KSS LTD, MUMBAI V. ASST CIT CC 38, MUMBAI

ITA 7552/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8741 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENARAJESH KUMAR YADAV
• Keywords: Gift; Depreciation
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) K.SERA SERA PRODUCTIONS LIMITED, 18, 4 TH FLOOR, MOHID HEIGHTS, ABOVE MASALA MANTRA RESTAURANT, LOKHANDWALA ROAD, ANDHERI (W), MUMBAI 400 053 PAN:AAACG 5103D ...... APPELLANT VS. THE DCIT, C.C-38, ROOM NO.32(1) GROUND FLOOR, AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO. 3308/MUM/2011,(A.Y.2004-05) ITA NO. 6961/MUM/2013,(A.Y.2004-05) THE DCIT, C.C-38, ROOM NO.32(1) GROUND FLOOR, AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 .... APPELLANT VS. K.SERA SERA PRODUCTIONS LIMITED, 18, 4 TH FLOOR, MOHID HEIGHTS, ABOVE MASALA MANTRA RESTAURANT, LOKHANDWALA ROAD, ANDHERI (W), MUMBAI 400 053 PAN:AAACG 5103D ...... RESPONDENT 2 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) ASSESSEE BY : SHRI SATISH MODY REVENUE BY : S/SHRI R.P.MEENA/RAJESH KUMAR YADAV DATE OF HEARING : 23/10/2017 DATE OF PRONOUNCEMENT : 31/10/2017 ORDER PER G.S.PANNU,A.M: THE CAPTIONED FOUR APPEALS RELATE TO THE SAME ASSE SSEE PERTAINING TO ASSESSMENT YEAR 2004-05, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDE R IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. FIRSTLY, WE MAY TAKE UP THE APPEALS IN ITA NOS. 2740/MUM/2011 & 3308/MUM/2011, WHICH ARE CROSS-APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER PASSED BY THE CIT (A) -41, MUMBAI PERTAINING TO THE ASSESSMENT YEAR 2004-05, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 31/12/2009 UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. 3. THE BACKGROUND OF THE DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PR OVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF PRODUCTION AND DISTRIBUTION OF FILMS. THERE WAS A SEARCH ACTION UNDER SECTION 132(1) OF THE ACT ON THE ASSESSEE AND ITS G ROUP CONCERNS AS WELL AS ON ITS DIRECTORS ON 12/09/2007. AS A CONSEQUENC E, A NOTICE UNDER SECTION 153A WAS ISSUED CALLING FOR A RETURN OF INC OME, IN RESPONSE TO WHICH ASSESSEE FILED A RETURN OF INCOME ON 10/09/20 09 DECLARING A TOTAL 3 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) INCOME OF RS.1,29,31,390/-, WHICH WAS THE SAME AS F ILED UNDER SECTION 139(1) OF THE ACT ON 01/11/2004. IN THE ENSUING AS SESSMENT FINALIZED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT DATED 3 1/12/2009, THE TOTAL INCOME FOR THE YEAR HAS BEEN ASSESSED AT RS.1,87,67 ,986/-, WHICH INTER- ALIA, CONTAINS FIVE ADDITIONS. THESE ADDITIONS ARE (I) DISALLOWANCE OF PRELIMINARY EXPENSES CLAIMED UNDER SECTION 35D OF T HE ACT OF RS.10,12,826/-; (II) DISALLOWANCE OF STOCK EXCHANGE LISTING FEE ON ACCOUNT OF BEING A PRIOR PERIOD EXPENSE RS.2,00,0 00; (III) DENIAL OF DEPRECIATION RS.5,95,013/-; (IV) DISALLOWANCE OF EXPENDITURE ON DISTRIBUTION OF GIFTS RS.28,00,000/-; AND, (V)DISA LLOWANCE OF INTEREST EXPENSE ON LOANS RS.10,29,724/-. 4. ALL THESE ADDITIONS WERE CARRIED IN APPEAL BEFOR E THE CIT(A), WHO HAS SINCE ALLOWED PART RELIEF. THE CIT(A) DELETED THE DISALLOWANCE MADE OUT OF INTEREST EXPENDITURE OF RS.10,29,724/- AND H AS SUSTAINED THE OTHER FOUR ITEMS OF ADDITION. AS A CONSEQUENCE, RE VENUE IS APPEAL BEFORE US CONTESTING THE ACTION OF THE CIT(A) IN DE LETING THE DISALLOWANCE OUT OF INTEREST EXPENDITURE, WHEREAS A SSESSEE IS CHALLENGING THE ORDER OF THE CIT(A) SUSTAINING THE OTHER FOUR ITEMS OF ADDITION. 5. IN THIS BACKGROUND, THE RIVAL COUNSELS HAVE BEEN HEARD AND THE RELEVANT MATERIAL PERUSED. AT THE OUTSET, LD. REPR ESENTATIVE FOR THE ASSESSEE REFERRED TO THE ADDITIONAL GROUNDS OF APP EAL RAISED, WHICH READ AS UNDER:- 5.(A). ON THE FACTS AND CIRCUMSTANCES OF THE CASES AND IN LAW, THE ID. CIT(A) OUGHT TO HAVE QUASHED THE ORDER PASSED U/S 1 43(3) R.W.S. 153A OF 4 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) THE ACT BEING INVALID AND BAD IN LAW AND NOT DOING SO IS WRONG AND CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS O F THE ACT AND THE RULES MADE THEREUNDER. (B) ON THE FACTS AND CIRCUMSTANCES OF THE CASES AND IN LAW, THE HON'BLE C1T(A) FAILED TO APPRECIATE THAT THE DISALLOWANCES MADE BY THE ID. ASSESSING OFFICER WERE NOT ARISING OUT OF THE SEARC H CARRIED OUT AT THE APPELLANT'S PREMISE BUT AS PER THE DIRECTION GIVEN BY THE COMMISSIONER OF INCOME TAX U/S 263. 5.1 THE LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAIN ED THAT INITIALLY IN THE MEMO OF APPEAL ASSESSEE HAD RAISED THREE GROUND S CHALLENGING THE ACTION OF CIT(A) IN SUSTAINING THE DISALLOWANCES MA DE OUT OF LISTING FEE PAID TO STOCK EXCHANGE OF RS.2,00,000/-; DEPRECIATI ON DISALLOWED OF RS.5,94,013/-; AND, DISALLOWANCE OF EXPENDITURE ON GIFTS OF RS.28,00,000/-. IT IS POINTED OUT THAT IN TERMS OF THE ADDITIONAL GROUNDS OF APPEAL, WHAT IS SOUGHT TO BE CONTENDED IS THAT T HE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE THE IMPUGNED ADDITIONS IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) R.W.S. 153A OF THE A CT, INASMUCH AS, NONE OF THE ADDITIONS WERE BASED ON ANY INCRIMINATING MA TERIAL FOUND IN THE COURSE OF SEARCH. THE LD. REPRESENTATIVE FOR THE A SSESSEE CONTENDED THAT THE PROPOSITION SOUGHT TO BE CANVASSED BY THE ASSESSEE IN THE ADDITIONAL GROUND OF APPEAL NO.5(B) ABOVE, IS CLEAR LY COVERED BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT, 374 ITR 645 (BOM). IT HAS ALSO BEEN CONTENDED THAT NECESSARY FACTUAL ASPECTS OF THE DIS PUTE ARE CLEARLY EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW A ND, THEREFORE, SINCE THE RELEVANT FACTS ARE AVAILABLE ON RECORD AND THE ISSUE RAISED IS A LEGAL 5 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) ISSUE, THE ADDITIONAL GROUNDS DESERVE TO BE ADMITT ED FOR ADJUDICATION FOLLOWING THE RATIO OF THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASE NATIONAL THERMAL POWER COMPANY LTD. VS. CI T, 229 ITR 383(SC) AS WELL AS IN THE CASE OF JUTE CORPORATION OF INDIA LTD. VS. CIT, 187 ITR 688 (SC). 5.2 IN SO FAR AS THE ADMISSION OF THE ADDITIONAL GR OUND OF APPEAL IS CONCERNED, THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT SERIOUSLY OPPOSED THE SAME, APART FROM POINTING OUT THAT SUCH A PLEA WAS NOT RAISED HITHERTO BEFORE THE LOWER AUTHORITIES. IN O UR CONSIDERED OPINION, THE POINT SOUGHT TO BE RAISED BY THE ASSESSEE IN TH E ADDITIONAL GROUNDS OF APPEAL IS A POINT OF LAW, WHICH IS INDEED SUPPOR TED BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA); AND, WITH THE NECESSARY FAC TS BEING AVAILABLE ON RECORD, THE SAME DESERVES TO BE ADMITTED FOR ADJUDI CATION. NOTABLY, IT IS ALSO CLEAR THAT THE ADDITIONAL GROUNDS SOUGHT TO BE RAISED BY THE ASSESSEE GO TO THE ROOT OF THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE THE IMPUGNED ADDITION AND IS THUS QUITE RELEVA NT TO DECIDE THE TAX LIABILITY OF THE ASSESSEE AND, THUS, DESERVES TO BE ADMITTED FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREM E COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD.(SUPRA). ACCORDI NGLY, WE ADMIT THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR ADJUDICATION. 5.3 AT THE TIME OF HEARING, THE RIVAL COUNSELS WERE ALSO HEARD ON THE MERITS OF THE ADDITIONAL GROUNDS OF APPEAL OF THE A SSESSEE. IN THIS BACKGROUND, WE NOW PROCEED TO ADJUDICATE THE DISPUT E RAISED IN THIS APPEAL. 6 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) 6. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE CONTENDED THAT IN THE COURSE OF SEARCH NO INCRIMINATING MATERIAL W AS FOUND WHICH WOULD JUSTIFY THE ADDITIONS MADE BY THE ASSESSING O FFICER IN THE IMPUGNED ASSESSMENT ORDER. POINTING TO THE FACTU AL MATRIX, IT WAS SHOWN THAT THE RETURN OF INCOME ORIGINALLY FILED UN DER SECTION 139(1) OF THE ACT ON 10/09/2009, WAS SUBJECT TO A SCRUTINY ASSESSMENT VIDE ORDER DATED 22/11/2006 UNDER SECTION 143(3) OF THE ACT. THUS, IT WAS POINTED OUT THAT AS ON THE DATE OF SEARCH I.E. 12/0 9/2007, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR OF 2004 -05 WAS NOT PENDING. CONSEQUENTLY, IT IS EXPLAINED THAT THE AS SESSMENT FOR THE YEAR UNDER CONSIDERATION DID NOT ABATE IN TERMS OF SECON D PROVISO TO SECTION 153A(1) OF THE ACT. SINCE THE ORIGINAL ASSESSMENT DID NOT ABATE AND THE FACT THAT THERE WAS NO INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH, THE IMPUGNED ADDITIONS COULD NOT HAVE BEEN MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) R.W.S. 153(A)(1) OF THE ACT. IN SUPPORT OF SUCH PROPOSITI ON, RELIANCE HAS BEEN PLACED ON VARIOUS DECISIONS: (I) ALL CARGO GLOBAL LOGISTICS LTD., 374 ITR 645 ( BOM) (II) JAI STEEL (INDIA), JODHPUR VS. ACIT, [2013] 3 6 TAXMANN.COM 523(RAJ) 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS JUSTIFIED THE ACTION OF THE LOWER AUTHORITIES BY POINTING OUT THAT IN TERMS OF SECTION 153A OF THE ACT, THE ASSESSING OFFICER WAS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEAR S IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PRE VIOUS YEAR IN WHICH 7 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) SEARCH WAS CONDUCTED. IT HAS BEEN EMPHASIZED THAT THE ASSESSING OFFICER WAS DUTY BOUND TO ASSESS OR REASSESS THE TO TAL INCOME OF SUCH ASSESSMENT YEARS AND, THEREFORE, THE IMPUGNED ADDIT IONS WERE JUSTIFIABLY MADE IN THE ASSESSMENT YEAR FINALIZED U NDER SECTION 143(3) R.W.S. 153A(1) OF THE ACT. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN ORDER TO APPRECIATE THE CONTROVERSY, IT IS PERTINENT TO OBSE RVE THAT SECTION 153A OF THE ACT POSTULATES AN ASSESSMENT IN CASE OF SEAR CH OR REQUISITION UNDER SECTION 132 OR UNDER SECTION 132A OF THE ACT RESPECTIVELY. THE SAID SECTION ENVISAGES THAT THE ASSESSING OFFICER S HALL ASSESS OR REASSESS THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATE LY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SEARCH WAS CONDUCTED. THE SECOND PROVISO TO SECTION 153A(1) O F THE ACT ALSO PRESCRIBES THAT ASSESSMENT OR RE-ASSESSMENT, IF ANY , RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX YE ARS REFERRED TO IN SUB- SECTION(1) OF SECTION 153A OF THE ACT, WHICH IS PEN DING ON THE DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITION, AS T HE CASE MAY BE, SHALL ABATE. THUS, IN SO FAR AS THE PENDING ASSESSMENTS ARE CONCERNED, THE COMPETENCE OF THE ASSESSING OFFICER TO MAKE THE ORI GINAL ASSESSMENT CONVERGES WITH THE ASSESSMENT TO BE MADE UNDER SECT ION 153A OF THE ACT, I.E. ONLY ONE ASSESSMENT SHALL BE MADE FOR SUC H ASSESSMENT YEARS, BASED ON THE FINDINGS OF THE SEARCH AS WELL AS ANY OTHER MATERIAL EXISTING OR BROUGHT ON RECORD BY THE ASSESSING OFFI CER. NOTABLY, THERE WOULD BE ASSESSMENTS IN THE PERIOD OF THE SIX ASSES SMENT YEARS IDENTIFIED IN SECTION 153A(1) OF THE ACT, WHICH WOU LD HAVE BECOME FINAL 8 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) (I.E. WHICH ARE NOT PENDING ON THE DATE OF SEARCH); SUCH ASSESSMENTS DO NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. THE SCOPE AND AMBIT OF THE ASSESSMENT WHERE THE ORI GINAL ASSESSMENT HAS NOT ABATED IS THE CONTROVERSY BEFORE US. IN TH IS CONTEXT, IT WOULD BE PERTINENT TO REFER TO THE JUDGMENT OF THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA) , WHEREIN THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT HAS BEEN C ONSIDERED. ONE OF THE POINTS ADDRESSED BY THE HON'BLE HIGH COURT WA S WHETHER THE SCOPE OF ASSESSMENT UNDER SECTION 153A OF THE ACT ENVISAGES ADDITIONS, WHICH ARE OTHERWISE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN THE CASE OF THE ORIGINAL ASSESSMENT NOT ABATING. AS PER HON'BLE HIGH COURT, NO ADDIT ION COULD BE MADE IN RESPECT OF THE ASSESSMENT THAT HAD BECOME FINAL, IN THE EVENT WHERE NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. THE HON'BLE HIGH COURT ALSO NOTICED ITS EARLIER JUDGME NT IN THE CASE OF CIT VS. MURALI AGRO-PRODUCTS LTD., INCOME TAX APPEAL NO .36 OF 2009 ORDER DATED 29/10/2010 AND ELABORATELY CULLED OUT THE SCO PE AND AMBIT OF THE ASSESSMENT AND REASSESSMENT OF TOTAL INCOME UN DER SECTION 153A(1) OF THE ACT READ WITH THE PROVISO THEREOF. THE HON'BLE BOMBAY HIGH COURT HAS RULED OUT THAT AN ASSESSMENT UNDER SECTION 153A(1) IN AN UNABATED YEAR WOULD NOT ENCOMPASS ANY ADDITION FOR WHICH NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH, BECAUSE IN SUCH A CASE, THE ORIGINAL ASSESSMENT HAD BECOME FIN AL. 8.1 THE AFORESAID PROPOSITION IS ALSO SUPPORTED BY JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT(CENTRA L)-III VS. KABUL CHAWLA 9 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) IN ITA 707/2014 DATED 28/08/2015, WHEREIN THE LEGA L PROPOSITION HAS BEEN SUMMARIZED IN THE FOLLOWING WORDS:- 'SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISO THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED 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 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATE LY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES P LACES. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E COMPUTED BY THE AOS AS AFRESH 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 TAKE 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 ASSESS MENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D 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 FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSES SMENT ' CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEI ZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONL Y ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATE D PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSE SS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARAT ELY 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 ASSESSING OFFICER. 10 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 8.2 IN THIS LEGAL BACKGROUND, WE MAY NOW TURN TO TH E ADDITION MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT AND THE MANNER IN WHICH SUCH ADDITIONS HAVE BEEN MADE. THE FIRST ADD ITION IS OUT OF CLAIM OF PRELIMINARY EXPENSES UNDER SECTION 35D OF THE AC T OF RS 10,12,826/-, AND THE RELEVANT DISCUSSION IN THIS REGARD IS CONT AINED IN PARA 5 OF THE ASSESSMENT ORDER WHICH SHOWS THAT IT IS BASED ON TH E DISALLOWANCE MADE IN THE ASSESSMENT ORIGINALLY FINALIZED UNDER S ECTION 143(3) OF THE ACT DATED 22/11/2006. THE SECOND ADDITION IS THE DISALLOWANCE OF STOCK EXCHANGE LISTING FEE OF RS.2,00,000/- AND THE RELEVANT DISCUSSION IS CONTAINED IN PARA-6 OF THE ASSESSMENT ORDER. THE A DDITION HAS BEEN MADE PRIMARILY IN THE ABSENCE OF EVIDENCE TO SUBSTA NTIATE THE EXPENDITURE. THIRDLY, DEPRECIATION ON FURNITURE AN D FIXTURES OF RS.5,94,013/- HAS BEEN DENIED IN TERMS OF THE DISCU SSION IN PARA-7 OF THE ASSESSMENT ORDER. THE RELEVANT DISCUSSION SHO WS THAT IN CASE OF SOME OF THE INVOICES OF THE COST OF FURNITURE AND F IXTURES, THE ASSESSEE COULD NOT SUBSTANTIATE THE VALUES AND THUS, DEPRECI ATION WAS DENIED ON SUCH VALUE OF THE ASSETS. FOURTHLY, THE ADDITION OF RS.28,00,000/- OUT OF EXPENDITURE ON GIFTS HAS BEEN MADE AND THE RELEVANT DISCUSSION IS CONTAINED IN PARA-9 OF THE ASSESSMENT ORDER. THE D ISCUSSION SHOWS THAT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE JU STIFICATION FOR INCURRENCE OF EXPENDITURE AND OUT OF THE TOTAL EXP ENDITURE OF 11 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) RS.30,00,000/- ON GIFTS MADE, HE DISALLOWED AN AMOU NT OF RS.28,00,000/-. LASTLY, THE ASSESSING OFFICER DISA LLOWED THE INTEREST EXPENDITURE OF RS.10,79,724/- AS PER THE DISCUSSION CONTAINED IN PARA-8 OF THE ASSESSMENT ORDER. THE ONLY REASON ADVANCED IS THE FAILURE OF THE ASSESSEE IS TO PROVE THAT THE CORRESPONDING BORROWI NGS WERE MADE FOR THE PURPOSES OF BUSINESS. THE RESPECTIVE DISCUSSIO N MADE BY THE ASSESSING OFFICER WITH RESPECT TO EACH OF THE ADDIT IONS DOES NOT REFLECT REFERENCE TO ANY INCRIMINATING MATERIAL OR ANY OTHE R INFORMATION, WHICH WAS UNEARTHED IN THE COURSE OF SEARCH, SO AS TO JUS TIFY THE ADDITIONS. EVEN AT THE TIME OF HEARING BEFORE US, THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL, MUCH LESS ANY MATERIAL FOUN D DURING THE COURSE OF SEARCH IN ORDER TO JUSTIFY THE ADDITIONS MADE IN THE IMPUGNED ASSESSMENT. THUS, ON FACTS, IT HAS TO BE CONCLUDE D THAT THE ADDITIONS MADE TO THE RETURNED INCOME BY THE ASSESSING OFFICE R IN THE IMPUGNED ASSESSMENT IS NOT WITH REFERENCE TO ANY INCRIMINAT ING MATERIAL FOUND IN THE COURSE OF SEARCH. THUS, FOLLOWING THE PARITY OF REASONING LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CAR GO GLOBAL LOGISTICS LTD. (SUPRA), THE IMPUGNED ADDITIONS COULD NOT HAVE BEEN MADE IN THE IMPUGNED ASSESSMENT SINCE THE ORIGINAL ASSESSMENT M ADE UNDER SECTION 143(3) OF THE ACT HAD BECOME FINAL AND DID NOT ABATE. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE ASSE SSING OFFICER IS NOT EMPOWERED TO MAKE THE IMPUGNED ADDITIONS IN AN ASS ESSMENT FINALIZED UNDER SECTION 143(3) R.W.S. 153A OF THE A CT. ACCORDINGLY, ASSESSEE SUCCEEDS ON ITS ADDITIONAL GROUND OF APPEA L NO.5(B), AS ABOVE. 12 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) 8.3 AS A CONSEQUENCE OF ABOVE, ALL THE ADDITIONS MA DE TO THE RETURNED INCOME ARE DELETED. THUS, ALL THE OTHER IS SUES RAISED BY THE ASSESSEE IN ITS APPEAL BECOME INFRUCTUOUS AND ARE N OT BEING ADJUDICATED. 9. THE CROSS APPEAL PREFERRED BY THE REVENUE IS WIT H REGARD TO THE DELETION OF INTEREST EXPENDITURE BY THE CIT(A). TH IS APPEAL ALSO BECOME INFRUCTUOUS BECAUSE WE HAVE ALREADY HELD IN THE EAR LIER PARAS THAT THE ASSESSING OFFICER WAS DEVOID OF JURISDICTION TO MAK E THE ADDITION OF RS. 10,29,724/- OUT OF INTEREST EXPENDITURE IN AN ASSES SMENT FINALIZED UNDER SECTION 143(3) R.W.S. 153(A)(1) OF THE ACT. 10. IN THE RESULT, SO FAR AS THE APPEAL OF THE ASSE SSEE IS CONCERNED, THE SAME STANDS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. 11. WE MAY NOW TAKE UP THE OTHER TWO CAPTIONED CROS S APPEALS, WHICH ARISE FROM THE PENALTY LEVIED BY THE ASSESSIN G OFFICER UNDER SECTION 271(1)(C) OF THE ACT OF RS.16,52,704/- WI TH RESPECT TO THE ADDITIONS MADE TO THE RETURNED INCOME IN THE ASSESS MENT FINALIZED UNDER SECTION 143(3) R.W.S. 153A(1) OF THE ACT DAT ED 31/12/2009. SINCE, IN THE QUANTUM APPEALS, WE HAVE ALREADY HELD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER DO NOT SURVIVE, THE Q UESTION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT DOES NOT ARISE AS THE ADDITIONS ITSELF HAVE BEEN FOUND TO BE UNTENABLE. THEREFORE, IN SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED, THE SAME I S ALLOWED AND THAT OF REVENUE IS DISMISSED. 13 ITA NO. 2740/MUM/2011,(A.Y.2004-05) ITA NO. 7552/MUM/2013,(A.Y.2004-05) ITA NO. 3308/MUM/2011,(A.Y.2004-05 ) ITA NO. 6961/MUM/2013,(A.Y.2004-05) IN THE RESULT, WHEREAS THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED AND THAT OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2017. SD/- SD/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 31/10/2017 VM , SR. PS 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