M/S RAJASTHAN FORT & PALACE PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX , JAIPUR

ITA 597/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2189 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Gift; Revision of order; Search and seizure; Block assessment; Revised return; Reassessment proceedings
• Section: 143(3); 153A; 139(5); 147; 27; 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 JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 597 TO 599/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 TO 2011-12 M/S RAJASTHAN FORT & PALACE PVT. LTD. 312, 3 RD FLOOR GANPATI PLAZA, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCR8826Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGRAWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 22/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 24/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF THE LD. CIT(A) DATED 26.05.2017 , 09.05.2017 & 26.05.2017 FOR THE ASSESSMENT YEAR 2009- 10 TO 2011 -12 RESPECTIVELY. THE ASSESSEE HAS RAISED THE COMMON GROUNDS IN THESE APPEALS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ASSESSMENT C OMPLETED U/S 143(3) R.W.S. 153A OF THE INCOME ACT ACT, 1961 WHEN NO INCRIMINATING PAPER WHATSOEVER WAS FOUND AS A RESUL T OF SEARCH ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 2 PERTAINING TO THE YEAR UNDER APPEAL, AND THE ADDITI ONS WERE MADE BY LD. AO WITHOUT REFERRING TO ANY SINGLE MATERIAL FOUND DURING SEARCH THUS THE CONSEQUENT ORDER PASSED DESERVES TO BE QUASHED. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE ADDITION S MADE TO THE INCOME WHICH ALREADY STOOD ASSESSED U/S 143(1)(A) O F THE INCOME TAX ACT, 1961 AND THE TIME LIMIT TO ISSUE NOTICE U/ S 143(2) STOOD EXPIRED. THUS, THE ORDER PASSED WITHOUT REFERRING T O A SINGLE PAPER/ INCRIMINATING MATERIAL SEIZED DURING THE COU RSE OF SEARCH, WHEN NO ASSESSMENT PROCEEDINGS WERE PENDING AS ON T HE DATE OF SURVEY, DESERVES TO BE HELD BAD IN LAW AND THE CONS EQUENTLY ADDITIONS DESERVES TO BE DELETED. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. A SEA RCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT IN CAS E OF MRS GROUP ON 17.07.2013, AND THE ASSESSEE IS PART OF THE SAID GR OUP. THEREAFTER THE AO ISSUED NOTICE U/S 153A OF THE I.T. ACT AND IN RE SPONSE THE ASSESSEE FILED ITS RETURN OF INCOME U/S 153A OF THE ACT DECL ARING THE SAME INCOME AS DECLARED IN THE ORIGINAL RETURN. THE ASSESSMENT FOR THESE 3 YEARS WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT WHEREBY THE ASSESSING OFFICER HAS MADE DISALLOWANCES U/S 40 (A)(IA) AND 36(1)(VA) OF THE ACT. THE ASSESSEE CHALLENGED THE A CTION OF THE AO BEFORE THE LD. CIT(A) AND OBJECTED THE DISALLOWANCE MADE BY THE AO WITHOUT REFERRING TO ANY INCRIMINATING MATERIAL FOU ND AND SEIZED DURING ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 3 THE COURSE OF SEARCH AND SEIZURE ACTION. HOWEVER, T HE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO WHILE PASSING THE IM PUGNED ORDER. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSING OFFICER HAS COMPLETED THE IMPUGNED ASSESS MENT U/S 153A OF THE I.T. ACT WITHOUT REFERRING TO ANY MATERIAL OR P APERS WHATSOEVER FOUND/SEIZED DURING THE COURSE OF SEARCH AND ACCORD INGLY, DISALLOWANCE/ ADDITION MADE BY THE AO IN RESPECT OF THE EXPENSES WHICH THE ASSESSEE LEGITIMATELY CLAIMED IS UNWARRANTED. HE HAS FURTHER CONTENDED THAT WHEN NO INCRIMINATING MATERIAL FOUND INDICATING ANY UNDISCLOSED INCOME PERTAINING TO THE YEARS UNDER CONSIDERATION THEN, T HE ASSESSING OFFICER CANNOT MAKE ADDITION IN THE RETURN OF INCOME DECLAR ED BY THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON TH E DECISION OF HONBLE JURISDICTION HIGH COURT IN CASE OF JAI STEEL INDIA V ACIT 259 CTR 281 AS WELL AS DECISION OF HONBLE DELHI HIGH COURT IN CA SE OF CIT V. KABUL CHAWLA 380 ITR 573 AND SUBMITTED THAT THE HONBLE H IGH COURT HAS HELD THAT IN CASE WHERE NOTHING INCRIMINATING MATE RIAL IS FOUND THOUGH SECTION 153A WOULD BE TRIGGERED AN ASSESSMENT OR RE ASSESSMENT TO ASCERTAIN TOTAL INCOME IS REQUIRED TO BE DONE, THE SAME WOULD NOT RESULT ANY ADDITION AND THE ASSESSMENT MADE EARLIER MAY HA VE TO BE REITERATED. HARMONIOUS CONSTRUCTION OF THE PROVISIO NS OF SECTION 153A OF ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 4 THE ACT WOULD LEAD TO AN IRRESISTIBLE CONCLUSION TH AT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS WHIC H DO NOT ABATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION O F SEARCH OR MAKING OF REQUISITION AND CAN BE TINKERED WITH ONLY ON THE BA SIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUI SITION OF DOCUMENTS. THEREFORE, THE HONBLE HIGH COURT HAS HELD THAT IT IS NOT OPEN TO THE ASSESSEE TO SEEK DEDUCTION OR CLAIM RELIEF NOT CLAI MED BY IT IN THE ORIGINAL ASSESSMENT WHICH ALREADY STANDS COMPLETED IN AN ASSESSMENT U/S 153A IN PURSUANT TO SEARCH OR REQUISITION. HENC E, THE LD. AR HAS SUBMITTED THAT IN VIEW OF THE VARIOUS DECISIONS ON THIS POINT AND WHEN NO PROCEEDINGS IN RESPECT OF THE ASSESSMENT YEARS U NDER CONSIDERATIONS WERE PENDING BEFORE THE AO THEN, THE AO DID NOT HAV E JURISDICTION TO MAKE AN ADDITION WITHOUT REFERRING TO ANY INCRIMINA TING MATERIAL SEIZED DURING THE COURSE OF SEARCH. 4. ON THE OTHER HAND, LD DR HAS RELIED UPON THE AUT HORITIES BELOW AND SUBMITTED THAT ONCE A SEARCH U/S 132 IS CARRIED OUT, IT IS INCUMBENT UPON THE AO TO ASSESS OR REASSESS THE INCOME OF THE ASSESSEE IN RESPECT OF 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SE ARCH IS CONDUCTED OR ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 5 REQUISITION IS MADE. THE AO HAD NO DISCRETION BUT T O ASSESS OR REASSESS THE TOTAL INCOME OF THE ASSESSEE AS PER THE PROVISI ONS OF SECTION 153A OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN CASE OF THE ASSESSEES GROUP ON 17.07.2013. THE ORIGINAL RETURN OF INCOME FOR THIS 3 ASSESSMENT YEARS WERE FILED U/S 139(1) A ND THE LAST DAY OF ISSUING NOTICE SECTION 143(2) WAS EXPIRED BEFORE TH E DATE OF SEARCH I.E. 17.07.2013. THE DETAILS OF THE RETURNS FILED U/S 13 9 AND THE LAST DATE OF ISSUING NOTICE ARE AS UNDER:- A.Y. U/S 139(1) DATE OF FILING RETURN OF INCOME LAST DATE OF ISSUANCE OF 143(2) 2009-10 30.09.2009 30.09.2010 2010-11 30.09.2010 30.09.2011 2011-12 30.09.2011 30.09.2012 THUS, IT IS CLEAR THAT THE LAST DATE OF ISSUING THE NOTICE U/S 143(2) FOR THE ASSESSMENT YEAR 2011-12 WAS EXPIRED ON 30.09.20 12 AND THEREFORE, NONE OF THESE ASSESSMENT YEARS WERE PENDING ON 17.0 7.2013 I.E. THE DATE OF SEARCH. AS PER SECTION 153A OF THE ACT ONC E A SEARCH AND SEIZURE ACTION IS CARRIED THE AO HAS TO ASSESS OR R EASSESS THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF 6 YEARS IMMEDI ATELY PRECEDING THE ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 6 ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH A SEARCH IS CONDUCTED OR REQUISITION IS MADE. IN CASE THE ASSES SMENT IS PENDING ON THE DATE OF SEARCH THE SAME SHALL BE ABATED AS PER PROVISO TO U/S 153A(1) OF THE ACT AND THE AO IS FREE TO ASSESS THE INCOME OF THE ASSESSEE AS REGULAR ASSESSMENT. HOWEVER, IN CASE OF COMPLETED ASSESSMENT AND NOT ABATED DUE TO INITIATION OF SEAR CH U/S 132 OR MAKING OF REQUISITION U/S 132A THE AO HAS TO REASSE SS THE TOTAL INCOME OF THE ASSESSEE AND THEREFORE, THE ASSESSMENT ALREA DY COMPLETED CAN BE TINKERED WITH OR DISTRUSTED UNTIL AND UNLESS INC RIMINATING MATERIAL IS FOUND AND SEIZED DURING THE COURSE OF SEARCH OR REQ UISITION AS CASE MAY BE INDICATING UNDISCLOSED INCOME OF THE ASSESSEE. T HEREFORE, THE SCOPE AND JURISDICTION OF THE AO TO REASSESSE THE TOTAL I NCOME OF THE ASSESSEE U/S 153A IS LIMITED ONLY TO THE EXTENT OF THE INCOM E DISCLOSED BY THE INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH AND SEIZURE ACTION. THE ASSESSING OFFICER HAS REASSESSED THE IN COME OF THE ASSESSEE BY MAKING THE DISALLOWANCE U/S 40(A)(IA) A S WELL AS U/S 36(1)(VA) OF THE ACT WITHOUT MAKING ANY REFERENCE T O ANY INCRIMINATING MATERIAL FOUND. THEREFORE, THE DISALLOWANCE/ADDITIO N MADE BY THE AO FOR THESE 3 ASSESSMENT YEARS COMPLETED U/S 153A IS UNDISPUTEDLY NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 7 OF SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT. ON CE, THE ASSESSING OFFICER HAS COMPLETED THE REASSESSMENT U/S 153A WIT HOUT ANY REFERENCE TO THE INCRIMINATING MATERIAL FOUND THEN, NO ADDITI ON CANNOT BE MADE TO THE RETURNED INCOME OF THE ASSESSEE. THE HONBLE JU RISDICTION DELHI HIGH COURT IN CASE OF CIT V. KABUL CHAWLA (SUPRA) V IDE WHILE CONSIDERING AN IDENTICAL ISSUE HAS HELD IN PARA 37 AND 39 AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, REA D WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW E XPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AY S IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARA TE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE 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 NO T 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 AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CA N BE ARBITRARY OR MADE WITHOUT ANY ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 8 RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY 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 COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICT ION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER 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 SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PR OPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE JURISD ICTION HIGH COURT IN CASE OF JAI STEEL INDIA V ACIT (SUPRA) AS HELD IN P ARA 22 TO 30 AS UNDER:- 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, WHICH IS INTRICATELY LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 132 AND 132A OF THE ACT, IT IS APPAR ENT THAT: ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 9 (A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATED IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; (B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME T HAT HAS ALREADY BEEN ASSESSE D, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND (C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. 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 CONSIDERED AT BEST SIMILAR TO A CASE WHERE IN SP ITE OF A SEARCH AND/OR REQUISITION, NOTHING INCRIMINATING 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 TH E PERSON IS REQUIRED TO BE DONE, HOWEVER, THE SAME WOULD IN THA T CASE NOT RESULT IN ANY ADDITION AND THE ASSESSMENTS PASSED E ARLIER 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 ASSESSEE. 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 NO TICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEA R FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTI ON IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSES S THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BL OCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULA R ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE A SSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BEEN GIVEN ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 10 THE POWER TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER I N RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE 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 I N RESPECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UN DER SECTION 143(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO TH E INITIATION OF THE SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWE RED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TA KING NOTE TO THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SE ARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFF ICER BY THE STRICT PROCEDURE TO ASSUME JURISDICTION TO REOPEN T HE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY TH E NON OBSTANTE CLAUSE WITH WHICH SUB-SECTION (1) OF SECTI ON 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTIO N 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MA DE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUI RES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NO TICE TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCL UDED IN A CASE COVERED BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. W ITH ALL THE STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING T O TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECT ION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS, IF N EED 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 THE SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PENDING. IN SUCH A CASE, THE SECOND PROVISO TO SUB- SECTION (1) OF SECTION 153A SAYS THAT SUCH PROCEEDINGS 'SHALL ABAT E'. THE REASON IS NOT FAR TO SEEK. UNDER SECTION 153A, THERE IS NO ROOM FOR MULTIPLE ASSESSMENT ORDERS IN RESPECT OF ANY OF THE SIX ASSE SSMENT YEARS UNDER CONSIDERATION. THAT IS BECAUSE THE ASSESSING OFFICER HAS TO DETERMINE NOT MERELY THE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 11 ALSO THE 'TOTAL INCOME' OF THE ASSESSEE IN WHOSE CA SE A SEARCH OR REQUISITION HAS BEEN INITIATED. OBVIOUSLY THERE CAN NOT BE SEVERAL ORDERS FOR THE SAME ASSESSMENT YEAR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN ORDER TO ENSURE THIS STATE OF A FFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSMENT YEARS PRECEDING TH E ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE SEARCH 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 15 3A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE A SSESSEE WHICH ARE PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING REQUISITION 'SHALL ABATE'. ONCE THOSE PROCEEDINGS A BATE, THE DECKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PASS ASSE SSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL INCOM E OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DECLAR ED IN THE RETURNS, IF ANY, FURNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQU ISITION. THE POSITION THUS EMERGING IS THAT THE SEARCH IS INITIA TED OR REQUISITION IS MADE, THEY 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 TH E ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPL ETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUES TION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATTER SITUATION, THE ASSESSING OFFICER WILL REOPEN THE AS SESSMENTS OR REASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT COND ITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED U NDER SECTION 153A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY R EASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL A SSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO RE ITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROCEED INGS FOR THE SIMPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PENDING SINCE THEY HAD ALREADY CULMINATED IN A SSESSMENT OR REASSESSMENT ORDERS WHEN THE SEARCH WAS INITIATED O R THE REQUISITION WAS MADE.' (EMPHASIS SUPPLIED) ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 12 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED A SSESSMENTS HAVE TO BE MADE TAKING NOTE OF THE UNDISCLOSED INCO ME, IF ANY, UNEARTHED DURING THE SEARCH AND THE INCOME THAT ESC APED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WIT H THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT AND AS SESSED AS THE TOTAL INCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING THE PROVISIONS OF DETERMINATION OF UNDISCLOSED INCO ME UNDER CHAPTER XIVB WITH DETERMINATION OF TOTAL INCOME UND ER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE CONT EXT OF SECOND PROVISO ONLY, WHICH DEALS WITH THE PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS. THE FURTHER OB SERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSMENT PROCEEDIN GS ALSO HAVE TO BE READ IN CONTEXT THAT IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH, THE NOTICE AND CONSEQUENTIAL ASSESSMENT UNDER SECTION 1 53A 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 TH E INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153 A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROV ISION WHICH AS NOTICED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH A ND/OR REQUISITION. THE PROVISIONS OF SECTIONS 153A TO 153C CANNOT BE I NTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE BEY OND PROVISIONS 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 RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVIS ION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE W ORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISI ON WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' H AS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS HAS B EEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SE ARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 13 INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL'S (SUPRA) HAS HELD AS UNDER: '19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMEN T PROCEEDINGS. THE WORD 'PENDING' DOES NOT OPERATE AN Y SUCH INTERPRETATION, THAT WHEREVER THE APPEAL AGAINST SU CH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAME ALONG WITH ASSESS MENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. TH E PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE , AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL, THE EN TIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY T HAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWA Y ALL THE CONSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTING BOGUS GIFTS IN THE REGULAR ASSESSMENT PRO CEEDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN UNDER SECTION 27 1(1)(C) OF THE ACT. THE MATERIAL FOUND IN THE SEARCH MAY BE A GROU ND FOR NOTICE AND ASSESSMENT UNDER SECTION 153A OF THE ACT BUT TH AT WOULD NOT EFFACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMENT RESULTING INTO T HE DEMAND OR PROCEEDINGS OF PENALTY.' (EMPHASIS SUPPLIED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECO ND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSIO N, WHICH WE HAVE REACHED HEREINBEFORE. 28. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 THAT 'IT IS WELL RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PR OVISION MUST BE SO CONSTRUED, IF POSSIBLE THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED.' 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 OUT OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A), ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 14 ITAT AND THE HIGH COURT, ON A NOTICE ISSUED UNDER S ECTION 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS B EEN CONCLUDED UP TO THE HIGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION HAS TO BE REPELLED AND/OR AVOIDED A S HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE (SUPRA). 30. CONSEQUENTLY, IT IS HELD THAT IT IS NOT OPEN FOR T HE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT B EEN CLAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY S TANDS COMPLETED, ONLY BECAUSE A ASSESSMENT UNDER SECTION 153A OF THE ACT IN PURSUANCE OF SEARCH OR REQUISITION IS REQUIR ED TO BE MADE. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE REASSESSMENT COMPLETED U/S153A WITHOUT ANY REFERENC E TO THE INCRIMINATING MATERIAL AS WELL AS BINDING PRECEDENT S AS SITED ABOVE THE ADDITION MADE BY THE AO U/S 40(A)(IA) AS WELL AS 36 (1)(VA) ARE NOT SUSTAINABLE, THE SAME ARE DELETED. IN THE RESULT, THE APPEALS OF THE ASESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/01/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJASTHAN FORT & PALACE PVT. LTD ., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-3, JAIPUR. ITA NO. 597 TO 599/JP/2017 M/S RAJASTHAN FORT & PALACE PVT. LTD. VS DCIT 15 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 597 TO 599/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR