNTS WERE CASH TO VARIOUS PERSONS AS TEMPORARY WAGES AND OTHER EXPENSES BY M/S GERMAN EXPRESS SHIPPING AGENCY(I) PVT. LTD. HOWEVER, THESE PERSONS HAVE WORKED AT THE RESIDENCE OF THE DIRECTORS INSTEAD OF THE COMPANY IN THE TIME PERIOD MENTIONED. F.Y. TEMP. WAGES ( RS ) OTHER EXPENSES (RS. ) TOTAL ( RS .) 2005 - 06 1718420 911562 2629982 2006 - 07 1 773325 969734 2743059 2007 - 08 1874387 986693 2861080 2008 - 09 1729763 1130020 2859783 2009 - 10 1932877 955358 2888235 2010 - 11 2029545 911246 2940791 2011 - 12 1849500 932475 27819 75 TOTAL 19,704,905 PLEASE CONFIRM THE SAME AND EXPLAIN AS TO WHY THE SAME SHOULD BE DISALLOWED AND TREATED AS TAXABLE INCOME IN THE RESPECTIVE YEARS. ANS. I DO CONFIRM THAT THE ABOVE MENTIONED AMOUNTS ARE PAID IN CASH FOR THE PERIOD AND REASON MENTIONED THEREIN. I WISH TO SA Y THAT THE AMOUNT OF 6 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., RS .1,97,O4,905/ - MAY BE TREATED AS TAXABLE INCOME IN M/S GERMAN EXPRESS SHIPPING AGENCY (I) PUT. LTD. IN THE RESPECTIVE YEARS AS MENTIONED.' 6.2. HOWEVER, THE ABOVE STATEMENT WAS RETRACTED BY SHRI KRISHN A B KOTAK ON 20 - 04 - 2012 U/S. 132(4) AS UNDER: 'IN REPLY TO QUESTION NO. 8 OF THE STATEMENT U/S 132(4) DATED 21.03.2012, WITH REGARD TO PAYMENT OF CASH TO VARIOUS PERSONS AS TEMPORARY WAGES AND OTHER EXPENSES BY M/S GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., I HAVE CONFIRMED THAT THOSE ARE PAID IN CASH TO THOSE PERSONS WHO HAVE WORKED AT THE RESIDENCE OF THE DIRECTORS A ND OFFERED THE ABOVE AMOUNT OF RS. 1,97,04,905 TO TAX. HERE I WOULD LIKE TO SUBMIT THAT THESE EXPENSES ARE PURELY REGULAR BUSINESS EXPENSE S AND NOT PERSONAL AS STATED EARLIER. WE, THE DIRECTORS ARE OF THE PRACTICE OF HOLDING BUSINESS MEETINGS WITH OUR CLIENTS AT OUR RESIDENCES WHERE ADEQUATE SPACE AND FACILITIES ARE AVAILABLE TO CONDUCT BUSINESS MEETINGS AND EXTEND HOSPITALITY. THIS IS DONE IN ORDER TO SAVE UNNECESSARY EXPENDITURES AT HOTELS TO MAINTAIN PERSONAL RAPPORT WITH THE CLIENTS AND ALSO TO SAVE TIME. FOR THIS PURPOSE WE ENGAGE TEMPORARY WORKERS AS AND WHEN THE NECESSITY ARISES WHO ARE PAID IN CASH. THIS PRACTICE IS OUT OF PURELY COM MERCIAL DECISION AND PURELY FOR THE PURPOSE OF BUSINESS. THERE IS NO PERSONAL ELEMENT IN THESE EXPENSES. WHEN CONSIDERING THE VOLUME OF THE BUSINESS OF OUR GROUP CONCERNS THIS EXPENDITURE OF RS.1.97 CRORES, SPANNING OVER SEVEN FINANCIAL YEARS, IS VERY REAS ONABLE AND ALSO I NEGLIGIBLE. FURTHER, DURING THE COURSE OF STATEMENT U/S 132(4) ON 21.03.12. I WAS UNDER TREMENDOUS MENTAL PRESSURE AND ALSO NOT ABLE TO GATHER FULL DETAILS ON THIS ISSUE. THEREFORE, I NOW REQUEST YOU TO KINDLY IGNORE THE DISCLOSURE OF RS. 1,97,04,905 GIV EN BY ME ON 21.03.12 U/S 132(4) IN THE HANDS OF M/S GERMAN EXPRESS SHIPPING AG ENCY (I) PVT. LTD., I REQUEST TO VIEW THIS WITHDRAWAL LENIENTLY CONSIDERING THE DIS CLOSURE OF RS .L56. 09 CRORES. ' 7. THE LD AO HAVING FOUND THAT THE DIRECTOR OF THE ASSESSEE WHO HAD ORIGINALLY GIVEN THE STATEMENT U/S 132(4) OF THE ACT HAD SUBSEQUENTLY RETRACTED THE SAME BY GIVING SOME EXPLANATION, DIRECTED THE ASSESSEE TO PROVIDE NECESSARY DOCUMENTARY EVIDENCES TO SHOW THAT THE MEETINGS WERE HELD AT HOME WITH T HE CLIENTS IN THE FOLLOWING MANNER: - 7 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., SI NO NAME OF PRINCIPAL/ CLIENT ADDRESS OF PRINCIPAL/ CLIENT DATE OF MEETING PERIOD OF STAY ADDRESS OF HOTEL/PRICE OF STAY OF PRINCIPALS/ C LEINTS EXPENSES IN NATURE OF SUCH EXPENSES THE LD AO ALSO DIRECTED T HE ASSESSEE TO FURNISH COPIES OF RELEVANT LEDGERS, BANK ACCOUNT STATEMENTS AND CASH BOOKS AND PROVIDE A CHART CORRELATING THE ENTRIES. 8. IN RESPONSE THERETO, THE ASSESSEE REPLIED VIDE LETTERS DATED 4.12.2013 AND 17.1.2014 THAT IT IS FUNCTIONING AS AGENT S OF INTERNATIONAL SHIPPING COMPANY AND IN THAT CONNECTION, INTERNATIONAL GUESTS VISIT MUMBAI FOR THE PURPOSE OF HOLDING DISCUSSIONS AND MEETINGS FOR THE PURPOSE OF IMPROVING BUSINESS AND SOLVING PROBLEMS RELATING THERETO. IN VIEW OF HEAVY PRICING IN 5 ST AR HOTELS, THE ASSESSEE THOUGHT IT FIT TO HOUSE THEM IN THE RESIDENCE OF THE DIRECTOR (I.E CARLTON TERRACE) FOR HOLDING BUSINESS MEETINGS AND DURING SUCH MEETINGS, HOSPITALITIES WERE TO BE EXTENDED BY THE ASSESSEE, FOR WHICH PURPOSE, CERTAIN TEMPORARY LABO URERS WERE DEPLOYED AND THEIR WAGES, OVERTIME ALLOWANCE, CONVEYANCE, MEDICAL EXPENSES ETC WERE INCURRED APART FROM PROVIDING BASIC AMENITIES TO THE GUESTS. THE DETAILS OF VARIOUS EXPENSES WERE FURNISHED AS UNDER: - DETAILS OF EXPENSES AT CARLTON TERRACE PARTICULARS 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12 TOTAL AMOUNT PROVISIONS 4,00,943 4,19,701 4,34,145 5,27,209 3,53,036 3,37,934 3,63,665 28,36,633 8 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., MEDICAL EXPENSES 61,323 63,552 59,202 70,501 85,535 73,629 75,522 4,89,264 LTA 23,957 26,368 28,935 35,208 38,660 36,850 37,723 2,27,701 OVERTIME 27,962 33,068 28,024 28,600 29,067 28,705 20,308 1,95,734 UNIFORM 10,598 8,402 9,612 11,636 9,847 9,112 16,177 75,384 CONVEYANCE 69,852 84,293 79,601 1,08,601 1,31,642 1,24,658 95,219 6,93,866 MIS CELLANEOUS ITEMS 3,16,922 3,34,350 3,47,174 3,48,265 3,07,571 3,00,358 3,23,811 22,78,451 TOTAL 9,11,562.00 9,69,734 9,86,693 11,30,020 9,55,358 9,11,246 9,32,425 67,97,038 DETAILS OF PROVISIONS GROSSARY BILLS 64,1 04 65,755 67,281 75,354 60,515 58,185 60,203 4,51,397 VEGETABLES 42,076 44,180 45,947 53,299 40,974 41,564 42,312 3,10,352 MILK 21,047 22,730 22,275 25,505 23,954 23,235 24,620 1,63,366 BREAD/BUTTER 16,110 15,788 15,867 17, 136 15,497 15,628 18,878 1,14,904 EGGS 36,076 36,436 36,071 40,399 32,915 33,024 36,345 2,51,266 MUTTON 49,213 53,150 52,618 65,774 40,331 37,718 40,604 3,39,408 CHICKEN 80,133 84,906 96,392 1,30,271 64,676 60,442 66,381 5 ,83,201 FISH 62,098 67,066 68,407 84,912 48,292 45,998 48,297 4,25,070 SOFTDRINKS / JURIES 30,091 29,690 29,287 34,559 25,882 22,140 26,025 1,97,674 TOTAL 4,00,948 4,19,701 4,34,145 5,27,209 3,53,036 3,37,934 3,63,665 28,36,6 38 THE ASSESSEE ALSO FURNISHED THE YEAR WISE DETAILS OF TEMPORARY WAGES PAID TO 15 TO 17 LABOURERS WHO WERE EMPLOYED AT CARLTON TERRACE FOR TAKING CARE OF THE GUESTS AT THE RESIDENCE OF THE DIRECTOR AS UNDER: - ASST YEAR TEMPORARY WAGES 2006 - 07 17,18,420 9 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 2007 - 08 17,73,325 2008 - 09 18,74,387 2009 - 10 17,29,763 2010 - 11 19,32,877 2 011 - 12 20,29,545 2012 - 13 18,49,500 ------------------ 1,29,07,817 ------------------- THE ASSESSEE FURTHER SUBMITTED THAT MR N J KOTAK, DIRECTOR, HAD PAID SEPARATELY FOR HIS PERSONAL STAFF OF 4 - 5 PERSONS THROUGHOUT THE CONCERNED PERIOD F ROM HIS PERSONAL FUNDS. IT WAS FURTHER SUBMITTED THAT MR N J KOTAK IS A STRICT VEGETARIAN, WHEREAS THE EXPENSES INCURRED ON NON - VEGETARIAN ITEMS ARE MORE THAN 50% OF THE AMOUNT OF THE YEARLY EXPENSES ON PROVISIONS. ALSO THE AMOUNT OF VEGETARIAN ITEMS WERE TOTALLY DISPROPORTIONATE FOR A SINGLE PERSON AGED 72 YEARS OLD. 9. THE LD AO HOWEVER, DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO DISALLOW THE ENTIRE EXPENSES INCURRED AT THE RESIDENCE AS ABOVE TREATING THE SAME AS PERSONAL EXPENSES OF THE DIRECTOR WHICH HAD BEEN ABSORBED AS EXPENDITURE IN THE BOOKS OF THE ASSESSEE COMPANY. ACCORDINGLY, A SUM OF RS 26,29,982/ - WAS DISALLOWED BY THE LD AO IN ASST YEAR 2006 - 07. SIMILAR DISALLOWANCES WERE MADE FOR OTHER ASST YEARS ALSO UPTO ASST YEAR 2012 - 13. WITH REGARD TO THE PRELIMINARY OBJECTION RAISED BY THE ASSESSEE BEFORE THE LD AO THAT FOR THE ASST YEARS 2006 - 07 TO 2010 - 11, THAT NO DISALLOWANCES COULD BE MADE IN RESPECT OF REGULAR ITEMS DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE, W ITHOUT THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH, RELATABLE TO THOSE EXPENDITURE, THE LD AO PROCEEDED WITH THE PLEA THAT THE 10 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., ASSESSMENTS TO BE FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND WOULD ENABLE THE LD AO T O ASSESS OR REASSESS THE TOTAL INCOME AS PER THE PROVISIONS OF THE ACT IRRESPECTIVE OF INCRIMINATING MATERIALS FOUND IN THE SEARCH. 10. THE ASSESSEE SUBMITTED BEFORE THE LD CITA THAT ABSOLUTELY THERE IS NO WHISPER OF ANY REFERENCE TO THE SEIZED MATERIA LS FOUND IN THE COURSE OF SEARCH FOR THE ASST YEARS 2006 - 07 TO 2010 - 11 FOR MAKING THE DISALLOWANCE OF EXPENSES. IT WAS VEHEMENTLY PLEADED THAT THE ENTIRE DISALLOWANCE OF EXPENSES WAS MADE ONLY BASED ON STATEMENT RECORDED DURING SEARCH U/S 132(4) OF THE ACT WHICH WAS LATER RETRACTED BY THE SAME DIRECTOR WITH PROPER REASONING. BUT THE LD CITA DID NOT HEED TO THESE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ACTION OF THE LD AO BY OBSERVING THAT THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNTS IN THE ORIGIN AL ASSESSMENT PROCEEDINGS AND HENCE THE ENTRIES RECORDED THEREIN WHICH WERE NOTICED AT THE TIME OF SEARCH WOULD BECOME INCRIMINATING MATERIALS. AGGRIEVED, THE ASSESSEE IS IN APPEALS BEFORE US. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD DR ARGUED THAT THE EXPRESSION INCRIMINATING MATERIAL IS NOT FOUND IN THE PROVISIONS OF THE ACT AND IT IS ONLY THE HONBLE COURTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATED THAT THE HONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE FOLLOWING DECISIONS : - 11 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., A) DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SMT DAYAWANTI VS CIT REPORTED IN 390 ITR 496 (DEL) WHEREIN THEY HAD HELD THAT ADDITION COULD BE MADE BASED ON THE STATEMENTS RECORDED DURING SEARCH. B) DECISION OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF ACIT VS HUKUM CHAND JAIN REPORTED IN 337 ITR 238 (CHATTISGARH) WHEREIN IT WAS HELD THAT WHEN AN ASSESSEE DOES NOT RETRACT HIS STATEMENT GIVEN U/S 132(4) IMMEDIATELY AFTER THE CONCLUSION OF THE S EARCH, THEN IT COULD BE SAID THAT THE ASSESSEE HAD FAILED TO DISCHARGE ONUS OF PROVING THAT CONFESSION MADE BY HIM U/S 132(4) OF THE ACT WAS A RESULT OF INTIMIDATION, DURESS AND COERCION OR THAT SAME WAS MADE AS A RESULT OF MISTAKEN BELIEF OF LAW OR FACTS. IN THE FACTS BEFORE US IN THE INSTANT CASE, WE FIND THAT THE RETRACTION STATEMENT WAS MADE WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF GIVING IT TOGETHER WITH PROPER REASONING BY THE ASSESSEE EXPLAINING THE PURPOSE OF RETRACTION. C) DECISION OF AHMED ABAD TRIBUNAL IN THE CASE OF KANTILAL C SHAH VS ACIT REPORTED IN 133 ITD 57 (AHD ITAT) ON THE SAME LINES OF CHATTISGARH HIGH COURT REFERRED TO SUPRA. 11.1. THE LD DR ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS GOVERNED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WITH SECTION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE : - 12 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., SECTION 132(1) - IF THE CONCERNED AU THORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - ( A ) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR ( B ) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENTS OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR ( C ) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY W HICH HAS NOT BEEN , OR WOULD NOT BE, DISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY) ; THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SEARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE ARGUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR INVOKING SEARCH PROCEEDINGS CANNOT BE GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTION 132(1)(C ) OF THE ACT. 11.2. THE PROVISIONS OF SECT ION 153A OF THE ACT USE THE EXPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FRAMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATEIALS. 12. IN RESPONSE TO THIS, THE LD AR STATED THAT THE ASSESSMENT FOR THE ASST YEAR 2010 - 11 WAS ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AS THE CASE WAS NOT SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON OR BEFORE 30.9.2011. OTHER THAN THIS, THE ASSESSMENTS FROM ASST YEARS 13 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 2006 - 07 TO 2009 - 10 WERE COMPLE TED U/S 143(3) OF THE ACT. HENCE ALL THE ASSESSMENTS FROM ASST YEARS 2006 - 07 TO 2010 - 11 WOULD FALL UNDER THE CATEGORY OF COMPLETED / UNABATED ASSESSMENTS. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY INCRIMINATING MATERIAL FOUND THEREON. THE LD AR STATED THAT THE DECISION RELIED UPON BY THE LD DR IN THE CASE OF SMT DAYAWANTI BY HONBLE DELHI HIGH COURT SUPRA HAD BEEN DULY DISTINGUISHED BY THE HONBLE DELHI HIGH COURT IN ITS SUBSEQUENT DECISION RENDERED IN THE CASE OF PCIT VS BEST INFRASTRUCTURE (INDIA) PVT LTD AND OTHERS REPORTED IN 397 ITR 82 (DEL). IN THE SAID DECISION, IT WAS SPECIFICALLY HELD THAT THE STATEMENTS RECORDED U/S 132(4) OF THE ACT DOES NOT CONSTI TUTE INCRIMINATING MATERIAL FOR THE PURPOSE OF SECTION 153A OF THE ACT. THE SAID DECISION DULY FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN 374 ITR 645 (B OM), AMONG OTHER DECISIONS. WITH REGARD TO OTHER TWO DECISIONS RELIED UPON BY THE LD DR SUPRA, THE DISTINGUISHING FACTS AND FEATURES THEREON WERE ALREADY DISCUSSED BY US HEREINABOVE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND IT WOULD BE NECESSA RY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR AB ATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT THE ASSESSMENTS FOR THE ASST YEARS 2006 - 07 TO 2010 - 11 WERE ORIGINALLY COMPLETED U/S 143(3) / 14 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 143(1) OF THE ACT, AS THE CASE MAY BE, AND HENCE IT FALLS UNDER CONCLUDED PROC EEDING , AS ON THE DATE OF SEARCH. WE HOLD THAT THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEAR CH RELATABLE TO SUCH CONCLUDED YEAR, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETERMINED THEREON, AS FINALITY HAD ALREADY BEEN REACHED THEREON, AND SUCH PROCEEDING WAS NOT PENDING ON THE DATE OF SEARCH TO GET ITSELF ABATED. IT IS NOT IN DISPUTE THAT BOTH THE LD AO AND THE LD CITA HAD ADMITTEDLY NOT MADE ANY REFERENCE TO ANY SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH IN THEIR ORDERS RELATABLE TO THE COMPLETED ASSESSMENT YEARS WITH REGARD T O THE ITEMS OF EXPENSES THAT WERE SUBJECT MATTER OF DISALLOWANCE. IN THIS REGARD, WE HOLD THAT THE EXPENSES INCURRED IN CASH WHICH ARE DULY RECORDED IN THE REGULAR CASH BOOKS OF THE ASSESSEE WHICH WERE ALREADY FORMING PART OF REGULAR BOOKS OF ACCOUNTS OF T HE ASSESSEE CANNOT BE CONSTRUED AS INCRIMINATING IN NATURE. EVERY ASSESSEE WOULD BE HAVING ITS REGULAR BOOKS OF ACCOUNTS (WHERE BOOKS ARE MAINTAINED) AND WOULD BE FILING HIS REGULAR RETURNS OF INCOME AND ASSESSMENTS FRAMED ACCORDINGLY. IF SUCH PERSON IS SUBJECTED TO SEARCH AND THE VERY SAME REGULAR BOOKS OF ACCOUNTS WERE FOUND AT THE TIME OF SEARCH AND IF THE LD AO TRIES TO TAKE A DIFFERENT VIEW ON THE ALREADY RECORDED TRANSACTIONS IN THE SAID REGULAR BOOKS OF ACCOUNTS IN THE SEARCH ASSESSMENT U/S 153A OF THE ACT WHICH IS CONTRARY TO THE VIEW TAKEN BY HIM IN THE ORIGINAL SCRUTINY ASSESSMENTS U/S 143(3) OR INTIMATION U/S 143(1) OF THE ACT, THEN IT WOULD ONLY RESULT IN GIVING ANOTHER INNINGS TO THE LD AO TO REVIEW HIS OWN EARLIER DECISION ON THE VERY SAME SE T OF FACTS AND FIGURES. 15 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., THIS WOULD MAKE THE ENTIRE SCHEME OF THE ACT MEANINGLESS AND THE LD AO WOULD BE CONFERRED WITH UNFETTERED POWERS TO REVIEW THE EARLIER DECISIONS TAKEN EITHER BY HIM OR BY HIS PREDECESSOR ON THE VERY SAME ISSUE , WHICH IN OUR CONSIDE RED OPINION, CANNOT BE THE INTENTION OF THE STATUTE. THATS WHY THE LEGISLATURE HAD DULY DRAWN A DISTINCTION BETWEEN THE COMPLETED AND ABATED ASSESSMENTS. THE PROVISIONS OF SECTION 153A OF THE ACT ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE : - ' [ASSESSMENT IN CASE OF SEARCH OR REQUISITION 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS O F ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, TH E RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIO NS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS:' 13.1. WE FIND THAT TH E CO - ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF DY. CIT V. AGGARWAL ENTERTAINMENT (P.) LTD REPORTED IN [2016] 72 TAXMANN.COM 340 (DELHI - TRIB.) HAD ADDRES SED THIS ASPECT. THE RELEVANT HEADNOTES IS REPRODUCED BELOW: 16 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 'SECTION 153A, READ WITH SECTION 143, OF THE INCOME - TAX ACT, 1961 - SEARCH AND SEIZURE - ASSESSMENT IN CASE OF (IN CASE OF SECTION 143(1) ASSESSMENT) - ASSESSMENT YEAR 2004 - 05 - WHETHER ASSESSMENT IN RESPECT OF WHICH RETURN HAS BEEN PROCESSED UNDER SECTION 143(1), CANNOT BE REGARDED AS PENDING FOR PURPOSE OF SECTION 153A AS ASSESSING OFFICER IS NOT REQUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN AND, THUS, SAID ASSESSMENT CANNOT BE REOPENED IN EXE RCISE OF POWER OF SECTION 153A - HELD YES (PARAS 10 AND 12) (IN FAVOUR OF ASSESSEE).' 13.2. WE FIND THAT THE CO - ORDINATE BENCH OF KOLKATA TRIBUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 REPORTED IN 2016 - TIO L - 167 - ITAT - KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW: - '6.4 IN OUR OPINION, THE SCHEME OF ASSESSMENT PROCEEDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCTED U/S. 132 OF THE ACT : - ( A ) NOTICE U/S. 153A OF THE AC T WOULD BE ISSUED ON THE PERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S. 132 OF THE ACT WAS ISSUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U/S. 153A OF THE ACT FOR THOSE SIX ASSESSMENT YEARS. ( B ) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S. 143(2) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S. 143(3) OF THE ACT. ( C ) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YEAR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR. ( D ) PURSUANT TO THE SEARCH U/S. 132 OF THE ACT, THE PENDING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NEEDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVISIONS OF THE ACT. 6.4.1 THE CONCLUDED ASSESSMENTS FOR THE PURPOSE OF SECTION 153A OF THE ACT SHALL BE - ( I ) ASSESSMENT YEARS W HERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(1) AND 17 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., TIME LIMIT FOR ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT HAS EXPIRED OR; ( II ) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S. 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S. 147 OF THE ACT FOR SOME OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2 THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMPLATED U/S. 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMPLATED U/S. 147 OF THE ACT AND THESE PROCEDURES O F ASSESSMENT OPERATE IN DIFFERENT FIELDS AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3 THE EXPRESSION 'ASSESS OR REASSESS' STATED IN SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW: - 'ASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF AB ATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSESSMENT YEARS ; 'REASSESS' MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF CONCLUDED ASSESSMENT YEARS WH ERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR.' 13.3. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS U NDER: - '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: ( I ) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. ( II ) ASSESSMENTS AN D REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE LD AOS AS A FRESH EXERCISE. ( III ) THE LD AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE R ELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE LD AO HAS THE 18 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. ( IV ) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE LD AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMEN T HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' ( V ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. ( VI ) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSES SMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE LD AO. ( VII ) COMPLETED ASSESSMENTS CAN BE INTER FERED WITH BY THE LD AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH W HICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 38. THE PRESENT APPEALS CONCERN AYS 2002 - 03, 2005 - 06 AND 2006 - 07, ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIM INATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 13.4. AT THIS JUNCTURE, IT WOULD BE PERTINENT TO ADDRESS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) WHICH IS NORMALLY RELIED UPON BY THE REVENUE 19 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., ON THE IMPUGNED ISSUE BEFORE US. IN OUR CONSIDERED OPINION, THE RELIANCE ON THE SAID DECISION DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBL E DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER: - 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 13.5. WE FIND THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAD DULY CONSIDERED THE DECISIONS O F CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MADUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DEVELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAXMAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REPORTED IN (2013) 219 TAXMAN 223 (DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPORTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). WE ALSO FIND THAT AGAINST THE DECISION OF THE HONBLE DE LHI HIGH COURT IN 380 ITR 573 (DEL) , THE REVENUE PREFERRED SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE APEX COURT WHICH IS REPORTED IN 380 ITR (ST.) 4 (SC). 20 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 13.6. WE ALSO FIND THAT THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G.A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORESAID VIEW OF HONBLE DELHI HIGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIANCE ON ITS OWN DECISI ON IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 TAXMANN.COM 149 (CAL HC). 13.7. WE FIND THAT THE PROVISIONS OF SECTION 132 OF THE ACT RELIED UPON BY THE REVENUE WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTING THE SEARCH ACT ION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDINGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEGISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT THE COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSESSMENTS (I.E PENDING PROCEEDINGS ON THE DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAMED BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MATERIALS DOES NOT HAVE ANY RELEVANCE. HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LEGISLATURE HAD CONFERRED POWERS ON THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CONCLUDED UNLESS THERE IS AN INCRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTURB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT UNDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSITY OF BIFU RCATION OF ABATED AND UNABATED ASSESSMENTS IN SECTION 153A OF THE ACT WOULD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE. 21 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 13.8. WITH REGARD TO THE OBSERVATIONS MADE BY THE LD CITA THAT THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNTS BEFORE THE LD AO IN THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS AND ACCORDINGLY THE VERY SAME BOOKS OF ACCOUNTS FOUND DURING THE COURSE OF SEARCH WOULD BECOME INCRIMINATING MATERIAL AND HENCE THE LD AO COULD HAVE A REVISIT OF THE ENTRIES ALREADY RECORDED THEREIN BY TAKIN G A DIFFERENT VIEW IS CONCERNED, WE FIND THAT THE LD AR HAD PLACED ON RECORD THE COPY OF THE SCRUTINY ASSESSMENT ORDER FOR THE ASST YEAR 2006 - 07 U/S 143(3) OF THE ACT DATED 18.3.2008 ENCLOSED IN PAGES 43 TO 44 OF THE PAPER BOOK. FROM THE PERUSAL OF THE SA ID ORDER, WE FIND THAT THE LD AO HAD CATEGORICALLY IN PARA 1 OF THE SAID ORDER HAD STATED THAT IN RESPONSE TO NOTICES ISSUED U/S 143(2) AND 142(1) OF THE ACT, THE AUTHORIZED REPRESENTATIVES OF THE ASSESSEE ATTENDED AND FURNISHED THE DETAILS AND THE CASE WA S DISCUSSED. AFTER THIS , HE HAD STATED THAT THE RETURNED INCOME OF THE ASSESSEE IS ACCEPTED. IN VIEW OF THIS, THE FINDING OF THE LD CITA AS STATED SUPRA IS FACTUALLY INCORRECT , WITHOUT ANY BASIS AND DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE. 13.9. IN ANY CASE, WE FIND THAT THIS ISSUE HAD BEEN THE SUBJECT MATTER OF ADJUDICATION BY THE HONBLE JURISDICTONAL HIGH COURT IN THE CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN 374 ITR 645 (BOM) WHICH HAD BEEN DECI DED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY WOULD BIND THIS TRIBUNAL. 22 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 13.10. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSMENTS FRAMED U/S 143(3) OF THE ACT FOR TH E ASST YEARS 2006 - 07 TO 2009 - 10 AND ASSESSMENT FRAMED U/S 143(1) OF THE ACT FOR THE ASST YEAR 2010 - 11, WHICH WERE UNABATED / CONCLUDED ASSESSMENTS, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND ACCORDINGLY THE DISALLOWANCE OF EXPENSES MADE THEREON ARE HEREBY DIRECTED TO BE DELETED. SINCE THE ISSUE IS ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATERIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE D ISALLOWANCE OF EXPENSES FOR THE ASST YEARS 2006 - 07 TO 2010 - 11 AND THEY ARE LEFT OPEN. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED. 14. LET US NOW COME TO APPEALS OF THE ASSESSEE FOR THE ASST YEARS 2011 - 12 AND 2012 - 13 IN ITA NOS. 4186 AND 4187/MUM/2016 . 15. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACTS ARE ALREADY NARRATED IN THE EARLIER PART OF THIS ORDER. AT THE TIME OF HEARING , THE BENCH DIRECTED THE LD AR TO ACCEPT FOR ESTIMATED DISALLOWANCE OF 25% OF TOTAL EXPENDI TURE FOR THE ASST YEARS 2011 - 12 AND 2012 - 13 WHICH WAS AGREED BY THE LD AR. THE LD DR VEHEMENTLY OBJECTED TO THE SAME. WE FIND THAT THE FACT OF HOLDING BUSINESS MEETINGS BY THE DIRECTOR AT HIS RESIDENCE (CARLTON TERRACE) IS NOT DISPUTED BY THE REVENUE. CONSIDERING THE FACT THAT THERE COULD BE SOME PERSONAL ELEMENT INCLUDED THEREON AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS NARRATED HEREINABOVE, WE HOLD THAT THE DISALLOWANCE OF EXPENSES AT THE RATE OF 23 ITA NOS.4181/MUM/2016 TO 4187/MUM/2016 M/S. GERMAN EXPRESS SHIPPING AGENCY (I) PVT. LTD., 25% THEREON FOR THE AS ST YEARS 2011 - 12 AND 2012 - 13 WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 16. TO SUM UP, THE APPEALS OF THE ASSESSEE IN ITA NOS. 4181 TO 4185/MUM/2016 FOR THE ASST YEARS 2006 - 07 TO 2010 - 11 ARE ALLOWE D AND APPEALS OF THE ASSESSEE IN ITA NOS. 4186 & 4187/MUM/2016 FOR THE ASST YEARS 2011 - 12 AND 2012 - 13 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 03 /201 9 SD/ - ( MAHAVIR SINGH ) SD/ - ( M. BAL AGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 06/03 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, M UMBAI 6. GUARD FILE. //TRUE COPY//