DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(2), MUMBAI V. MIHIR NERURKAR, MUMBAI

ITA 4901/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6626 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Search and seizure; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 201; 143(2); 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4901 / MUM/ 201 7 ( / ASSESSMENT YEAR: 20 09 - 10 ) DCIT, CC - 6(2) R. NO. 1903, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021. / VS. SHRI MIHIR NERURKAR G - 8, SHRIKANT CHAMBERS, NEXT TO RK STUDIO, SION TROMBAY ROAD, CHEMBUR MUMBAI - 400071. ./ ./ PAN/GIR NO. : AAAPN 3999 H ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 06 . 0 2 .201 9 / DATE OF PRONOUNCEMENT : 27. 02 . 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 07 . 0 4 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 54 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 1 0 . 2 . THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN GRANTING RELIEF TO THE ASSESSEE WHILE HOLDING THAT NO ADDITION CAN BE MADE IN RESPECT OF AN UNABATED ASSESSMENT WHICH HAS BECOME FINAL IF NO INCRIMINAT ING MATERIAL IS FOUND DURING THE SEARCH. ' REVENUE BY : SHRI D. G. PANSARI (SR AR) ASSESSEE BY: SHRI AAYUSH GOYAL ITA NO.4901 /M/201 7 A.Y.20 09 - 10 2 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.03 .20 1 0 DECLARING TOTAL IN C OME TO THE TUNE OF RS19,55,520/ - . A SEARCH & SEIZURE OPERATION U/S 132 OF THE I. T. ACT, 1961 WAS CA RRIED OUT IN THE CASE OF SAMIRA GROUP ON 21.03.2013. AS PART OF THE SAME WARRNAT NO. 9330 FOR ASSESSEES RESIDENCE AT 7, SHIVVAYAN SHRINAGAR COMPLEX, P.L. LOKHANDE MARG, CHEMBUR, MUMBAI AND WARRANT NO. 9337 FOR LOCKER NO. 87, SARASWAT CO - BANK, CHEMBUR ETC, IN THE NAME OF THE ASSESSEE WERE EXECUTED. NOTICE U/S 153A OF THE ACT DATED 26.03.2014 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 12.12.2014 DECLARING TOTAL INCO ME TO THE TUNE OF RS.20,55,520/ - . NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER, THE AO RAISED THE ADDITION ON DIFFERENT ACCOUNTS AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 6,28,67,563/ - . FEELING AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO DELETED THE ADDITION , THEREFORE , THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4. UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION ON ACCOUNT OF THIS FACT THAT IF NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH, THEREFORE, NO ADDITION CAN BE RAISED IN RESPECT OF UNABATED ASSESSMENT. IT IS NOT IN DISPUTE THAT THE ASSESSMENT OF THE ASSESSEE WAS UNABATED DURING THE YEAR UNDER CONSIDERATION. AT THE TIME OF, A SEARCH AND SEIZURE ACTION U/S 153A OF THE ACT NO INCRIMINATING MATERIAL WAS FOUND. EVEN AFTER THE AO CONCLUDED THE ASSESSMENT IN VIEW OF THE PROVISIONS U/S 14 4 A R .W. RULE 153A OF THE ACT. BEFORE GOING FURTHER, WE DEEM IT ITA NO.4901 /M/201 7 A.Y.20 09 - 10 3 NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD. T HE MATTER OF CONTROVERSY HAS BEEN DECID ED WHILE DECIDING T HE GROUND NO. 11 AND THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 7.3 WHICH IS HEREBY REPRODUCED BELOW.: - 7.3.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE APPELLANT HAS CHALLENGED THE VALIDITY OF IMPUGNED ASSESSMENT U/S 143(3) RWS 153A OF THE ACT ON THE GROUND THAT THE SOME IS ILLEGAL/INVALID IN LAW AND HENCE NULL & VOID, AS THE LD. AO COULD NOT FIND AN Y INCRIMINATING DOCUMENTS DURING THE COURSE OF SEARCH FOR MAKING SUCH ADDITIONS/DISALLOWANCES. THE APPELLANTS MAIN CONTENTIONS ARE THAT IN ITS CASE THE RETURN OF INCOME U/S 139 WAS FILED/PROCESSING WAS ALREADY COMPLETED AND AS ON DATE OF INITIATION OF SEAR CH, I.E. 21 .03.2013, NO ASSESSMENT/REASSESSMENT PROCEEDING WAS PENDING IN RESPECT OF ASSESSMENT YEAR UNDER CONSIDERATION AND SUCH COMPLETED ASSESSMENT PROCEEDINGS DOSE NOT ABATE. IT HAS ALSO BEEN ARGUED THAT NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF VARIOUS DISALLOWANCES/ADDITIONS MADE WHILE COMPLETING THE ASSESSMENT U/S 143(3) RWS 153A OF THE ACT. THE CONTENTIONS OF THE APPELLANT HAVE BEEN CONSIDERED CAREFULLY. IT IS AN ADMITTED FACT THAT IN THE CASE OF APPELLANT THERE WAS A SEARCH ACTION U/S 132 OF THE ACT ON 21.03.2013. THE ISSUE OF ASSUMING JURISDICTION U/S 153A OF THE ACT AND MAKING DISALLOWANCE/ADDITIONS WHILE COMPLETING ASSESSMENT U/S 153A OF THE ACT ARE TWO DIFFERENT THINGS AND HAS TO BE DECIDED ON THE BASIS OF RELEVANT PROVISIONS OF THE ACT AND THE VARIOUS LEGAL PRONOUNCEMENTS IN RESPECT OF SAME. THE HON'BLE BOMBAY HIGH COURT HAS SETTLED BOTH THE ISSUES OF ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT AND SCOPE OF ASSESSMENT THEREIN. THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD REPORTED IN 58 TAXMANN.COM 78 HAS HELD AS UNDER. 'WE, THEREFORE, HOLD THAT THE SPECIAL BENCH'S UNDERSTANDING OF THE LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW AP PARENT ON THE FACE OF THE RECORD. THE SPECIAL BENCH IN THAT REGARD HELD AS UNDER: 48. THE PROVISION UNDER SECTION 153A IS APPLICABLE WHERE A SEARCH OR REQUISITION IS INITIATED AFTER 37.5.2003. IN SUCH A CASE THE AC IS OBLIGED TO ISSUE NOTICE U/S 153A IN RE SPECT OF 6 PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INITIATED. THEREAFTER HE HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. IT IS OBLIGATORY ON THE PART OF THE AC TO ASSESS OR REASSESS TOTAL INCOME OF THE SIX YEARS AS PROVIDED IN ITA NO.4901 /M/201 7 A.Y.20 09 - 10 4 SECTION 153A(L)(B) AND REITERATED IN THE 1ST PROVISO TO THIS SECTION. THE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION SHALL ABATE. WE FIND THAT THERE IS NO DIVERGEN CE OF VIEWS IN SO FOR AS THE PROVISION CONTAINED IN SECTION 153A TILL THE 1ST PROVISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEANS THAT AN AS SESSMENT OR REASSESSMENT PENDING AND THE DATE OF INITIATION OF SEARCH SHALL CEASE TO EXIST AND NO FURTHER ACTION SHALL BE TAKEN THEREON. THE ASSESSMENT SHALL NOW BE MADE U/S 153A. THE CASE OF LD. COUNSEL FOR THE ASSESSEE IS THAT NECESSARY COROLLARY TO THIS PROVISION IS THAT COMPLETED ASSESSMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FOR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH. ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE LD. STANDING COUNSEL THAT ABATEM ENT OF PENDING ASSESSMENT IS ONLY FOR THE PURPOSE OF AVOIDING TWO ASSESSMENTS FOR THE SOME YEAR, ONE BEING REGULAR ASSESSMENT AND THE OTHER BEING ASSESSMENT U/S 153A. IN OTHER WORDS THESE TWO ASSESSMENTS COALESCE INTO ONE ASSESSMENT THE SECOND PROVISO DOES NOT CONTAIN ANY WARD OR WORDS TO THE EFFECT THAT NO REASSESSMENT SHALL BE MADE IN RESPECT OF A COMPLETED ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITERAL INTERPRETATION SHOULD BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANIFES TLY ABSURD OR UNJUST RESULTS AS SECTION 153A (I) (B) AND THE FIRST PROVISO CLEARLY PROVIDE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSES WHERE ONE OR MORE OF SUCH ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE D ATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVANCE IN VIEW OF CLEAR AND UNAMBIGUOUS WORDS USED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESULTS. THERE IS NO CASUS OMISSUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISL ATIVE INTENT AND AGAINST THE VERY RULE IN THIS BEHALF THAT IT SHOULD BE SUPPLIED FOR THE PURPOSE OF ACHIEVING LEGISLATIVE INTENT. THE SUBMISSIONS OF THE LD. COUNSELS ARE MANIFOLD, THE FOREMOST BEING THAT THE PROVISION U/S 153A SHOULD BE READ IN CONJUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), THE REASON BEING THAT THE LATTER DEALS WITH SEARCH AND SEIZURE AND THE FORMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TWO ARE INEXTRICABLY LINKED WITH EACH OTHER. 49. BEFORE PROCEEDING FURTHER , WE MAY NOW EXAMINE THE PROVISION CONTAINED IN SUB - SECTION (2) OF SECTION 153, WHICH HAS BEEN DEALT WITH BY LD. COUNSEL. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUB - SECTION (I) IS ANNULLED IN APPEAL ETC., THEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER NULLIFIED, THE ASSESSMENT AGAIN ABATES. THE CASE OF THE LD. COUNSEL IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOOTING FROM THE ITA NO.4901 /M/201 7 A.Y.20 09 - 10 5 PENDING ASSESSMENTS BECAUSE APPEALS ETC. PROCEEDINGS CON TINUE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPENDS UPON SUBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, WE FIND THAT THIS PROVISION ALSO MAKES IT CLEAR THAT THE ABATEMENT OF PENDING PROCEEDI NGS IS NOT OF SUCH PERMANENT NATURE THAT THEY CEASE TO EXIST FOR ALL TIMES TO COME. THE INTERPRETATION OF THE LD. COUNSEL, THOUGH NOT SPECIFICALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMENT MADE U/S 153(1), THE AO GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EARLIER INDEPENDENT OF THE SEARCH AND WHICH CAME TO AN END DUE TO INITIATION OF THE SEARCH. 50. THE PROVISION CONTAINED IN SECTION 132 (1) EMPOWERS THE OFFICER TO ISSUE O WARRANT OF SEARCH OF THE PREMISES OF A PERSO N WHERE ANY ONE OR MORE OF CONDITIONS MENTIONED THEREIN IS OR ARE SATISFIED, LE. - (A) SUMMONS OR NOTICE HAS BEEN ISSUED TO PRODUCE BOOKS OF ACCOUNT OR OTHER DOCUMENTS BUT SUCH BOOKS OF ACCOUNT OR DOCUMENTS HAVE NOT BEEN PRODUCED, (B) SUMMONS OR NOTICE HAS BEEN OR MIGHT BE ISSUED, HE WILL NOT PRODUCE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED THEREIN, OR (C) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRESENTS WHOLLY OR PARTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMENT, CALLED AS UNDISCLOSED INCOME OR PROPERTY. WE FIND THAT THE PROVISION IN SECTION 132 (1) DOES NOT USE THE WORD 'INCRIMINATING DOCUMENT'. CLAUSES (A) AND (B) OF SECTION 132(1) EMPLOY THE WORDS 'BOOKS OF ACCOUNT OR OTHER DOCUMENTS'. FOR HARMONIOUS INTERPRETATION OF THIS PROVISION WITH PROVISION CONTAINED IN SECTION 153A, ALL THE THREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAVE TO BE TAKEN INTO ACCOUNT. 51. HAVING HELD SO, ON ASSE SSMENT OR REASSESSMENT U/S 153A ARISES ONLY WHEN O SEARCH HAS BEEN INITIATED AND CONDUCTED. THEREFORE, SUCH ON ASSESSMENT HAS O VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. WE HAVE MENTIONED THAT A SEARCH CAN BE AUTHORIZED ON SATISFACTION OF O NE OF THE THREE CONDITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING THE PROVISION CONTAINED IN SECTION I53A ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, WE PROCEED TO LITERALLY INTERPRET TO PROVISION IN I53A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINED IN SECTION 132(1). 52. THE PROVISION COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIR ING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE WORD USED IS SHALL' AND, THUS, THERE IS NO OPTION BUT TO ISSUE ITA NO.4901 /M/201 7 A.Y.20 09 - 10 6 SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOME OF THESE SIX YEARS. IN THI S RESPECT ALSO, THE WORD USED IS 'SHALL' AND, THEREFORE, THE AO HAS NO OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE PENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDING PROCEEDINGS WILL NOT BE PROCEEDED WITH THEREAFTER. THE ASSESSMENT HAS NOW TO BE MODE U/S 153A (1)(B) AND THE FIRST PROVISO. IT ALSO MEANS THAT ONLY ONE ASSESSMENT WILL BE MODE UNDER THE AFORESAID PROVISIONS AS THE TWO PROCEEDINGS I.E. ASSESSMENT OR REASSESSMENT PROCEEDINGS AND PROCEEDINGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB - SECTION (1) IS ANNULLED IN APPEAL OR OTHER LEGAL PROCEEDINGS, THEN THE ABAT ED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR REASSESSMENT, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. 53. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASSESSMENT OR REAS SESSMENT OF TOTAL INCOME U/S 153A (1) (B) AND THE FIRST PROVISO WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRO DUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS: - (A) IN SO FAR AS PENDING ASSESSMENTS ARE CON CERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON T HE RECORD OF THE AO, (B) IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UN DISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 54. IT MAY BE MENTIONED HERE THAT LD. COUNSEL FOR AIL CARGO GLOBAL LOGISTICS LTD. WAS QUESTIONED ABOUT THE SCOPE OF PENDING ASSESSMENTS AS IT WAS HIS CONTENTION THAT ALL SIX ASSESSMENTS ARE TO BE MODE, IF ITA NO.4901 /M/201 7 A.Y.20 09 - 10 7 NECESSARY, ON THE BASIS OF UNDISCLOSED INCOME DISCOVERED IN THE COURSE OF SEARCH. HE WAS SPECIFICALLY QUESTIONED ABOUT THE JURISDICTION OF THE AO TO MAKE ORIGINAL ASSESSMENT ALONG WITH ASSESSMENT U/S 153A, MERGING INTO ONE. HOWEVER, HE TOOK AN EVASIVE VIEW SUBMITTING THAT THIS QUESTION NEED NOT BE DECIDED IN HIS CASE ALTHOUGH THE QUESTION OF JURISDICTION U/S 153A WAS VEHEMENTLY PRESSED ON ACCOUNT OF WHICH GROUND NO.1 IN THE APPEAL FOR ASSESSMENT YEAR 2004 - 05 WAS ADMITTED AS ADDITIONAL GROUND. HE ALSO WA NTED THE ADDITIONAL GROUND TO BE RETAINED IN CASE OF ANY FUTURE CONTINGENCY.' 7.3.2 THE HON'BLE DELHI HIGH COURT IN ITS DECISION DATED 281' AUG 2015 IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 61 TAXMONN.COM 412 AFTER CONSIDERING THE ABOVE REFERRED DEC ISIONS OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD AND OF HON'BLE ITAT, MUMBAI SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD HAS HELD AS UNDER. '36. ULTIMATELY IN CONTINENTAL W AREHOUSING CORPORATION (NHAVA SHEVA) LTD. (SUPRA), THE BOMBAY HIGH COURT ANSWERED THE QUESTION FRAMED BY IT AS UNDER: 'A. IN ASSESSMENTS THAT ORE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 1534F OR WHICH A SSESSMENTS 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 OH 1534 WILL BE MODE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEV ANT 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.' SUMMARY OF THE LEGAL POSITION 37 . ON A CONSPECTUS OF SECTION 1534(1) OF THE ACT READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LOW 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, N OTICE UNDER SECTION 153 AL I) 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. ITA NO.4901 /M/201 7 A.Y.20 09 - 10 8 ASSESSMENTS AND REASSESSMENTS PEND ING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. IV THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH T AKES PLACE. THE AO HAS THE 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 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MODE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORM ATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MODE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N 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. THOS E PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ORE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT 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 AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SE CTION 753 A 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 WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNO WN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 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 INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. ITA NO.4901 /M/201 7 A.Y.20 09 - 10 9 7.3.3 FROM THE FACTS AND LAW DISCUSSED ABOVE, IT IS EVIDENT THAT ONCE THE SEARCH ACTION U/S 132 OF THE ACT HAS BEEN INITIATED AFTER 31 11 DAY OF MAY 2003, THE AO HAS TO ISSUE NOTICE U/S 153A OF THE ACT REQUIRING FURNISHING RETURNS OF INCOME FOR THE PERIODS MENTIONED THEREIN. THE USAGES OF WORD 'SHALL' U/S 153A OF THE ACT, BOTH IN RESPECT OF CALLING FOR RETURN AND ASSESSING OR REASSESSING THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PR ECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED DOES NOT LEAVE ANY OPTION WITH THE ASSESSING OFFICER, BUT TO DO SO. EVEN THE HON'BLE COURTS IN ABOVE REFERRED DECISIONS HAS HELD SO. THE LAW EMERGING OUT OF THE PRO VISIONS OF 153A OF THE ACT AND FROM THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT AND HON'BLE DELHI HIGH COURT REFERRED ABOVE, IS THAT ONCE SEARCH ACTION U/S 132 OF THE ACT HAS BEEN INITIATED AFTER 31' DAY OF MAY 2003, THEN THE LD. AO HAS TO ISSUE NOTICE U/S 153A OF THE ACT AND ASSESS OR REASSESS THE INCOME OF THE ASSESSMENT YEARS MENTIONED THEREIN. THE HONBLE BOMBAY HIGH COURT AND HON'BLE DELHI HIGH COURT HAVE ALSO DEFINED THE SCOPE OF ASSESSMENT OR REASSESSMENT U/S 153A OF THE ACT IN RESPECT OF BOTH ABA TED ASSESSMENT AND NON - ABATED, I.E. COMPLETED ASSESSMENTS. THE HON'BLE COURTS HAVE HELD THAT IN RESPECT OF ABATED ASSESSMENT/REASSESSMENTS THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS, I.E HE HAS FULL POWERS TO ASSESS/REASSESS ANY INCOME ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORDS OF THE AO. HOWEVER, IN RESPECT OF COMPLETED ASSESSMENT, WHICH DOES NOT GET ABATED, THE HON'BLE COURTS HAVE HELD THAT THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND DURING THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN COURSE OF SEARCH. THE HON'BLE DELHI HIGH COURT IN THE CASE OF KABU L CHAWLA (SUPRA) HAS HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED U/S 153A OF THE ACT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH AND IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. 7.3.4 IN VIEW OF ABOVE DISCUSSIONS AND LEGAL POSITION NO FAULT CAN BE FOUND WITH THE ACTION OF THE LD. AO, IN ASSUMING JURISDICTION U/S 153A OF THE ACT AND COMPLETING THE ASSESSMENT/REASSESS MENT U/S 143(3) RWS 153A OF THE ACT. HOWEVER, THE DISALLOWANCES/ADDITIONS MADE U/S 153A IN CASE OF COMPLETED ASSESSMENT, WHICH HAS NOT BEEN ABATED, WILL REQUIRE TO BE CONSIDERED AND ADJUDICATED ON TWO ACCOUNT. FIRSTLY WHETHER THE SAME IS BASED ON THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED DURING THE COURSE OF ASSESSMENT BUT FOUND DURING THE COURSE OF SEARCH AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY ITA NO.4901 /M/201 7 A.Y.20 09 - 10 10 DISCOVERED IN COURSE OF SEARCH AND SECONDLY ON MERITS. IN VIEW OF THE FACTS AND CIRCUMSTANCES, OF THE CASE AND IN LAW, IT IS HELD THAT THE LD. AO HAD LEGALLY ASSUMED JURISDICTION U/S 153A OF THE ACT AND THE IMPUGNED ORDER U/S 143(3) R.W.S 153A OF THE ACT DOES NOT SUFFER WITH ANY ILLEGALITY AND HENCE NOT BAD IN LAW. ACCORDINGLY, THE CONTENTION OF TH E APPELLANT THAT THE IMPUGNED ASSESSMENT U/S 143(3) R.WS. 153A OF THE ACT IS NULL AND VOID IS DEVOID OF MERIT AND HENCE HEREWITH REJECTED. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSMENT OF THE ASSESSEE WAS UNABATED AND NO I NCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE ACTION U/S 153A OF THE ACT. THE CIT(A) HAS RELIED UPON THE LAW SETTLED IN CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. 58 TAXMANN.COM 78. THE CIT(A) HAS REPRODUCED THE RELEVANT FINDING ABOVE, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. IN BRIEF, WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE ACTION, THEREFORE, THE UNABATED ASSESSMENT CAN NOT BE LEGAL LY OPENED IN ACCORDANCE WITH LAW. IN VIEW OF THE SAID CIRCUMS TANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27. 02.2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27. 02.2019 . V IJAY ITA NO.4901 /M/201 7 A.Y.20 09 - 10 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3 . ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI