M/S BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AJMER

ITA 477/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1257 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLLY AGARWAL CIT DHK
• Keywords: Revision of order; Search and seizure; Difference of opinion; Block assessment; Revised return; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 153A; 139(5); 32; 147; 148; 132; 15; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 477/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. M/S. BANNALAL JAT CONSTRUCTIONS PVT. LTD. BUS STAND, JAHAJPUR, DISTRICT BHILWARA. CUKE VS. THE ACIT, CENTRAL CIRCLE, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCB 9357 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLLY AGARWAL (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.07.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/09/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19 TH JANUARY, 2018 OF LD. CIT (A)-2, UDAIPUR FOR THE ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE OF RS. 3,16,194/- INCUR RED FOR INCREASE IN THE AUTHORIZED SHARE CAPITAL OF THE COM PANY BY HOLDING THE SAME AS CAPITAL EXPENDITURE IGNORING TH AT THE CAPITAL WAS INCREASED FOR THE MEETING THE WORKING CAPITAL R EQUIREMENT AND THUS ALLOWABLE AS REVENUE EXPENDITURE. 1.1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ABOVE DISALLOWANCE IN THE ASSESSMENT FRAMED U/S 153 A EVEN WHEN THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION HAS NOT ABATED. 2 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. 2. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 3. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. THE ASSESSEE IS A COMPANY AND ENGAGED IN THE EXE CUTION OF GOVERNMENT CONTRACTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 TH SEPTEMBER, 2012 DECLARING TOTAL INCOME OF RS. 36,37,320/-. A SEARCH AND SEIZ URE ACTION WAS CARRIED OUT AT THE RESIDENTIAL AND VARIOUS BUSINESS PREMISES OF THE AS SESSEE ON 10.10.2014. SUBSEQUENTLY, THE AO ISSUED NOTICE UNDER SECTION 15 3A ON 22.12.2014. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 36,37,320/- AS DECLARED IN THE ORIGINAL RETURN OF I NCOME. IN THE ASSESSMENT FRAMED UNDER SECTION 153A, THE AO MADE DISALLOWANCE OF RS. 3,16,194/- ON ACCOUNT OF THE EXPENDITURE INCURRED ON INCREASE OF AUTHORIZED CAPI TAL. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENGED THE ADDITION MADE BY THE AO A ND ALSO RAISED A LEGAL ISSUE IN GROUND NO. 1.1 OF THE GROUNDS OF APPEAL. THE LD. A/ R OF THE ASSESSEE HAS SUBMITTED THAT THE TIME LIMIT FOR ISSUING THE NOTICE UNDER SE CTION 143(2) WAS EXPIRED ON 30 TH SEPTEMBER, 2014 PRIOR TO THE DATE OF SEARCH UNDER S ECTION 132 ON 10.10.2014. THUS THE LD. A/R HAS SUBMITTED THAT THE ASSESSMENT WAS N OT PENDING AS ON THE DATE OF SEARCH AND HENCE THE ASSESSMENT COMPLETED UNDER SEC TION 153A IS A REASSESSMENT AND NOT THE ASSESSMENT AND, THEREFORE, THE AO CANNO T MAKE ANY ADDITION/DISALLOWANCE IN THE ORDER PASSED UNDER SEC TION 153A EXCEPT BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND SEIZURE PROCEEDINGS. THE LD. A/R HAS POINTED OUT THAT THE DISALLOWANCE O F RS. 3,16,194/- WAS MADE BY THE AO WITHOUT REFERRING TO ANY INCRIMINATING DOCUMENT OR MATERIAL FOUND DURING THE 3 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. SEARCH AND SEIZURE ACTION. THUS HE HAS SUBMITTED T HAT THE ADDITION MADE BY THE AO WITHOUT ANY INCRIMINATING MATERIAL FOUND IN THE SEA RCH IS NOT SUSTAINABLE IN LAW AND, THEREFORE, THE SAME IS ILLEGAL AND BAD. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT, 219 TAXMAN 233 (RAJ.). HE HAS ALSO RELIE D UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF SAUMYA CONSTRUCTION P VT. LTD., 387 ITR 529 (GUJ.). THE LD. A/R HAS ALSO RELIED UPON VARIOUS OTHER DECI SIONS ON THIS POINT INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. KABUL CHAWLA, 126 DTR 130 (DELHI). 3. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT EVEN IN A CASE WHERE UNDIS CLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH, THE SAME WOULD ALSO BE TAKEN INTO CONSIDERATION. THE REQUIREMENT OF THE ASSESSME NT OR REASSESSMENT UNDER SECTION 153A HAS TO BE READ IN CONTEXT OF SECTION 1 32 OR 132A OF THE IT ACT IN ASMUCH AS IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, ONCE THERE IS A SEARCH UNDER SECTION 132, SECTION 1 53A OF THE ACT WOULD BE TRIGGERED AND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOT AL INCOME OF THE ASSESSEE IS REQUIRED TO BE DONE. THE AO IS DUTY BOUND TO DETER MINE THE TOTAL INCOME OF THE ASSESSEE FOR SIX YEARS IMMEDIATELY PRECEDING THE AS SESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED. THE TO TAL INCOME, THEREFORE, WILL COVER NOT ONLY THE INCOME EMANATING FROM THE DECLARED SOU RCE OR ANY MATERIAL PLACED BEFORE THE AO BUT FROM ALL SOURCES INCLUDING UNDISC LOSED ONE OR BASED ON UNPLACED MATERIAL BEFORE THE AO. THE LD. D/R HAS FURTHER SUB MITTED THAT THE DECISIONS RELIED UPON THE ASSESSEE HAVE NOT BEEN ACCEPTED BY THE DEP ARTMENT AND THE SLPS AGAINST 4 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF M/S. ALL CARGO GLOBAL LOGISTICS AS WELL AS IN CASE OF CONTINENTAL WAREHOU SING CORPORATION HAVE BEEN ADMITTED BY THE HONBLE SUPREME COURT. SIMILAR SLP IN THE CASE OF KABUL CHAWLA HAS ALSO BEEN FILED BY THE REVENUE WHICH HAS BEEN ADMIT TED BY THE HONBLE SUPREME COURT. WHEN THE EXPENDITURE WHICH IS NOT AN ALLOWAB LE CLAIM BEING INCURRED FOR INCREASE IN SHARE CAPITAL THEN THE DISALLOWANCE OF SAME IS JUSTIFIED BY FRAMING THE ASSESSMENT UNDER SECTION 153A OF THE ACT. THE LD. D /R HAS FURTHER SUBMITTED THAT THERE IS NO ORIGINAL ASSESSMENT UNDER SECTION 143(3 ) IN THE CASE OF THE ASSESSEE, THEREFORE, THE ASSESSMENT FRAMED UNDER SECTION 153A IS THE ONLY ASSESSMENT IN THIS CASE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE TIME LIMIT FOR ISSUING NOTICE UNDER SECTION 143(2) ON THE RETURN OF INCOME FILED BY THE ASSESSEE UNDER SECTION 139(1) WAS EXPIRED ON 30 TH SEPTEMBER, 2014. THEREFORE, ON THE DATE OF SEARCH ON 10.10.2014 THE ASSESSMENT ON THE ORIGINAL RETURN OF INCOME WAS NOT PENDING. HENCE IT IS A CASE OF REASSESSMENT OF TOTAL INCOME OF THE ASSESSEE AND NO T THE CASE OF ABATED ASSESSMENT AND CONSEQUENTLY REGULAR ASSESSMENT UNDE R SECTION 153A OF THE ACT. ONCE IT IS A CASE OF REASSESSMENT UNDER SECTION 153 A PURSUANT TO THE SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT, THEN T HE ADDITION IN THE TOTAL INCOME OF THE ASSESSEE CAN BE MADE ONLY ON THE BASIS OF INCRI MINATING SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THIS ISSUE HAS BEEN CO NSIDERED AND DECIDED BY THE VARIOUS HIGH COURTS INCLUDING THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS HELD IN PARA 21 TO 26 AND 29 AS UNDER :- 5 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. 21. THE ARGUMENT RAISED BY THE COUNSEL FOR THE APPELLA NT TO THE EFFECT THAT ONCE A NOTICE UNDER SECTION 153A OF THE ACT IS ISSUED, THE ASSESSMENTS FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND ASSESSEE HAS NO WARRANT I N LAW. 22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN REA DING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROVISION, WHIC H IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPARENT THAT: (A) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATE D IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JUR ISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATI NG MATERIAL AND (C) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MA DE. THOUGH SUCH A CLAIM BY THE ASSESSEE FOR THE FIRST T IME UNDER SECTION 153A OF THE ACT IS NOT COMPLETED, THE CASE IN HAND, HAS TO BE CONSIDER ED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARCH AND/OR REQUISITION, NOTHING IN CRIMINATING IS FOUND. IN SUCH A CASE THOUGH SECTION 153A OF THE ACT WOULD BE TRIGGERED A ND ASSESSMENT OR REASSESSMENT TO ASCERTAIN THE TOTAL INCOME OF THE PERSON IS REQUIRE D TO BE DONE, HOWEVER, THE SAME WOULD IN THAT CASE NOT RESULT IN ANY ADDITION AND T HE ASSESSMENTS PASSED EARLIER MAY HAVE TO BE REITERATED. 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLA NT ON THE CASE OF ANIL KUMAR BHATIA (SUPRA) ALSO DOES NOT HELP THE CASE OF THE A SSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDER: '19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HA VE ALREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE A SSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSM ENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS O R REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSME NT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCE EDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 15 3A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASS ESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESS MENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESP ECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND T HE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT T O BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OB VIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION, THE ASSES SING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INC OME, TAKING NOTE TO THE 6 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE S TRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTION S 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB-S ECTION (1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MA DE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTIO N TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SEC TION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSMENT OR REASS ESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY S ECTION 153A. WITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKI NG REASSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. 21. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN T HE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF TH E SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PENDING. IN SUCH A CASE, TH E SECOND PROVISO TO SUB- SECTION (1) OF SECTION 153A SAYS THAT SUCH PROCEEDI NGS 'SHALL ABATE'. THE REASON IS NOT FAR TO SEEK. UNDER SECTION 153A, THER E IS NO ROOM FOR MULTIPLE ASSESSMENT ORDERS IN RESPECT OF ANY OF THE SIX ASSE SSMENT YEARS UNDER CONSIDERATION. THAT IS BECAUSE THE ASSESSING OFFICE R HAS TO DETERMINE NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'TOTAL INCOME' OF THE ASSESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SA ME ASSESSMENT YEAR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN OR DER TO ENSURE THIS STATE OF AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSME NT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE S EARCH TOOK PLACE THERE IS ONLY ONE DETERMINATION OF THE TOTAL INCOME, IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB-SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE ASSESSEE WHICH AR E PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING REQUISITION 'SHA LL ABATE'. ONCE THOSE PROCEEDINGS ABATE, THE DECKS ARE CLEARED, FOR THE A SSESSING OFFICER TO PASS ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETER MINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DE CLARED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDIS CLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POS ITION THUS EMERGING IS THAT THE SEARCH IS INITIATED OR REQUISITION IS MADE, THE Y WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASE WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS SUBSISTING AT THE TIME WHEN THE SEA RCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE N O PROCEEDINGS ARE PENDING. IN THIS LATTER SITUATION, THE ASSESSING OF FICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 7 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 15 3A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME THAT ESCAP ED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIE R PROCEEDINGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSE SSMENT WERE PENDING SINCE THEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WAS MAD E.' (EMPHASIS SUPPLIED) 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED ASSESSMENTS HAVE TO B E MADE TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH AND THE INCOME THAT ESCAPED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WIT H THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT AND ASSESSED AS THE TOTAL I NCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING THE PROVISIONS OF DETERMIN ATION OF UNDISCLOSED INCOME UNDER CHAPTER XIVB WITH DETERMINATION OF TOTAL INCOME UND ER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE CONTEXT OF SECOND PROVIS O ONLY, WHICH DEALS WITH THE PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS. THE FU RTHER OBSERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSMENT PROCEEDINGS ALSO HAVE TO BE READ IN CONTEXT THAT IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THE NOTICE AND CONSEQUENTIAL ASSESSMENT UNDER SECTION 153A HAVE TO BE UNDERTAKEN. 25. THE ARGUMENT OF THE LEARNED COUNSEL THAT THE AO IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT IS ALSO NO T BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED ABOVE IS ESSENTIALL Y IN CONTEXT OF SEARCH AND/OR REQUISITION. THE PROVISIONS OF SECTIONS 153A TO 153 C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE BEYOND P ROVISIONS OF SECTIONS 139 (RETURN OF INCOME), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 263 (REVISION OF ORDERS) OF THE ACT. 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME IN R ESPECT 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 SECT ION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTIO N AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIB LE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDIN GS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF R EQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 27. XXXX XXXX 28. XXXX XXXX 8 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. 29. THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT IF T AKEN TO ITS LOGICAL END WOULD MEAN THAT EVEN IN CASES WHERE THE APPEAL ARISING OU T OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A), ITAT AND THE HIGH COURT , ON A NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED UP TO THE HIGH COURT. ANY INTERPRETATION WHICH LEAD S TO SUCH CONCLUSION HAS TO BE REPELLED AND/OR AVOIDED AS HELD BY THE HON'BLE SUPR EME COURT IN THE CASE OF K.P. VARGHESE (SUPRA). IT IS PERTINENT TO NOTE THAT A SIMILAR VIEW HAS BEE N TAKEN IN A SERIES OF DECISIONS BY THE HONBLE DELHI HIGH COURT, HONBLE GUJARAT HIGH COURT AS WELL AS HONBLE BOMBAY HIGH COURT AS RELIED UPON BY THE LD. A/R. THUS IT IS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT THAT THE ASSESSMENT OR REASSESSMENT OF 6 YEARS IS A MANDATORY REQUIREMENT PURSUANT TO THE SEARCH UNDER SECTION 13 2 OF THE ACT. HOWEVER, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND, THE SA ME WOULD NOT RESULT IN ANY ADDITION AND ASSESSMENT PASSED EARLIER MAY HAVE TO BE REITERATED. THUS THE AO CANNOT RESORT TO THE PROVISIONS OF SECTION 153A TO FILL UP THE LACUNA LEFT IN THE ORIGINAL ASSESSMENT OR NOT DOING THE ORIGINAL ASSESSMENT EXC EPT REASSESSMENT OF THE TOTAL INCOME AND ADDITION, IF ANY, BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. IN THE CASE IN HAND, UNDISP UTEDLY NO INCRIMINATING MATERIAL WAS FOUND TO REVEAL ANY INCOME NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE IT ACT. RA THER THE ADDITION IS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE TREATI NG THE SAME AS CAPITAL IN NATURE. THEREFORE, THE ISSUE OF DISALLOWANCE OF EXPENDITURE IS A DEBATABLE ONE AND THE DISALLOWANCE IS BASED ON DIFFERENCE OF OPINION BETW EEN THE ASSESSEE AND THE AO. HENCE WHEN THE ORIGINAL ASSESSMENT WAS NOT PENDING AS ON THE DATE OF SEARCH THEN THE AO CANNOT USE THE PROCEEDINGS UNDER SECTION 153 A TO MAKE AN ADDITION PURELY ON THE BASIS OF DIFFERENCE OF OPINION. THE LD. CIT (A) THOUGH ACCEPTED THE BINDING 9 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. PRECEDENTS IN FAVOUR OF THE ASSESSEE, HOWEVER DECLI NED TO FOLLOW THE SAME ON THE GROUND THAT THE REVENUE HAS NOT ACCEPTED THOSE DECI SIONS OF THE HIGH COURTS AND FILED THE SLP BEFORE THE HONBLE SUPREME COURT. IT IS PERTINENT TO NOTE THAT THE LD. CIT (A) IS A QUASI-JUDICIAL AUTHORITY AND IS NOT SU PPOSED TO FUNCTION AS A TAXING AUTHORITY. IN CASE THE DEPARTMENT HAS NOT ACCEPTED THE DECISIONS OF HONBLE HIGH COURTS, THEN THE AO IS AT LIBERTY TO MAKE THE ADDIT ION TO KEEP THE ISSUE ALIVE BUT THE APPELLATE AUTHORITY IS BOUND BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT SO LONG THE SAME IS NOT REVERSED BY THE HONBLE SUPREM E COURT. HENCE IT WAS NOT PROPER ON THE PART OF THE LD. CIT (A) TO REFUSE TO FOLLOW THE BINDING PRECEDENT. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDERS OF TH E AUTHORITIES BELOW QUA THIS ISSUE AND DELETE THE ADDITION MADE BY THE AO. SINCE THE ADDITION MADE BY THE AO IN THE ASSESSMENT FRAMED UNDER SECTION 153A IS DELETED FOR WANT OF INCRIMINATING MATERIAL, THEREFORE, GROUND NO. 1 OF THE ASSESSEES APPEAL BECOMES INFRUCTUOUS IN VIEW OF OUR FINDING ON THE ISSUE RAISED IN GROUND N O. 1.1. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 07/09/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 07/09/2018. DAS/ 10 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI BANNALAL JAT CONSTRUCTIONS P VT. LTD., BHILWARA. 2. THE RESPONDENT THE ACIT, CENTRAL CIRCLE, AJMER . 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 477/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 11 ITA NO. 477/JP/2018 BANNALAL JAT CONSTRUCTIONS PVT. LTD., BHILWARA.