ACIT, Faridabad V. M/s. Hindustan Syringes & Medical Devices Ltd., Faridabad

ITA 5407/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8356 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Assessee Lawyers: V K AGARWAL
• Keywords: Depreciation
• Section: 143(3); 153A; 132

Judgement Text

ITA NO. 5407/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 5407 / DEL/201 3 A.Y. : 200 5 - 0 6 ACIT, CENTRAL CIRCLE - II NEW DELHI VS. M/S HINDUSTAN SYRINGES & MEDICAL DEVICES LTD., SECTOR-25, BALLABGARH, FARIDABAD (PAN: AAACH0007) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. A.K. SAROHA, CIT(DR) ASSESSEE BY : SH. V.K. AGARWAL, A.R. DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 1 11 14 44 4- -- -0 00 03 33 3- -- -201 201 201 2016 66 6 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 01 0101 01- -- -04 0404 04- -- -201 201 201 2016 66 6 ORDER ORDER ORDER ORDER PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM PER H.S. SIDHU : JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 25/7/2013 PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (CENTRAL), GURGAON FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLL OWING GROUND:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS. 50 ,19,494/- MADE BY THE AO ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE WITHOUT CONSIDERING THE MERIT OF THE CASE AND MERELY TAKING INTO ACCOUNT THE FACTS THAT ORIGINAL ASSESSM ENT WAS ALREADY COMPLETED U/S. 143(3) OF THE INCOME TAX ACT, 1961 ITA NO. 5407/DEL/2013 2 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION WAS CARRIED OUT ON 15.12.2010 COVERING THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. IN RESPONSE TO NOTICE U/S. 153A, RETURN DECLARING INCOME OF RS. 33,93,10,591/- WAS FILED ON 23.12.2011. THE ORIGIN AL RETURN OF INCOME U/S. 139(1) WAS FILED ON 26.10.2005 DECLARING RS. 33,93, 10,591/-. THE ASSESSMENT WAS COMPLETED AT RS. 34,43,30,085/-, BY ADDING AN A MOUNT OF RS. 50,19,494/- ON ACCOUNT OF EXCESS CLAIM OF DEPRECIAT ION VIDE ORDER DATED 31.12.2012 PASSED U/S. 153A(1)(B)/143(3) OF THE INC OME TAX ACT, 1961. 3. AGAINST THE AFORESAID ASSESSMENT ORDER DATED 31 .12.2012, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 25.7.2013 HAS PARTLY ALLOWED THE APPEAL OF THE ASSE SEE. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5.1 ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE ST ATED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOR OF THE ASSESSE E BY THE DECISION DATED 28.8.2015 OF THE HONBLE DELHI HIGH COURT PASSED IN THE CASE CIT(CENTRAL)-III VS. KABUL CHAWLA IN ITA NO. 707, 709, 713/DEL/2014 WHER EIN THE HONBLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATIO N, THEN THESE ADDITIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW. HE FURTHER ST ATED THAT RECENTLY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. JAKSON ENGINEERS LTD. VIDE ORDER DATED 7.12.2015 REPORTED IN 2015-TIOL-2789-HC-DEL-IT HAS DEALT THE SIMILAR ISSUE WHEREIN THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. KABUL ITA NO. 5407/DEL/2013 3 CHAWLA (SUPRA) WAS DISCUSSED AND FOLLOWED. IN THIS BEHALF, HE FILED THE COPIES OF THE AFORESAID ORDERS. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES. WE FIND THAT LD. CIT(A) HAD ADJUDICATED THE LEGAL ISSUE VIDE PA RA NO. 6 TO 6.4 AT PAGES 8 TO 12. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE RELEVANT FINDINGS OF THE LD. CIT(A) AS UNDER:- 6. I HAVE CONSIDERED THE ASSESSEES SUBMISSION AND THE IMPUGNED ORDER. IN SO FAR AS GROUNDS OF APPEAL NOS. 1 AND 2 ARE CONCERNED, THE ASSESSEE HAS VEHEMENTLY SUBMITTED TH AT WHERE NO INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SE ARCH, THE RETURN OF INCOME U/S. 139(1) R/W SECTION 143(3) CANNOT BE DIS TURBED. THE ASSESSEE HAS RELIED ON THE HONBLE ITAT, SPECIAL BE NCH, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DIT , 2012-TIOL-391- ITAT-MUM-SB; HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. ANIL KUMAR BHATIA, ITA NO. 1626/2010; HONBLE ITATMUMBAI DATED 19.12.2012 IN THE CASE OF ACIT VS. M/S PRATIBHA IN DUSTRIES LTD., ITA NO. 2197 TO 2199/MUM/2008; HONBLE ITAT MUMBAI IN T HE CASE OF SHRI GURINDER SINGH BAWA VS. DCIT, ITA NO. 2075/ MUM/2010; LMJ INTERNATIONAL LTD. VS. DCIT, (2008) 119 TTJ (KO L) 214; ANIL P KHIMANI VS. DCIT 2010-TIOL-177-ITAT-MUM. 6.1 TO DECIDE ON THE ISSUE, WE MAY REFER TO THE PRO VISIONS OF SECTION 153A OF THE INCOME TAX ACT, 1961. CHAPTER XIV OF THE ACT AND PROVISIONS OF SECTION 153A WERE BROUGHT IN THE STATUTE BY FINANCE ACT 2003 W.E.F. 1.6.2003. IT READS AS UNDER :- ITA NO. 5407/DEL/2013 4 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTIO N 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 13 2 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UND ER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SH ALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM A ND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSES S THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S UCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS [SUB-SECTION] PENDING 81 ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SE CTION 132A, AS THE CASE MAY BE, SHALL ABATE : [ PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY I T AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSING OFFICER SHA LL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOM E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE.] ITA NO. 5407/DEL/2013 5 [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF A SSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APP EAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINE D IN SUB-SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELA TING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO S UB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER: PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF S UCH ORDER OF ANNULMENT IS SET ASIDE.] EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT, (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SEC TION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPE CT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL B E CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSME NT YEAR. IN OTHER WORDS, THE ONLY CONDITION FOR INITIATION OF NOTICE U/S 153A IS A SEARCH CONDUCTED U/S 132. IT ALSO GIVES CREDENCE TO A REQUISITION U/S 132A. THE WORD 'INCRIMINATING' DOCUMENT/MATERIAL HA S NOT BEEN MENTIONOD. THE SAID SECTION FACILITATES ASSESSMENT/ REASSESSMENT FOR SIX FINANCIAL YEARS IMMEDIATELY PRECEDING THE ASSESSMEN T YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. IN OTHER WORDS, THE AO IS BOUND TO ISSUE NOTICE TO THE ASSESSEE FOR EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEAR RECKONED FROM THE DATE OF SEARCH. AO IS ALSO EMPOWERED TO ASSESS OR REASSE SS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS HAS BEEN THE STAND OF THE DELHI HIGH COURT IN CIT V ANIL KUMAR BHATIA (2012) 80 DTR 169. THE HON'HLE HIGH COURT HAS ALSO ITA NO. 5407/DEL/2013 6 LAID DOWN THAT THIS AMENDMENT HAS BEEN BROUGHT ABOU T TO AVOID MULTIPLICITY OF ASSESSMENT. IT MAY BE REITERATED THAT THE PROVISIONS OF SECTION 153A DOES NOT PROVIDE THAT THE ASSESSMENT/REASSESSMENT SHOULD HE BASED ON 'INCRIMINATING MATERIAL'. HOWEVER, ONE MAY STATE TH AT THE DELHI HIGH COURT (SUPRA) IN PARA 23 HAS LEFT THE ISSUE OPEN. NOT WITHOUT REASON, THE HON'BLE ANDHRA PRADESH HIGH COURT IN GOPAL LAL BHADRUKA & ORS (2012) 77 DTR 146 HAS OBSE RVED THAT SECTION 15BBI WAS INTRODUCED BY THE FINANCE ACT, 2 003. THE SAID PROVISION ALSO STATED THAT CHAPTER XIVB DID NOT APP LY AFTER 315.2003. IT HAS CATEGORICALLY HELD IN PARA 17 THAT WHILE THE PROVISIONS OF CHARTER XIV-B OF THE ACT LIMIT THE EN QUIRY BY THE AO TO THOSE MATERIALS FOUND IN THE COURSE OF SEARCH AND S EIZURE OPERATIONS, NO SUCH LIMITATION IS FOUND INSOFAR AS SECTIONS 153 A/153C OF THE ACT ARC CONCERNED. THE AO CAN TAKE INTO CONSIDERATION M ATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH AND SEIZU RE OPERATION FOR MAKING AN ASSESSMENT OF THE UNDISCLOSED INCOME OF T HE ASSESSEE. 6.2 IT IS FURTHER REITERATED THAT THE WORD 'INCRIM INATING' DOES NOT FIND MENTION IN SECTION 153A OR SECTION 153C. NOR HAS TH E SAID WORD BEEN DEFINED IN THE, ACT. IF IT MEANS ONLY WHAT HAS BEEN SEIZED, THEN SECTIONS 153A/153C DOES NOT PROVIDE FOR THE SAME. T HERE COULD BE TIMES WHEN SOME MATERIAL MAYBE FOUND BUT NOT SEIZED . SO CAN THE SAME BE DECLARED AS NON-INCRIMINATING? FOR INSTANCE JEWELLERY FOUND BUT NOT SEIZED. WILL THAT BE OUTSIDE THE SCOPE OF ' INCRIMINATING'? THE ITA NO. 5407/DEL/2013 7 SEARCH PARTY MAY ONLY INVENTORISE AND NOT SEIZE ANY OF THE JEWELLERY. WOULD THAT IMPLY THE SOURCE OF ACQUISITION STOOD EX PLAINED? INSTRUCTION NO. 1916 DARED 11.05.1994 OF THE CBDT, RELATES TO EXEMPTIONS FROM SEIZURE OF JEWELLERY TO SOME EXTENT BUT IT DOES NOT HOWEVER EXCLUDE JEWELLERY FOUND FROM BEING ASSESSED IF SOURCES OF ACQUISITION ARE NOT SATISFACTORILY EXPLAINED. IN SU CH CIRCUMSTANCES THE AO IS EXPECTED TO COME TO A TRUE FIGURE OF TOTAL I NCOME' AS DECIDED IN THE CASE OF ANIL KUMAR BHATIA (SUPRA). LASTLY, SECTION 5 OF THE ACT PROVIDES FOR 'SCOPE OF TOTAL INCOME'. IT CLEARLY BRINGS OUT ALL INCOME FROM WHATEVER SOURCE DERIVED FROM. THUS, I AM OF THE VIEW THAT WHILE MAKING ASSESSMENT U/S 153A, THE AO IS NOT OBLIGED TO ONLY UTILIZE THE INCRIMINATING MATERIALS COLLECTED DURING A SEARCH OPERATION IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR. 6.3. HOWEVER, I AM BOUND BY JUDICIAL DISCIPLINE A S HELD BY A CATENA OF JUDICIAL DECISIONS. THERE IS NO DECISION OF THE JURISDICTIONAL HIGH COURT. DECISIONS IN UNION OF INDIA VS. KAMALAK SHI FINANCE CORPORATION LTD. (1991) 55 ELT 433 (SC); CIT VS. RA LSONS INDUSTRIES LTD. (2007) 288 ITR 322 (SC); TRIVENI CHEMICALS V U OI (2007) 2SCC 503 (SC); NOKIA CORPORATION V DC IT (INTERNATIONAL TAXATION) (2007) 292 ITR 22 (DELHI) MAY BE REFERRED. WHILE ON THE IS SUE, I AM ALSO AWARE THAT WHEN TWO HIGH COURTS HAVE GIVEN DIFFEREN T OPINIONS NOT BEING JURISDICTIONAL HIGH COURT- THE ONE FAVORING T HE ASSESSEE HAS TO ITA NO. 5407/DEL/2013 8 BE FOLLOWED AS HELD IN CIT VS. VEGETABLE PRODUCTS L TD., 8B ITR 192 (SC). 6.3.1. RECENTLY THE HON'BLE RAJASTHAN HIGH COURT IN JAI STEEL (INDIA) V ACIT (2013) 88 DTR (RAJ) 1, HAS RENDERED A DECISI ON ON THE ISSUE AND HAS HELD IN PARA 30 (PAGE 15) AS UNDER:- 30. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT FOR REASSESSM ENT OF THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FOILING WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONT EXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HA VE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOU LD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'A SSESS' HAS BEEN USED IN THE CONTEXT OF 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 SUP PORT THE INTERPRETATION THAT/OR THE COMPLETED ASSESSMENT S, THE SAME CAN BE TINKERED ONLY HOSED ON THE INCRIMINATIN G MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUI SITION OF DOCUMENTS. ITA NO. 5407/DEL/2013 9 IN OTHER WORDS, THE HON'BLE RAJASTHAN HIGH COURT HA S HELD THAT THE ASSESSMENT/REASSESSMENT CAN ONLY BE BASED ON IN CRIMINATING MATERIAL. SAME IS TILE STAND TAKEN BY THE JURISDICT IONAL TRIBUNAL IN MGF AUTOMOBILES LTD. V JCJT, ITA NO: 4212/DEL/2011 IN AN ORDER DATED 28.6.2013 AS WELL AS OTHERS VIZ. HONBLE ITAT MUMBAI IN ACIT V M/S PRATIBHA INDUSTRIES LTD IN ITA NO. 2197 TO 21 99/MUM/2000 AND IN THE CASE OF GURINDER SINGH BAWA V DCIT IN IT A NO. 2075/MUM/2010. THESE DECISIONS HAVE ALSO BEEN RELIE D UPON BY THE ASSESSEE . 6.4. THUS RESPECTFULLY FOLLOWING THE ABOVE ON THE I SSUE OF NOTICE U/S 153A AND THE NECESSITY OF MAKING ASSESSMENT/ REASSE SSMENT ON INCRIMINATING MATERIAL, I AM OF THE OPINION THAT TH E ASSESSEE DESERVES TO GET RELIEF ON THESE TWO GROUNDS OF APPEAL. 7. KEEPING IN VIEW OF THE AFORESAID FINDINGS GIVEN BY THE LD. CIT(A), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY HELD THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE SEARCH, AS A RESULT, NO DISALLOWANCE / ADDITIONS CAN BE MADE IN THE ASSESSMENT U/S. 153A OF THE I.T. AC T. EVEN OTHERWISE, WE FIND FORCE IN THE LD. COUNSELS SUBMISSIONS THAT THE IS SUE IN DISPUTE IS ALSO COVERED BY THE DECISION OF THE HONBLE HIGH COURT IN THE CAS E OF CIT(CENTRAL)-III VS. KABUL CHAWLA IN ITA NO. 707, 709, 713/DEL/2014 WHEREIN TH E HONBLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT B ASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS WERE NOT SUSTAINABLE IN THE EYES OF LAW. FOR THE SAKE OF CL ARITY, WE ALSO REPRODUCING THE RELEVANT PARA NO. 37 & 38 OF THE JUDGMENT AS UNDER: - ITA NO. 5407/DEL/2013 10 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D 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 AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT A DDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAIL ABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ITA NOS. 707 , 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONL Y ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATAB LE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERN ED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A ITA NO. 5407/DEL/2013 11 MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND A NY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE 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 KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. 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 DURIN G THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREAD Y ASSESSED. 7.1 WE FURTHER FIND FORCE IN THE ASSESSEES CONTENT ION THAT THE HONBLE HIGH COURT IN THE CASE OF CIT VS. JAKSON ENGINEERS LTD. VIDE ORDER DATED 7.12.2015 REPORTED IN 2015-TIOL-2789-HC-DEL-IT HAS DEALT THE SIMILAR ISSUE WHEREIN THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) WAS DISCUSSED AND FOLLOWED. 7.2 AFTER GOING THROUGH THE IMPUGNED ORDER AS WEL L AS THE CASE LAWS CITED BY THE LD. CIT(A) IN THE IMPUGNED ORDER AND THE CASE L AW IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) AND CIT VS. JAKSON ENGINEERS L TD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT /REASSESSMENT P ROCEEDINGS U/S. 153A OF THE I.T. ACT, CAN BE BASED ONLY ON INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH. AS PER RECORD, OF THIS CASE THE DEPRECIA TION CLAIM RESTRICTED BY THE AO IS NOT BASED UPON INCRIMINATING MATERIAL/ DOCUMENTS FOUND IN THE SEARCH OPERATIONS. THEREFORE, THE ADDITIONS MADE BY THE A O IS NOT SUSTAINABLE IN THE EYES OF LAW. THUS, THE LD. CIT(A) HAS RIGHTLY ADJU DICATED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY, F OLLOWING THE VARIOUS DECISIONS OF THE HONBLE HIGH COURT AND THE TRIBUNAL MENTIONE D IN THE IMPUGNED ORDER ITA NO. 5407/DEL/2013 12 AND ALSO RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF CIT VS. KABUL CHAWLA (SUPRA) AND CIT VS. JAKSON ENGINEERS LTD. (SUPRA), WE UPHOLD THE WELL REASONED ORDER PAS SED BY THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/04/2016. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [J.S. REDDY J.S. REDDY J.S. REDDY J.S. REDDY] ]] ] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE 01/04/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES