M/s.GMR Hyderabad International Airport Limited, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 619/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7481 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 16-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL JAIN
• Assessee Lawyers: B K PANDA
• Keywords: Depreciation; Search and seizure; Earning of tax free income; Question of law; Validity of assessment; Block assessment
• Section: 143(3); 133A; 153A; 14A; 201(1); 147; 148; 263; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS. A.Y. APPELLANT VS. RESPONDENT 592/BANG/2017 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BENGALURU. M/S. DELHI INTERNATIONAL AIRPORT PVT. LTD., SKIP HOUSE, 25/1, MUSEUM ROAD, BENGALURU 560 025. PAN: AACCD3570F 593/BANG/2017 2012-13 594/BANG/2017 2013-14 595/BANG/2017 2009-10 M/S. DELHI INTERNATIONAL AIRPORT PVT. LTD., BENGALURU 560 025. PAN: AACCD3570F THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BENGALURU. 621/BANG/2017 2010-11 635/BANG/2017 2008-09 597/BANG/2017 2009-10 THE ACIT, CENTRAL CIRCLE 2(2), BENGALURU. M/S. GMR HYDERABAD INTERNATIONAL AIRPORT PVT. LTD., SKIP HOUSE, 25/1, MUSEUM ROAD, BENGALURU 560 025. PAN: AABCH3448M 598/BANG/2017 2010-11 599/BANG/2017 2011-12 600/BANG/2017 2012-13 601/BANG/2017 2013-14 634/BANG/2017 2008-09 602/BANG/2017 2007-08 M/S. GMR HYDERABAD INTERNATIONAL AIRPORT PVT. LTD., PAN: AABCH3448M THE DCIT, CENTRAL CIRCLE 2(2), BENGALURU. 619/BANG/2017 2009-10 632/BANG/2017 2008-09 REVENUE BY : SHRI B.K. PANDA, CIT RESPONDENT BY : SHRI SUNIL JAIN, CA DATE OF HEARING : 24.08.2017 DATE OF PRONOUNCEMENT : 13.10.2017 ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 2 OF 20 O R D E R PER BENCH THESE ARE CROSS APPEALS PREFERRED BY THE REVENUE A S WELL AS THE ASSESSES AGAINST THE RESPECTIVE ORDERS OF THE CIT(A PPEALS). SINCE THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOS ED OF THROUGH THIS CONSOLIDATED ORDER. WE, HOWEVER, PREFER TO ADJUDIC ATE THEM ONE AFTER THE OTHER. ITA 592, 593, 594/BANG/2017 2. THESE ARE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF CIT(APPEALS) ON COMMON GROUNDS WHICH ARE AS UNDER:- 1. WHETHER THE CIT(A) WAS RIGHT WHILE HOLDING THA T ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME ON INVESTMENT MA DE WHICH EARN EXEMPTED INCOME THOUGH THE CBDT HAS CLARIFIED THAT THE EXPENSES WHICH ARE RELATABLE TO EARNING OF EXEMPT I NCOME HAVE TO BE CONSIDERED FOR DISALLOWANCE, IRRESPECTIVE OF THE FACT WHETHER ANY SUCH INCOME HAS BEEN EARNED DURING THE FINANCIA L YEAR OR NOT. 2. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F APPEAL. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION THAT DURING THE IMPUGNED ASSE SSMENT YEAR, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, THEREFOR E NO DISALLOWANCE U/S. 14A CAN BE MADE. IN SUPPORT OF HIS CONTENTION S, HE PLACED RELIANCE UPON VARIOUS JUDGMENTS. ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 3 OF 20 4. THE LD. DR PLACED RELIANCE UPON THE ORDER OF TH E AO. THE LD. DR, HOWEVER, HAS DISPUTED THE RECEIPT OF EXEMPT INCOME AND FURTHER SUBMITTED THAT THE MATTER MAY BE SENT BACK TO THE AO FOR VERI FICATION. 5. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THOUGH THE ASSESSEE HAS MADE INVESTMENT IN MUTUAL FUNDS, BUT DURING THE IMPUGNED ASSESSMENT YEARS IT HAS NOT RECEIVED ANY DIVIDEND INCOME ON SUCH INVEST MENT ACCORDING TO THE ASSESSEE. THEREFORE, IN THE ABSENCE OF EXEMPT INCO ME, NO DISALLOWANCE U/S. 14A CAN BE MADE. THE CIT(APPEALS) HAS FOLLOWE D THE ORDER OF THE BANGALORE TRIBUNAL IN THE CASE OF ALLIANCE INFRASTRUCTURE PROJECT PVT. LTD. V. DCIT IN ITA NOS.220 & 143/BANG/2013 . IT HAS BEEN REPEATEDLY HELD BY THE VARIOUS HIGH COURTS AND THE TRIBUNAL THAT WHERE ASS ESSEE DID NOT EARN ANY EXEMPT INCOME, NO DISALLOWANCE U/S. 14A CAN BE MADE . IN THIS CASE, THE REVENUE HAS DISPUTED THE FACT OF RECEIPT OF EXEMPT INCOME, THEREFORE, WE FIND IT APPROPRIATE TO RESTORE THE MATTER TO THE FI LE OF THE AO FOR VERIFICATION OF THE FACT. IF THE ASSESSEE DOES NOT HAVE ANY EXE MPT INCOME, NO DISALLOWANCE U/S. 14A CAN BE MADE, OTHERWISE THE AO MAY ACT IN ACCORDANCE WITH THE LAW. ITA NOS.595, 621 & 635 AND 602, 619 & 632/BANG/2017 6. THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAI NST THE RESPECTIVE ORDER OF CIT(APPEALS) ON VARIOUS GROUNDS. IN THESE APPEALS, THE ASSESSEE HAS RAISED A SPECIFIC COMMON GROUND WITH REGARD TO VALIDITY OF ASSESSMENT PASSED U/S. 143(3) R.W.S. 153A OF THE ACT. SINCE T HIS GROUND GOES TO THE ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 4 OF 20 ROOT OF THE CASE, WE PREFER TO ADJUDICATE THIS GROU ND ON THE VALIDITY OF ASSESSMENT AT THE THRESHOLD. WE, HOWEVER, FOR THE SAKE OF REFERENCE, EXTRACT THE COMMON GROUND RAISED IN ITA NO.595/BANG /2017:- GROUND I: ORDER PASSED UNDER SECTION 143(3) R.W.S . 153A IS LIABLE TO BE QUASHED 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT I N CASE A NOTICE UNDER SECTION 153A IS ISSUED THE ASSESSING OFFICER IS BOUND TO ASSESS AND REASSESS THE TOTAL INCOME OF THE APPELLA NT. 2. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, RANG E -10 , NEW DELHI HAS COMPLETED THE ASSESSMENT OF THE APPEL LANT VIDE ORDER DATED DECEMBER 16, 2011 PASSED UNDER SECTION 143(3) AND IN THE COURSE OF SUCH ASSESSMENT PROCEEDINGS FULL S CRUTINY AND EXAMINATION WAS MADE. A SEARCH AND SEIZURE OPERATIO N UNDER SECTION 132 WAS CONDUCTED ON OCTOBER 11, 2012 AND D URING THE COURSE OF SEARCH NO INCRIMINATING DOCUMENTS OR UNDI SCLOSED INCOME WAS FOUND. 3. THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT HA VING REGARD TO THE SECOND PROVISO TO SECTION 153A, THE C OMPLETED ASSESSMENT CANNOT BE DISTURBED EXCEPT ONLY IN THE C ASE WHERE THERE IS ANY UNDISCLOSED INCOME FOUND IN THE COURSE OF SEARCH OR ANY INCRIMINATING DOCUMENTS POINTING TOWARDS SUCH U NDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH OR IN THE C OURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 153A OF THE IN COME-TAX ACT. 4. THE APPELLANT THEREFORE PRAYS THAT THE ORDER PA SSED BY THE ASSESSING OFFICER IS CONTRARY TO THE PROVISIONS OF LAW AND LIABLE TO BE QUASHED SINCE NO UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH OR IN THE COURSE OF PROCEEDINGS UNDER SEC TION 153A. 7. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE TH AT A SEARCH ACTION U/S. 132 WAS CONDUCTED UPON THE ASSESSEE ON 11.10.2 012. CONSEQUENT TO THE SEARCH, NOTICE U/S 153A WAS ISSUED AND ASSESSME NT WAS COMPLETED U/S. 153A R.W.S. 143(3) OF THE ACT. BEFORE THE SEA RCH, ASSESSMENT WAS ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 5 OF 20 COMPLETED U/S. 143(3) FOR THE AY 2008-09 ON 24.12.2 010, FOR AY 2009-10 ON 16.12.2011, AND FOR AY 2010-11 ON 24.04.2012 IN THE CASE OF DELHI INTERNATIONAL AIRPORT PVT. LTD. AND ASSESSMENT U/S . 143(3) WAS COMPLETED IN THE CASE OF GMR HYDERABAD INTERNATIONAL AIRPORT PVT. LTD. FOR THE AY 2009-10 ON 30.12.2011, FOR THE AY 2008-09 ON 24.12. 2010 AND FOR THE AY 2007-08 U/S. 143(1) BY ISSUING INTIMATION DATED 09. 03.2009 AND BY ALSO ISSUING REFUND OF RS.25,630 VIDE REFUND ORDER DATED 13.03.2009. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND, THEREF ORE THE ASSESSMENTS FRAMED CONSEQUENT TO SEARCH IS NOT VALID AND DESERV ES TO BE QUASHED. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL OF THIS BENCH IN THE CASE OF P.M.A. RAZAK IN ITA NO.305/BANG/2017, THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT V. KABUL CHAWLA, 234 TAXMAN 300 AND THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. LANCY CONSTRUCTIONS, 237 TAXMAN 728 WITH THE SUBMISSION THAT THIS ISSUE WAS EXAMINED BY THE TRIB UNAL IN THE CASE OF P.M.A. RAZAK (SUPRA) WHEREIN IT WAS CATEGORICALLY HELD THAT IN THE ABSEN CE OF ANY INCRIMINATING MATERIAL, PROCEEDINGS U/S. 153 A CANNOT BE INITIATED IN THE CONCLUDED ASSESSMENT. THE TRIBUNAL ACCORDINGLY KNOCKED DOWN THE ASSESSMENT ORDER FRAMED U/S. 143(3) R.W.S. 153A OF THE ACT. 9. THE LD. DR, ON THE OTHER HAND, HAS PLACED RELIAN CE UPON THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CANARA HOUSING DEVELOPMENT COMPANY V. DCIT, 49 TAXMAN.COM 98 WITH THE SUBMISSION THAT THE JUDGMENT OF THE HON'BLE JURISDI CTIONAL HIGH COURT CAME ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 6 OF 20 AFTER THE JUDGMENT IN THE CASE OF LANCY CONSTRUCTIONS (SUPRA) AND THEREFORE THE SAME MAY BE FOLLOWED. 10. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORI TIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY ASS ESSMENT U/S. 143(3) WAS COMPLETED BEFORE THE SEARCH TOOK PLACE UPON THE ASS ESSEE. NOTHING HAS BEEN DEMONSTRATED BEFORE US THAT ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH WAS USED FOR COMP LETING THE ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT. THEREFORE THER E IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH ON THE B ASIS OF WHICH CONCLUDED ASSESSMENT CAN BE REOPENED AND FRESH ASSESSMENT CAN BE FRAMED U/S. 143(3) R.W.S. 153A OF THE ACT. THE QUESTION THAT A RISES IN THIS CASE IS WHETHER THE AO CAN REFRAME THE ASSESSMENT U/S. 153 A ON THE BASIS OF SEARCH CONDUCTED UPON THE ASSESSEE WHEREIN NO INCRI MINATING MATERIAL IS FOUND? THIS QUESTION WAS EXAMINED BY THIS BENCH O F THE TRIBUNAL IN WHICH ONE OF THE MEMBERS WAS A PARTY TO IT AND THE TRIBUN AL HAVING EXAMINED BOTH THE JUDGMENTS OF THE HON'BLE JURISDICTIONAL HI GH COURT PASSED IN THE CASES OF LANCY CONSTRUCTIONS (SUPRA) AND CANARA HOUSING DEVELOPMENT COMPANY (SUPRA) HAS CONCLUDED THAT IN THE ABSENCE OF ANY INCRIMINA TING MATERIAL, PROCEEDINGS U/S. 153A CANNOT BE INITIATED AND CONCLUDED ASSESSMENT CANNOT BE REOPENED. THE RELEVANT OBSERV ATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER:- 14. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AND THE JUDGMENT REFERRED TO BY THE PARTIES, WE FIND THAT IN THE CASE OF CANARA HOU SING DEVELOPMENT COMPANY, THE QUESTION OF LAW RAISED BEF ORE THE HON'BLE HIGH COURT WAS WITH REGARD TO SCOPE OF REVI SION UNDER SECTION 263 OF THE ACT WITH RESPECT TO ASSESSMENT C OMPLETED ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 7 OF 20 UNDER SECTION 143(3) OF THE ACT IN THE LIGHT OF THE FACT THAT PROCEEDINGS UNDER SECTION 153A WAS INITIATED. FOR T HE SAKE OF REFERENCE, WE EXTRACT THE QUESTION OF LAW REFERRED TO HON'BLE HIGH COURT AS UNDER: 'WHEN ONCE THE PROCEEDINGS UNDER SECTION 153A OF THE ACT IS INITIATED, WHETHER THE COMMISSIONER OF INCOM E TAX CAN INVOKE THE POWER UNDER SECTION 263 OF THE ACT T O REVIEW THE ORDER OF ASSESSMENT PASSED BY THE ASSESS ING AUTHORITY?' 15. THE FACTS OF THE CASE WAS THAT ASSESSMENT UNDE R SECTION 143(3) WAS COMPLETED BY AN ORDER DATED 31.12.2010. SUBSEQUENTLY, A SEARCH TOOK PLACE IN THE PREMISES O F THE ASSESSEE UNDER SECTION 132 OF THE ACT ON 12.04.2011. IN THE COURSE OF SEARCH, INCRIMINATING MATERIAL LEADING TO NON-DISCL OSURE OF INCOME WAS SEIZED. ACCORDINGLY, PROCEEDINGS UNDER S ECTION 153A WAS INITIATED AND IN RESPONSE TO THE NOTICE UNDER S ECTION 153A, THE ASSESSEE FILED A RETURN OF INCOME FOR 6 YEARS A S REQUIRED UNDER THE SAID PROVISION. WHEN THE SAID RETURN WAS UNDER CONSIDERATION, ON 14.03.2013, THE CIT INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE GROUND THAT ASSESSMENT ORDER DATED 3 1.12.2010 PASSED UNDER SECTION 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASS ESSEE FILED OBJECTIONS. BUT ULTIMATELY ORDER UNDER SECTION 263 WAS PASSED WHICH WAS CHALLENGED BEFORE THE TRIBUNAL AND THE TR IBUNAL HAVING RELIED UPON THE JUDGMENT OF THE SPECIAL BENC H OF ITA T IN THE CASE OF ALL CARGO LOGISTICS LTD., 16 ITR 380 (M UM) SPECIAL BENCH HELD THAT IT IS OPEN TO THE COMMISSIONER TO I NVOKE HIS POWERS UNDER SECTION 263 OF THE ACT IF THE SAID ASS ESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. OTHERWISE THE REVENUE WILL BE WITHOUT ANY REMEDY. A GAINST THIS ORDER OF TRIBUNAL, MATTER WAS BROUGHT BEFORE THE JU RISDICTIONAL HON'BLE HIGH COURT AND THE HIGH COURT RE-EXAMINED T HE ENTIRE ISSUE IN THE LIGHT OF JUDGMENTS OF CIT VS. ANIL KUM AR 80 CCH 113 DELHI HIGH COURT AND CAME TO THE CONCLUSION THA T THE COMMISSIONER BY VIRTUE OF THE POWER CONFERRED UNDER SECTION 263 OF THE ACT, GETS NO JURISDICTION TO INITIATE PROCEE DINGS UNDER THE SAID PROVISION BECAUSE THE CONDITION PRECEDENT FOR INITIATING PROCEEDINGS UNDER SECTION 263 IS ANY ORDER PASSED U NDER THE ACT BY THE AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN ONCE THE ORDER PASSED BY THE AO G ETS REOPENED, THERE IS NO ORDER WHICH CAN BE SAID TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE RELEVANT OBSERVATION OF THE JURISDICTIONAL HIGH COU RT IN THE CASE ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 8 OF 20 OF CANARA HOUSING DEVELOPMENT COMPANY IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: '10. SECTION 133A OF THE ACT STARTS WITH A NON OBST ANTE CLAUSE. THE FETTERS IMPOSED UPON THE ASSESSING OFFI CER BY THE STRICT PROCEDURE TO ASSUME JURISDICTION TO REOP EN THE ASSESSMENT UNDER SECTIONS 147 AND 148, HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECTION (1) OF SECTION 153A OPENS. THE TIME-LIMIT W ITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, A S PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLIC ABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUI RES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOPEN THE ASSESSMENT UNDER SECTION 14 8 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153 A. THE TIME-LIMIT PRESCRIBED FOR COMPLETION OF AN ASSE SSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE A WAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL TH E STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153A HAS BEEN ENTRUSTED WITH THE DUTY OF BR INGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHOSE CASE I S COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMEN TS 'WITHOUT ANY FETTERS, IF NEED BE. THEREFORE, IT IS CLEAR EVEN IF AN ASSESSMENT ORDER IS PASSED UNDER SECTION 143( 1) OR 143(3) OF THE ACT, THE ASSESSING OFFICER IS EMPOWER ED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INC OME TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEA RTHED DURING THE SEARCH. AFTER SUCH REOPENING OF THE ASSE SSMENT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REA SSESS THE TOTAL INCOME OF THE AFORESAID YEARS. THE CONDIT ION PRECEDENT FOR APPLICATION OF SECTION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITIATION OF PROCEE DINGS UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLO SED INCOME BEING UNEARTHED DURING SUCH SEARCH. THE PROV ISO TO THE AFORESAID SECTION MAKES IT CLEAR THE ASSESSI NG OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPEC T OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN TH E PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE A FORESAID SUB-SECTION ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEEDING SHALL ABATE. IF SU CH PROCEEDINGS ARE ALREADY CONCLUDED BY THE ASSESSING OFFICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. T HE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESU LTING ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 9 OF 20 IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVE R, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO A SSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMEN T YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE ASSE SSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AN D REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDIS CLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTA L INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153 A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER I N RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHI CH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITI ATED UNDER SECTION 153A OF THE ACT, THE LEGAL EFFECT IS EVEN IN CASE WHERE THE ASSESSMENT ORDER IS PASSED IT STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. RE-OPENED MEANS TO DEAL WITH OR BEGIN W ITH AGAIN. IT MEANS THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS. ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RE TURN, ANY UNDISCLOSED INCOME FOUND DURING SEARCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTHED DURING THE SEARCH, IN ORDER TO FIND OUT WHAT IS THE 'TOTAL INCOME' OF EACH YEAR AND THE N PASS THE ASSESSMENT ORDER. THEREFORE, THE COMMISSIONER B Y VIRTUE OF THE POWER CONFERRED UNDER SECTION 263 OF THE ACT GETS NO JURISDICTION TO INITIATE PROCEEDINGS UN DER THE SAID PROVISION BECAUSE THE CONDITION PRECEDENT FOR INITIATING PROCEEDINGS UNDER SECTION 263 IS ANY ORD ER PASSED UNDER THE ACT BY THE ASSESSING OFFICER IS ER RONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE ORDER PASSED BY THE ASSESSING OFFICER GETS REOPENED, THERE IS NO ORDER WHICH CAN BE SAID TO BE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE WHICH CONFERS JURISDICTION ON THE COMMISSIO NER TO EXERCISE THE POWER OF THE JURISDICTION. 11. THE TRIBUNAL HAS PROCEEDED ON THE ASSUMPTION BY VIRTUE OF THE JUDGMENT OF THE SPECIAL BENCH OF T HE MUMBAI, THE SCOPE OF ENQUIRY UNDER SECTION 153A IS TO BE CONFINED ONLY TO THE UNDISCLOSED INCOME UNEARTHED D URING SEARCH AND IF THERE IS ANY OTHER INCOME WHICH IS NO T THE SUBJECT MATTER OF SEARCH, THE SAME CANNOT BE TAKEN INTO CONSIDERATION. THEREFORE, THE REVISIONAL AUTHORITY CAN ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 10 OF 20 EXERCISE THE POWER UNDER SECTION 263. IN THE ENTIRE SCHEME OF 153A OF THE ACT., THERE IS NO PROHIBITION FOR THE ASSESSING AUTHORITY TO TAKE NOTE OF SUCH INCOME. ON THE CONTRARY, IT IS EXPRESSLY PROVIDED UNDER SECTION 15 3A OF THE ACT THE ASSESSING OFFICER SHALL ASSESS OR REASS ESS THE 'TOTAL INCOME' OF SIX ASSESSMENT YEARS WHICH MEANS THE SAID TOTAL INCOME INCLUDES INCOME WHICH WAS RETURNE D IN THE EARLIER RETURN, THE INCOME WHICH WAS UNEARTHED DURING SEARCH AND INCOME WHICH IS NOT THE SUBJECT MATTER O F AFORESAID TWO INCOME. IF THE COMMISSIONER HAS COME ACROSS ANY INCOME THAT THE ASSESSING AUTHORITY HAS NOT TAKEN NOTE OF WHILE PASSING THE EARLIER ORDER, THE SAID MATERIAL CAN BE FURNISHED TO THE ASSESSING AUTHORIT Y AND THE ASSESSING AUTHORITY SHALL TAKE NOTE OF THE SAID INCOME ALSO IN DETERMINING THE TOTAL INCOME OF THE ASSESSE E WHEN THE EARLIER PROCEEDINGS ARE REOPENED AND THAT INCOM E ALSO SHALL BECOME THE SUBJECT MATTER OF SAID PROCEEDINGS . IN THAT VIEW OF THE MATTER THE REASONING GIVEN BY THE TRIBUNAL IS NOT JUSTIFIED. THE COMMISSIONER DID NOT HAVE JURISDICTION TO INITIATE ANY PROCEEDINGS UNDER SECT ION 263 OF THE ACT. 16. THUS IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY, THE JURISDICTIONAL HIGH COURT HAS NOT LAID DOWN ANY PROPOSITION OF LAW THAT IN THE ABSENCE OF INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH, PROCEEDING UNDER SECTION 153A CAN BE INITIATED AND THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OR 143(1) CAN BE RELOOKED INTO OR RE CONSIDERED. WHEREAS IN THE CASE OF LANCY CONSTRUCTION, THE JURI SDICTIONAL HIGH COURT HAS EXAMINED THE QUESTION OF LAW 'WHETHE R ACCOUNTS IN TALLY COPIED AND SEIZED AT THE TIME OF SEARCH DO NOT COME WITHIN THE PURVIEW OF MATERIAL FOUND DURING THE COU RSE OF SEARCH AS PER RATIO OF THE DECISION OF THE SPECIAL BENCH O F BANGALORE IN THE CASE OF ALL CARGO LOGISTICS VS. DCIT (SUPRA). 17. WHILE ADJUDICATING THE ISSUE, THE HON'BLE HIGH COURT CATEGORICALLY HELD THAT IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, PROCEEDINGS UNDER SECTION 153A CANNOT BE INITIATED IN THE LIGHT OF THE FACT THAT REGULAR ASSESSMENT WAS COMPL ETED. IF IT IS TO BE ALLOWED, THEN IT WOULD AMOUNT TO SECOND OPPORTUNITY TO THE REVENUE TO REOPEN THE CONCLUDED ASSESSMENT. THE RELEVANT OBSERVATION OF THE HON'BLE HIGH COURT IS EXTRACTED HEREIN FOR THE SAKE OF REFERENCE : ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 11 OF 20 '6. IN OUR VIEW, IF ASSESSMENT IS ALLOWED TO BE REO PENED ON THE BASIS OF SEARCH, IN WHICH NO INCRIMINATING M ATERIAL HAD BEEN FOUND, AND MERELY ON THE BASIS OF FURTHER INVESTIGATING THE BOOKS OF ACCOUNT WHICH HAD BEEN A LREADY SUBMITTED BY THE ASSESSEE AND ACCEPTED BY THE ASSES SING OFFICER AT THE TIME OF REGULAR ASSESSMENT, THE SAME WOULD AMOUNT TO THE REVENUE GETTING A SECOND OPPORTUNITY TO REOPEN THE CONCLUDED ASSESSMENT, WHICH IS NOT PERMISSIBLE UNDER THE LAW. MERELY BECAUSE A SEARCH IS CONDUCTED IN THE PREMISES OF THE ASSESSEE, WOULD NO T ENTITLE THE REVENUE TO INITIATE THE PROCESS OF REAS SESSMENT, FOR WHICH THERE IS A SEPARATE PROCEDURE PRESCRIBED IN THE STATUTE. IT IS ONLY WHEN THE CONDITIONS PRESCRIBED FOR REASSESSMENT ARE FULFILLED THAT A CONCLUDED ASSESSM ENT CAN BE REOPENED. THE VERY SAME ACCOUNTS WHICH WERE SUBMITTED BY THE ASSESSEE, ON THE BASIS OF WHICH ASSESSMENT HAD BEEN CONCLUDED, CANNOT BE REAPPRECIA TED BY THE ASSESSING OFFICER MERELY BECAUSE A SEARCH HA D BEEN CONDUCTED IN THE PREMISES OF THE ASSESSEE. ' 18. THIS ISSUE WAS ALSO EXAMINED BY DIFFERENT HIGH COURTS. IN THE CASE OF CIT VS. KABUL CHAWLA, THE DELHI HIGH CO URT HAS EXAMINED THIS ISSUE AND HAS CATEGORICALLY HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN THE JUDGME NT HAVING EXAMINED THE VARIOUS ASPECTS, THE LORDSHIP HAS ELAB ORATED THE LEGAL POSITION THAT EMERGES ON CONSPECTUS OF SECTIO N 153A(1) OF THE ACT AS UNDER: ' I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(I) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING T HE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARC H TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUC H AYS WILL HAVE TO BE COMPUTED BY THE A OS AS A FRESH EXE RCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEARCH TAKES PLACES. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 12 OF 20 AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WIL L BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIO NS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FO UND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATE RIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSES SMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT H AS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEI ZED MATERIAL. ' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABAT ED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PRO CEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E 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 M ATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 15 3A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVE RED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. ' 19. GUJARAT HIGH COURT HAS ALSO EXAMINED THIS ISSU E IN THE CASE OF PR. CIT VS. SAUMYA CONSTRUCTION PVT. LTD., AND HAVING RELIED UPON THE JUDGMENT OF THE KABUL CHAWLA, DELHI HIGH COURT, THE HON'BLE HIGH COURT HAS HELD THAT THE VERY PURPO SE OF THE PROVISIONS OF SECTION 153A WAS TO MAKE ASSESSMENT I N THE CASE OF SEARCH OR REQUISITION, THEREBY IT GOES WITHOUT SAYI NG THAT THE ASSESSMENT SHOULD BE CONNECTED WITH SOMETHING FOUND DURING THE COURSE OF SEARCH OR THE REQUISITION I.E., INCRIMINA TING MATERIALS ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 13 OF 20 WHICH REVEALS UNDISCLOSED INCOME. IN THAT CASE, THE ADDITION MADE WAS NOT BASED ON INCRIMINATING DOCUMENTS FOUND DURI NG THE COURSE OF SEARCH. THE HON'BLE HIGH COURT HAS HELD T HAT AO WAS NOT JUSTIFIED IN MAKING THE ADDITIONS. THE HON'BLE GUJARAT HIGH COURT WHILE ADJUDICATING THE ISSUE HAD TAKEN INTO A CCOUNT THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT (SUPRA) AND CI T VS. KABUL CHAWLA OF DELHI HIGH COURT. 20. THIS LEGAL PROPOSITION WAS FOLLOWED BY THE TRI BUNAL IN A SERIES OF CASES AND SOME OF THE CASES ARE LISTED HE REUNDER: I) DY.CIT, CC-I, NEW DELHI VS.AGGARWAL ENTERTAINMEN T (P.) LTD. (2016) (72 TAXMANN.COM 340), DATED 29.6.2 016 (ITA DELHI BENCH 'A). 21. TURNING TO THE FACT OF THE CASE WE FIND THAT U NDISPUTEDLY NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH AND THESE AVERMENTS IN THIS REGARD WERE NOT DISPUTE D BY THE REVENUE. IT IS ALSO A FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED AS RETURN OF INCOME WAS FILED ON 19.01.2003 AND THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFT ER, NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 18.06.2 014. SINCE THE TIME FOR ISSUING OF NOTICE UNDER SECTION 143(2) OF THE ACT AGAINST THE ORIGINAL RETURN HAS BEEN EXPIRED IT IS DEEMED THAT THE ASSESSMENT WAS CONCLUDED AND BY ISSUING NOTICE UNDE R SECTION 153A, THE REVENUE INTENT TO REOPEN THE CONCLUDED AS SESSMENT WITHOUT HAVING ANY INCRIMINATING MATERIAL FOUND DUR ING THE COURSE OF SEARCH. IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL, PROCEEDINGS UNDER SECTION 153A CANNOT BE INITIATED AND THE CONCLUDED ASSESSMENT CANNOT BE REOPENED. THEREFORE, WE HAVE NO HESITATION IN HOLDING THAT PROCEEDING INITIATED UND ER SECTION 153A ARE NOT VALID AND WE ACCORDINGLY FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE CIT(A) AND RIGHTLY KNOCK DOWN THE ASSESSMENT COMPLETED UNDER SECTION 153A OF THE ACT. WE THEREFORE CONFIRM HIS ORDER. 11. WE THEREFORE FOLLOWING THE VIEW TAKEN BY THE TR IBUNAL IN THE AFORESAID CASE HOLD THAT IN THE ABSENCE OF INCRIMIN ATING MATERIAL, THE CONCLUDED ASSESSMENT CANNOT BE REOPENED AND ASSESSM ENT U/S. 153A CANNOT BE FRAMED. IN THE INSTANT CASE, UNDISPUTEDL Y NO INCRIMINATING MATERIAL WAS FOUND, THEREFORE THE ASSESSMENT FRAMED U/S. 143(3) R.W.S. ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 14 OF 20 153A OF THE ACT IS NOT SUSTAINABLE AND WE ACCORDING LY KNOCK DOWN THE ASSESSMENTS. 12. SINCE WE HAVE KNOCKED DOWN THE ENTIRE ASSESSMEN TS FRAMED U/S. 143(3) R.W.S. 153A OF THE ACT, WE FIND NO JUSTIFICA TION TO DEAL WITH THE OTHER ISSUES RAISED ON MERIT. ACCORDINGLY, THE APPEALS O F THE ASSESSES STAND ALLOWED. ITA NOS.597 TO 601/ BANG/2017 13. THESE APPEALS ARE PREFERRED BY THE REVENUE AGAI NST THE RESPECTIVE ORDERS OF THE CIT(APPEALS) RAISING THE FOLLOWING CO MMON GROUND:- WHETHER THE CIT(A) WAS RIGHT IN ALLOWING THE DEPRE CIATION BASED ON THE DISALLOWANCE OF EXPENSES AS NOT ELIGIB LE FOR DEPRECIATION IN AY: 2007-07 & 2008-09. 14. IN THIS REGARD, WE HAVE EXAMINED THE FACTS OF T HE CASE AND WE FIND THAT THE ASSESSEE HAS ALLOCATED CAPITAL WORK-IN-PRO GRESS [CWIP] OF RS.434,86,82,557 TO ASSETS AND ACCORDINGLY HAD CLAI MED DEPRECIATION ON ASSETS. THE ABOVE EXPENDITURE HAS BEEN INCURRED IN RELATION TO CONSTRUCTION OF THE AIRPORT. THE AO HAD DISALLOWED THE EXPENDITURE OF RS.60,11,28,411 BY CONSIDERING THE SAME AS NOT ELIG IBLE FOR CAPITALIZATION SINCE THEY ARE NOT IN CAPITAL NATURE IN THE AY 2008 -09 AND ACCORDINGLY HAS REDUCED THE ABOVE AMOUNT IN WORKING OUT THE CLOSING BALANCE OF CWIP. THE DEPRECIATION OF RS.3,69,75,969 IN AY 2013-14 AN D RS.7,26,69,385 IN AY 2009-10 ON THE SAID EXPENDITURE RELATING TO CURR ENT ASSESSMENT YEAR HAS BEEN DISALLOWED. ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 15 OF 20 15. BEFORE THE CIT(APPEALS) THE ASSESSEE HAS CONTEN DED THAT THE AO FAILED TO APPRECIATE THE FACT THAT ASSESSEE IS INTO DEVELOPMENT OF AIRPORT AND THE EXPENDITURE INCURRED IN LIEU OF CONSTRUCTIO N OF AIRPORT IS ELIGIBLE TO BE DEBITED TO THE CWIP. THE ASSESSEE FURTHER PRAYE D THAT THE AO BE DIRECTED TO ALLOW THE EXPENSES OF RS.60,11,28,011 UNDER CWIP FOR AY 2008-09. THE ASSESSEE PRAYS THAT THE AFORESAID DIS ALLOWANCE DURING THE SAID ASSESSMENT YEAR BE DELETED. 16. THE CIT(APPEALS) RE-EXAMINED THE ISSUE AND DIRE CTED THE AO TO CONSIDER CERTAIN AMOUNT AS NOT ELIGIBLE FOR FORMING PART OF CWIP WHICH IS TO BE UTILIZED AT THE TIME OF ACHIEVING THE COMMERCIAL OPERATION OF THE ASSESSEE. THE AO WAS DIRECTED TO CONSIDER THE AMOU NTS AS HELD NOT ELIGIBLE FOR CAPITALIZATION IN DECIDING THE APPEAL FOR AY 2007-08 & 2008-09 FOR THE PURPOSE OF ALLOWING DEPRECIATION. 17. THIS FINDING OF THE CIT(APPEALS) IS CHALLENGED BY THE REVENUE, BUT THE LD. DR DID NOT POINT OUT THE SPECIFIC DEFECT TH EREIN. HE SIMPLY RELIED UPON THE ORDER OF THE AO. WHEREAS, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE CIT(APPEALS) HAS EXAMINED THE IS SUE IN THE RIGHT PERSPECTIVE, THEREFORE NO INTERFERENCE IS CALLED FO R. 18. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER A UTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE CIT(APPEALS) HAS ADJUDICATED THE ISSUE IN THE RIGHT PERSPECTIVE AND NO INFIRMITY HAS BEEN POINTED OUT BY THE LD. DR. ACCORDINGLY, WE CONFIRM THE ORDER OF THE C IT(APPEALS). 19. IN ITA NOS.599 TO 601/BANG/2017 , THE OTHER GROUNDS RELATE TO DISALLOWANCE U/S. 14A OF THE ACT, DESPITE THE FACT THAT THE ASSESSEE HAS NOT ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 16 OF 20 EARNED ANY EXEMPT INCOME. THIS ISSUE WAS EXAMINED IN THE FOREGOING PARAS AND WE HAVE TAKEN A VIEW THAT IN THE ABSENCE OF ANY EXEMPT INCOME, DISALLOWANCE U/S. 14A CANNOT BE MADE. SINCE THE RE VENUE HAS DISPUTED THE RECEIPT OF EXEMPT INCOME, WE HAVE RESTORED THE MATTER IN THE EARLIER APPEALS TO THE AO FOR VERIFICATION OF THE FACTS AND IF IT IS ESTABLISHED THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME, NO DIS ALLOWANCE CAN BE MADE. FOLLOWING THE SAME, THIS ISSUE IS RESTORED T O THE AO AFTER SETTING ASIDE THE ORDER OF THE CIT(APPEALS). 20. IN ITA NO.601/BANG/2017 , THE ORDER OF CIT(APPEALS) IS CHALLENGED ON ONE MORE GROUND I.E., WHETHER THE CIT(APPEALS) W AS RIGHT WHILE HOLDING THAT TDS IS DEDUCTIBLE U/S. 192 AND NOT U/S. 194J F OR DIRECTOR SITTING FEES WHICH IS SELF CONTRADICTORY TO CIT(A)S FINDING FOR THE EARLIER YEARS. 21. THE FACTS BORNE OUT FROM THE RECORD IN THIS REG ARD ARE THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.1 LAKH T OWARDS SITTING FEES OF DIRECTORS FOR ATTENDING AUDIT COMMITTEE MEETINGS, BOARD MEETINGS, ETC. THE AO HAS DISALLOWED THIS EXPENSES ON THE GROUND T HAT TDS HAS NOT BEEN DEDUCTED ON THE SAID EXPENSES. 22. THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) WITH THE SUBMISSION THAT IN THE CASE OF GROUP COMPANY VI Z., M/S. DELHI INTERNATIONAL AIRPORT PVT. LTD., IN APPEAL AGAINST THE ORDER PASSED U/S. 201(1) AND 201(1A) OF THE ACT IT WAS HELD BY THE CI T(A) THAT NO TAX IS DEDUCTIBLE ON PAYMENTS MADE TO DIRECTORS AS SITTING FEES FOR ATTENDING BOARD MEETINGS. IT WAS FURTHER CONTENDED THAT THE AMENDMENT MADE IN SECTION 194J VIDE FINANCE ACT, 2012 W.E.F. 1.6.2012 CASTS AN OBLIGATION ON ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 17 OF 20 THE PERSON RESPONSIBLE FOR PAYMENT OF ANY COMMISSIO N TO DIRECTOR TO DEDUCT TDS @ 10% U/S. 194J. HE ALSO PLACED RELIANCE UPON CLAUSE 71 OF THE FINANCE BILL, 2012. 23. THE CIT(APPEALS) RE-EXAMINED THE SAME HAVING RE PRODUCED CLAUSE 71 OF THE FINANCE BILL, 2012 IN HIS ORDER AND HELD THAT SITTING FEES OF RS.1 LAKH WAS PAID TO DIRECTORS WHO ARE IN RECEIPT OF SA LARY AND ACCORDINGLY THE PROVISIONS OF SECTION 192 SHALL APPLY TO SUCH PAYME NT OF SITTING FEES AND NOT THE PROVISIONS OF SECTION 194J. THE AO WAS ACCORDI NGLY DIRECTED TO DELETE THE DISALLOWANCE. 24. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND PLACED RELIANCE UPON THE ORDER OF THE AO, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT AMENDMENT TO SECTION 19 4J WAS BROUGHT TO THE STATUTE W.E.F. 1.7.2012, WHEREAS THE IMPUGNED A SSESSMENT YEAR IS 2013-14, THEREFORE THE AMENDMENT WOULD NOT APPLY IN THE PRESENT CASE. IN THE ABSENCE OF ANY SUCH AMENDMENT, SITTING FEES PAI D BY THE ASSESSEE TO ITS DIRECTORS COULD NOT BE DISALLOWED U/S. 194J OF THE ACT. 25. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF THE RECORD, WE FIND THAT UNDISPUTEDLY AMENDMENT U/S. 19 4J WAS BROUGHT W.E.F. 1.7.2012, THEREFORE IT WOULD APPLY FROM AY 2014-15, NOT IN THE IMPUGNED ASSESSMENT YEAR. THEREFORE, WE FIND THAT THE CIT(A PPEALS) HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF RELEVANT PROV ISIONS OF THE ACT AND WE FIND NO INFIRMITY THEREIN. WE ACCORDINGLY CONFIRM HIS ORDER. ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 18 OF 20 ITA NO.634/BANG/2017 26. THROUGH THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ER RED IN FACTS AND LAW IN HOLDING THAT THE EXPENSES ARE REVE NUE IN NATURE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN HOLDING THAT ENTIRE EXPENSES TOWARDS PRE- OPERATIVE EXPENSES AND INAUGURATION EXPENSES ARE REVENUE IN NATURE MERELY ON THE FACT THAT THE BUSINESS OF THE ASSESSEE IS SET UP WITHOUT GOING IN TO THE NATURE OF BENEFIT ON ACCOUNT OF THE SAID EXPENDITUR E. THE HUGE EXPENDITURES ARE INCURRED WHICH FACILITATE IN SETTI NG UP OF INTERNATIONAL AIRPORT, WHICH GIVES THE ASSESSEE BEN EFITS OF ENDURING NATURE. 3. THE SPECIFIC EXPENDITURES LIKE EXPENDITURE INCU RRED TOWARDS SATISH GUJRAL PAINTING, PRODUCTION OF FILM AND SONGS, VIDEOS, SHORT FILM ON THE ACTIVITIES OF AIRPORT OUT OF INAUGURAL EXPENSES PRIMA FACIE GIVE ARE CAPITAL IN NATURE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FA ILED TO APPRECIATE THAT, THOUGH THE EXPENSES ARE INCURRED A FTER SET UP OF BUSINESS THE SAID EXPENSES GIVE THE ASSESSEE BENEFI TS OF ENDURING NATURE IN SETTING UP OF INTERNATIONAL AIRPORT. 5. FOR THE ABOVE GROUNDS AND ANY OTHER GROUNDS THA T MAY BE RAISED DURING THE COURSE OF APPEAL PROCEEDINGS, THE ORDERS OF THE AO MAY BE UPHELD, SINCE THE EXPENDITURE ARE CAPITAL IN NATURE. 27. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION THAT IN THIS CASE ALSO ASSESS MENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 24.12.2010, WHER EAS SEARCH WAS CONDUCTED THEREAFTER AND NO INCRIMINATING MATERIAL WAS FOUND HAVING INVOKED THE PROVISIONS OF RULE 27 OF THE ITAT RULES . THEREFORE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 153A WIT HOUT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IS BAD I N LAW. ONCE THE ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 19 OF 20 ASSESSMENT ORDER IS QUASHED, NO ADDITION MADE THERE IN WOULD SURVIVE. IN THE LIGHT OF THESE FACTS, THE REVENUES APPEAL BECO MES INFRUCTUOUS. 28. THE LD. DR, HOWEVER, PLACED RELIANCE UPON THE O RDER OF THE AO. 29. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORI TIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT IN THE FOREGOING PARAS WE HAVE CATEGORICALLY HELD THAT IN THE ABSENCE OF ANY INCRI MINATING MATERIAL, THE ACTION U/S. 143(3) R.W.S. 153A CANNOT BE INITIATED TO REASSESS THE ISSUES CONCLUDED IN THE REGULAR ASSESSMENT FRAMED U/S. 143 (3) OF THE ACT VIDE ORDER DATED 24.12.2010. UNDISPUTEDLY SEARCH WAS CO NDUCTED ON 11.10.2012 AND NO INCRIMINATING MATERIAL WAS FOUND. THEREFORE, ASSESSMENT FRAMED U/S. 143(3) R.W.S. 153A OF THE AC T IS NOT VALID AND THEREFORE THE ADDITIONS MADE THEREIN ARE NOT SUSTAI NABLE. WE THEREFORE FIND NO MERIT IN THE REVENUES APPEAL RELATING TO CERTAI N ADDITIONS MADE IN THE ASSESSMENT ORDER. ACCORDINGLY, THE REVENUES APPEA L STANDS DISMISSED. 30. IN THE RESULT, THE ASSESSEES' APPEALS IN ITA NO S.595, 621, 635, 602, 619 & 632 ARE ALLOWED. THE REVENUES APPEALS IN IT A NOS.592 TO 594/B/17 ARE ALLOWED FOR STATISTICAL PURPOSES, ITA NOS. 597 & 634/BANG/17 ARE DISMISSED AND ITA NOS. 598 TO 601/B/17 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCTOBER, 2017. SD/- SD/- ( JASON P. BOAZ ) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 13 TH OCTOBER, 2017. / D ESAI S MURTHY / ITA NOS.592 TO 595/BANG/17 & CONNECTED APPEALS PAGE 20 OF 20 COPY TO: 1. REVENUE 2. ASSESSEES (2) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.