ACIT CEN CIR 32, MUMBAI V. NIKKI AGARWAL, MUMBAI

ITA 880/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75352 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Assessee Lawyers: DEVENDRA MEHTA
• Keywords: Unexplained expenditure; Gift; Search and seizure; Opportunity of being heard; Retrospective amendment; Cost of acquisition; Fair market value; Valuation report; Onus to prove; Reassessment proceedings
• Section: 143(3); 153A; 14A; 147; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER C.O . NO.204/M/2013 (AY: 2003 - 2004) (ARISING OUT OF ITA NO. 879/M/2011 ) NIKKI AGARWAL, 601, A - WING, AURUS CHAMBERS, BEHIND MAHINDRA TOWERS, S.S. AMRUTWAR MARG, WORLI, MUMBAI 400 013. / VS. ACIT - CENTRAL CIRCLE - 32, MUMBAI. ./I.T.A. NO.879/M/2011 (AY: 2003 - 2004) ACIT - CENTRAL CIRCLE - 32, MUMBAI. / VS. NIKKI AGARWAL, 720/A - 5, LOK BHARTI CHS LTD, MAROL MAROSHI ROAD, MAROL, ANDHERI (E), MUMBAI - 400059. ./I.T.A. NO.8915/M/2010 (AY: 2004 - 2005) NIKKI AGARWAL, C/O. M/S. RAVI & DEV, CHARTERED ACCOUNTANTS, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRA BAZAR, MUMBAI 400 002. / VS. ACIT - CENTRAL CIRCLE - 32, MUMBAI. ./I.T.A. NO.8916/M/2010 (AY: 2005 - 2006) NIKKI AGARWAL, C/O. M/S. RAVI & DEV, CHARTERED ACCOUNTANTS, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRA BAZAR, MUMBAI 400 002. / VS. ACIT - CENTRAL CIRCLE - 32, MUMBAI. ./I.T.A. NO.880/M/2011 (AY: 2005 - 2006) ACIT - CENTRAL CIRCLE - 32, MUMBAI. / VS. NIKKI AGARWAL, C/O. M/S. RAVI & DEV, CHARTERED ACCOUNTANTS, 377 - B, FIRST FLOOR, JAGANNATH SHANKER SETH MARG, CHIRA BAZAR,MUMBAI 400 002. ./ PAN : AEIPA 3109 A ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DEVENDRA MEHTA / REVENUE BY : SHRI PRITAM SINGH, DR / DATE OF HEARING : 06.12.2013 / DATE OF PRONOUNCEMENT : 22 .01.2014 2 / O R D E R PER BENCH : THERE ARE FIVE APPEALS UNDER CONSIDERATION. OUT OF THESE FIVE APPEALS, THERE IS A COUPLE OF CROSS APPEALS FOR THE AYS 2003 - 04 AND 2005 - 2006 AND APPEAL ITA NO. 8915/M/2010 IS FILED BY THE ASSESSEE FOR THE AY 2004 - 2005. ALL THESE FIVE APPEALS ARE FILED AGAINST THE COMMON ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.11.2010. SINCE, THE ISSUES RAISED IN ALL THESE 5 APPEALS ARE IDENTIC AL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, SHRI DEVENDRA A. MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION THAT THERE IS A DELAY OF 51 DAYS IN FIL ING THE CROSS OBJECTIONS BEFORE THE TRIBUNAL. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION THE AFFIDAVIT DATED 3.10.2013 FILED BY HIM AND READ OUT THE RELEVANT CONTENTS OF THE SAME WHICH READ AS UNDER: I) II) SHRI NAND KISHOR KATWANKAR IS OFFICE AS SISTANT WORKING IN MY OFFICE SINCE 1985. HE IS USUALLY ASSIGNED THE WORK OF SUBMITTING AND COLLECTING DOCUMENTS FROM THE INCOME TAX DEPARTMENT OF VARIOUS CLIENTS. HE COLLECTED THE GROUNDS OF APPEAL OF MS. NIKKI AGARWAL FOR THE AY 2003 - 2004. III) USUALLY, THE DOCUMENTS COLLECTED FROM INCOME TAX DEPARTMENT ARE PLACED BEFORE ME FOR REVIEWS. HOWEVER, AS I WAS OUT OF TOWN, HE KEPT THE GROUNDS OF APPEAL IN RELEVANT FILE BUT INADVERTENTLY, DID NOT BRING IT TO MY NOTICE FOR FURTHER ACTION. IV) AS SOON AS THE FILE WAS PUT UP FOR BEFORE ME FOR PREPARATION OF WRITTEN SUBMISSION, I NOTICED THAT THE CROSS OBJECTION AGAINST THE REVENUES APPEAL WERE NOT PREPARED AND FILED BEFORE THE HONBLE TRIBUNAL. V) I REITERATE THAT THE ABOVE MISTAKE WAS A BONA FIDE MISTAKE AND AN I NADVERTENT LAPSE ON OUR PART AND ASSESSEE SHOULD NOT BE ALLOWED TO SUFFER BECAUSE OF IT. 2.1. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS [1987] 167 ITR 471; ANOTHER JUDGMENT OF THE APEX COURT IN THE CASE OF CONCOLD OF INDIA INSURANCE CO. LTD VS. SMT. NIRMALA DEVI, 118 ITR 507 AND SOME OTHER DECISIONS OF THE HONBLE HIGH COURTS OF WHICH ARE RELEVANT FOR THE PROPOSITION THAT THE DELAY IN FI LING OF APPEAL DUE TO LAPSE ON PART OF ASSESSEES COUNSEL WHO WAS LOOKING AFTER TAX MATTERS, IS A SUFFICIENT CAUSE FOR CONDONATION OF DELAY. 3 2.2 ON HEARING THE ABOVE SUBMISSIONS OF THE LD COUNSEL AND AFTER HEARING THE LD DR ON THIS ISSUE, WE FIND THAT THE RE IS A REASONABLE AND SUFFICIENT CAUSE FOR DELAY OF 51 DAYS IN FILING THE CROSS OBJECTIONS BEFORE THE TRIBUNAL, CONSIDERING THE SAME, WE CONDONE THE DELAY AND PROCEED TO ADJUDICATE THE APPEAL ON MERITS. 3 . FIRSTLY, WE SHALL TAKE UP THE CROSS APPEALS FOR T HE AY 2003 - 2004 . IN THESE TWO CROSS APPEALS, CO NO. 204/M/2013 , IS FILED BY THE ASSESSEE AND THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1. THE LD CIT (A) ERRED IN LAW AND FACTS IN HOLDING THAT THE AO WAS EMPOWERED TO MAKE ADDITIONS IN THE ORDER PAS SED U/S 153A OF THE ACT IN RESPECT OF COMPLETED ASSESSMENT EVEN IN THE ABSENCE OF INCRIMINATING MATERI AL FOUND AS A RESULT OF SEARCH . 2. THE ACIT ERRED IN LAW A ND AS WELL AS IN THE FACTS IN MAKING ADDITION OF RS. 34,87,500/ - ON ACCOUNT OF SALE PROCEEDS OF SHARES OF DATABASE FINANCE LTD AND RS. 1,74,375/ - ON ACCOUNT OF UNEXPLAINED EXPENSES RELATING TO LONG TERM CAPITAL GAIN ON SALE OF SHARES AND DATABASE FINANCE LTD IN THE ORDER PASSED U/S 153A EVEN IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 4 . BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEES INCOME CONSISTS OF INTEREST, CAPITAL GAINS AND OTHER MISCELLANEOUS INCOME. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT THE OFFICE AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 3.1.2008. IN CONNECTION WITH THE SEARCH ACTION U/S 132 AND IN RESPONSE TO THE NOTICE U/S 153A, ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 90,390/ - AGAINST THE ORIGINAL RETURN OF INCOME FILED ON 26.11.2003. ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT AFTER DETERMINING THE ASSESSED INCOME OF RS. 37,52,20/ - . ASSESSMENT HAS REACHED FINALITY AND THE AO MADE ADDITION ON ACCOUNT OF SALE PROCEEDS ON SHARES OF DATABASE FINANCE LTD, WHICH ARE OTHERWISE ACCOUNTED IN THE BOOKS OF ACCOUNTS, TOWARDS UNEXPLAINED E XPENDITURE RELATING TO THE LONG TERM CAPITAL GAINS ON SALE OF THE SAME SHARES. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 5 . DURING THE PROCEEDINGS BEFORE THE, AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) CONFIRMED THE ABOVE ADD ITIONS MADE BY THE AO. AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 6 . DURING THE PROCEEDINGS BEFORE US, SHRI DEVENDRA MEHTA , LD COUNSEL FOR THE ASSESSEE RAISED THE ABOVE MENTIONED GROUNDS AND QUESTIONING THE ADDITIONS AND THE VALIDITY OF THE ASSESSMENT U/S 153A OF THE ACT. IN THIS REGARD, LD COUNSEL FOR THE 4 ASSESSEE SUBMITTED VARIOUS ARGUMENTS BEFORE US, WHICH ARE COMMON TO THE ONES ALREADY MENTIONED IN DETAIL AND A DJUDICATED BY US IN CONNECTION WITH THE APPEALS FILED IN THE CASE OF SHRI GOVIND AGARWAL VS. ACIT VIDE ITA NOS. 3389/M/2011 (AY: 2002 - 2003) AND ITA NO. 3390/M/2011 (AY: 2004 - 2005) VIDE ORDER DATED 10.01.2014. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELE VANT PORTIONS OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) ARE REPRODUCED HERE UNDER: 6. BEFORE THE TRIBUNAL: DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF THE RELEVANT ASSESSMENT ORDER PASSED U/S 153A R W S 143(3) OF THE ACT AND DEMONSTRATED THAT NO SEIZED MATERIAL WAS USED FOR MAKING THE ADDITIONS EITHER ON ACCOUNT OF INFLATED INVESTMENT OR ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT. FAIRLY REFERRING TO THE PROCEEDINGS DURING THE SEARCH ACTION, LD COUNSEL MENTIONED THAT IT IS THE VALUATION REPORT OF THE DVO WHICH WAS GARNERED BY THE OFFICE OF THE DIT ( INV) DURING THE SEARCH ACTION. THIS WAS THE ONLY MATERIAL COLLECTED BY THE REVENUE IN THE SEARCH, WHICH WAS AVAILABLE FOR THE AO BOTH FOR ISSUING THE NOTICE AS WELL AS FOR MAKING ADDITIONS. HE REASONED THAT THE VALUATION REPORT CAN AS WELL BE OBTAINED DUR ING THE NORMAL ASSESSMENT OR REASSESSMENT PROCEEDINGS AND THERE IS NO NEED FOR INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IN THIS REGARD. 7. FURTHER, LD COUNSEL HAS TWO FOLD ARGUMENTS TO MAKE BEFORE US I.E., (I) CONSIDERING THE FACT THAT NO INCRI MINATING MATERIAL WAS FOUND FROM THE ASSESSEES PREMISES DURING THE SEARCH ACTION, THE NOTICE U/S 153A WAS NOT REQUIRED TO BE ISSUED. EVEN IT IS ISSUED VALIDLY, NO ADDITION CAN BE MADE IN THE CASES OF COMPLETED ASSESSMENTS WITHOUT THE SUPPORT OF THE INCRI MINATING MATERIAL ISSUED OR ACQUIRED IN SEARCH ACTION U/S 132 / 132A OF THE ACT. IN THIS REGARD, LD COUNSEL RELIED ON THE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD (SUPRA); COORDINATE BENCH DECISIONS IN THE CASE OF PRATIBHA INDUST RIES LTD (SUPRA) AND GURINDER SINGH BAWA (SUPRA) AND SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD VS. DCIT 2012 - TIOL - 391 - ITAT - MUM - SB. LD COUNSEL ARGUED IN RESPECT OF THE COMPLETED ASSESSMENT, SUCH AS THE PRESENT ONE, ASSESSMENT WIL L BE MADE ONLY ON THE BASIS OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED IN THE ORIGINAL ASSESSMENT BUT IN THE COURSE OF THE SEARCH AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH. NONE OF THESE CONDITIONS ARE MET BY THE REVENUE BEFORE ISSUING OF THE NOTICE U/S 153A OF THE ACT OR BEFORE MAKING ADDITIONS. THEREFORE, AS PER THE LD COUNSEL, THE IMPUGNED NOTICE IS INVALID ONE AND ADDITIONS SHOULD BE DELETED. FAIRLY REFERRING TO THE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA VIDE ITA NO.1626/2010, DATED 7.8.2012 (DEL.), LD COUNSEL MENTIONED THAT THIS ISSUE REGARDING THE ADDITION TO BE MADE IN A COMPLETED ASSESSMENT WHERE NO INCRIMINATING MATERIAL WAS FOUND, WAS LEFT OPEN. PARA 23 OF THE SAID JUDGMENT IS RELEVANT IN THIS REGARD. FURTHER, RELYING ON THE ORDER OF THE ITAT, JODHPUR IN THE CASE OF DINESH TABACCO INDUSTRIES VS. DCIT VIDE ITA NO.184 & 185/JU/2011 DATED 22.2.2013, LD COUNSEL REITERATED THAT THE NOTICE BECOMES INVALID WHEN THERE IS NO INCRIMI NATING MATERIAL. SIMILAR VIEW WAS REPEATED BY THE LD COUNSEL BY RELYING ON THE DECISION OF THE ITAT, KOLKATA IN THE CASE OF LMJ INTERNATIONAL LTD VS. DCIT, 119 TTJ 214 (KOL). THE SAID DECISION OF THE OF ITAT KOLKATA (SUPRA) IS RELEVANT FOR THE PROPOSITIO N THAT WHERE NOTING INCRIMINATING WAS FOUND IN COURSE OF SEARCH RELATING TO ASSESSMENTS, ASSESSMENT FOR SUCH YEARS CANNOT BE DISTURBED. HE CULLED OUT MANY OTHER DECISIONS WHICH ARE AS UNDER. A) ANIL P KHIMANI VS. DCIT [2010 TIOL - 177 - ITAT - MUM] B) MEGHMANI ORGANI CS LTD VS. DCIT [2010] 36 DTR 187 (AHD) C) SUNCITY ALLYS PVT. LTD. VS. ACIT [2009] 124 TTJ 674 (JODH) D) ACIT VS. PACL INDIA LTD [ITA NO.2637/ DEL/2010] 5 E) SHRI DEEPEN A PAREKH VS. ACIT [ ITA NO.467/MUM/2011] F) MGF AUTOMOBILES LTD VS. ACIT [ ITA NO.4212 & 4213/DEL/20 11] FURTHER, LD COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF GOVIND AGARWAL HUF VS ACIT VIDE ITA NO.217/MUM/2011 (AY 2008 - 2009) WHICH IS A PART OF THE ASSESSEES GROUP AND WHERE NOTICE U/S 153C WAS ISSUED. LD COUNSEL MENTIONED THAT THE TRIBUNAL HAS UPHELD THE INVALIDITY OF SUCH NOTICE AND DELETED THE ADDITIONS MADE ON ACCOUNT OF GIFT EMANATED FROM THE BOOKS OF ACCOUNTS. (II) THE SECOND ASPECT OF HIS ARGUMENTS RELATES TO THE TREATMENT TO BE GIVEN TO THE DVOS REPORT, IF THE SAID REPORT CONSTITUTES ANY INCRIMINATING MATERIAL. MENTIONING THAT THE REVENUE DID NOT CONSIDER THE SAME AS A INCRIMINATING MATERIAL FOR THE PURPOSE OF ISSUANCE OF NOTICE U/S 153A OF THE ACT, LD COUNSEL MENTIONED THAT THE OFFICE OF DIT (INV) REFERRED THE IMPUGNED H OUSE PROPERTY (MANGALDEEP AT UDAIPUR) TO THE VALUATION CELL FOR IDENTIFYING THE MARKET VALUE OF THE PROPERTY, NOT THE COST OF ACQUISITION . (AARCH CONSULATANTS & VALUERS, MUMBAI) THE VALUERS SUBMITTED A REPORT ON 16.2.2008 DETERMINING THE VALUE OF THE PROPE RTY AT RS. 3,67,09,000/ - AS THE FAIR MARKET VALUE AS AGAINST THE DISCLOSED AMOUNT OF RS. 1.56 CRS BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS AS ON 31.3.2007. IT IS THE SUBMISSION OF THE ASSESSEE THAT SUCH REPORTS OF THE DVO IGNORED BY THE DIT OFFICE DURING THE SEARCH PROCEEDINGS CANNOT CONSTITUTE INCRIMINATING MATERIAL AND THE AO SHOULD NOT RELY ON SUCH REPORTS FOR ISSUANCE OF NOTICE U/S 153A OF THE ACT AND FOR MAKING ADDITIONS U/S 143(3) R.W.S 153A OF THE ACT. AS PER THE LD COUNSEL SUCH REPORTS ARE MERE E STIMATES AND THE ADDITIONS ARE NOT SUSTAINABLE IN THE SEARCH ASSESSMENT. IN THIS REGARD, LD COUNSEL RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX V. DHARIYA CONSTRUCTION CO, 328 ITR 515 WHICH IS R ELEVANT FOR THE PROPOSITION THAT HAVING EXAMINED THE RECORDS, WE FIND IN THAT CASE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO. THE OPINION GIVEN BY THE DISTRICT VALUATION OFFICER IS NOT PER SE INFORMATION FOR THE PURPOSE OF REOPENING AN ASSESSMENT UNDER SECTION 147 OF THE INCOME - TAX ACT, 1961. AO HAS TO APPLY HIS MIND AND FORM A BELIEF THERE FROM. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE CONCLUDED ASSESSMENT BASED ON SUCH DVOS REPORT. SUCH REPORTS ARE MER E AN OPINION OF THE VALUER, THE THIRD PARTY AND NEVER CAN BE EQUATED TO THE OPINION OF THE AO AND RELIED ON THE GUWAHATI HIGH COURT JUDGMENT IN THE CASE OF BHOLA NATH MAJUMDAR V. INCOME - TAX OFFICER 221 ITR 608 AND THE JUDGMENT OF HONBLE RAJASTHAN HIGH COU RT IN THE CASE OF BRIG. B. LALL V. WEALTH - TAX OFFICER 127 ITR 308 . IN THESE CASES, THE CONCEALMENT PROCEEDINGS WERE QUASHED ON THIS BASIS. REFERRING TO THE ANOTHER JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SURAJ DEVI, 328 ITR 604 AND IN THE CASE OF CIT VS. NAVEEN GERA [2011] 328 ITR 516, LD COUNSEL MENTIONED THAT THE ADDITIONS CANNOT BE MADE ON THE BASIS OF THE VALUATION REPORT OF THE DVO IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THE BURDEN VEST S ON THE REVENUE IN SUCH CAES. REFERRING TO THE FACTS OF THE PRESENT CASE, LD COUNSEL MENTIONED THAT THE ASSESSEE DISCLOSED INVESTMENT OF RS. 46,13,007/ - ON THE HOUSE AS ON 31.3.2002 WHEREAS THE AO CAME TO THE CONCLUSION THAT THE LAND VALUE OF RS. 14.8 L AKHS IS THE ONLY INVESTMENT ON THE HOUSE, NO CONSTRUCTION WAS UNDERTAKEN BY THIS DATE. AO CAME TO SUCH CONCLUSION FOR ASSESSEES FAILURE TO FURNISH THE SUPPORTING BILLS TO DEMONSTRATE THE FACT OF PART CONSTRUCTION OF THE IMPUGNED RESIDENTIAL PROPERTY. IT IS A CASE OF MERE PRESUMPTION AND THE ADDITIONS ARE UNSUSTAINABLE ON SUCH PRESUMPTION. AO HAS NO EVIDENCE TO INFER THAT THE ASSESSEES FIGURE OF RS. 46,13,007/ - IS BOGUS AND RS. 14.8 LAKHS IS THE ONLY INVESTMENT ON THE SAID PROPERTY. IN FACT, RS. 14.8 L AKHS IS THE COST OF THE LAND PLOTS ON WHICH THE HOUSE WAS CONSTRUCTED AND ASSESSEE SPENT THE BALANCE OF RS. 31,33,007/ - IN CONSTRUCTION OF THE HOUSE. THEREFORE, THE PROCEEDINGS INITIATED U/S 153A IS REQUIRED TO BE QUASHED AND THE ADDITION BASED ON THE SUR MISES OF THE AO SHOULD NOT BE SUSTAINED. 8. ON THE OTHER HAND, LD DR RELIED HEAVILY ON THE ORDER OF THE AO AND THE CIT (A). IN CONNECTION WITH THE LEGAL ISSUE REGARDING THE VALIDITY OF THE NOTICE U/S 153A OF THE ACT, LD DR FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SCOPE (P) LTD VS. DCIT [2013] 33 TAXMANN.COM 167 (MUMBAI TRIB.) DATED 20.3.2013 AND STATED THAT 6 UNDER THE PROVISIONS OF SECTION 153A OF THE ACT, AO IS BOUND TO PROCEED FOR ALL THE 6 AYS IMMEDIATELY PRECEDING AY RELEVANT TO THE PREV IOUS YEAR IN WHICH SEARCH WAS CONDUCTED EVEN IF THERE IS NO INCRIMINATING MATERIAL TO INDICATE ANY UNDISCLOSED INCOME DURING THE ORIGINAL ASSESSMENT COMPLETED U/S 143(3) FOR ANY YEAR. THIS IS THE CASE WHERE REGULAR ASSESSMENT U/S 143(3) WAS COMPLETED ON 7 .11.2007 PRIOR TO THE DATE OF SEARCH ON 15.11.2007 AND THE ADDITION WAS MADE U/S 14A OF THE ACT AND NOT BASED ON ANY SEIZED MATERIAL FOUND DURING THE SEARCH. THOUGH SUCH DISALLOWANCE WAS DELETED FOR OTHER REASONS BUT THE VALIDITY OF THE NOTICE WAS UPHELD IN THIS CASE. CIT - DR ALSO BROUGHT OUR ATTENTION TO THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BHADRUKA VS. DCIT [2012] 27 TAXMANN.COM 167 (AP) IN HIS FAVOUR. OF COURSE, THIS IS THE CASE WHERE ASSESSMENTS COMPLETED U/S 158BD OF THE ACT AND NOT U/S 153A AS IN THE PRESENT CASE. FURTHER, LD DR ALSO FILED THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF MADUGULA VENU VS. DIT [2013] 29 TAXMANN.COM 200 (DELHI), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE NOTICE ISSUED U/S 153A CALLING UPON ASSESSEE TO FILE THE RETURNS FOR EARLIER 6 AYS CANNOT BE CHALLENGED ON THE GROUND THAT IT WOULD CAUSE CERTAIN DEGREE OF HARDSHIP TO ASSESSEE. LD DR HAS BROUGHT OUR ATTENTION TO PARA 7 OF THE SAID JUDGMENT OF THE DELHI HIGH COURT AND MENTIONED THAT T HE SECTION COUCHED IN MANDATORY LANGUAGE WHICH IMPLIES THAT ONCE THERE IS A SEARCH, THE AO HAS NO OPTION BUT TO CALL UPON THE ASSESSEE TO FILE THE RETURNS OF THE INCOME FOR THE EARLIER SIX ASSESSMENT YEARS. IT IS NOT MERELY THE UNDISCLOSED INCOME THAT WIL L BE BROUGHT TO TAX IN SUCH ASSESSMENTS, BUT THE TOTAL INCOME OF THE ASSESSEE, INCLUDING BOTH THE INCOME EARLIER DISCLOSED AND INCOME FOUND CONSEQUENT TO THE SEARCH, WOULD BE BROUGHT TO TAX. THE NORMAL PROVISIONS RELATING TO INQUIRY, AFFORDING OPPORTUNITY ETC., WHICH ARE PROVIDED FOR IN SECTIONS 142, 143 ETC ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. OF COURSE, THE ABOVE EXPLANATION OF THE PROVISIONS DOES NOT REFER TO THE PRESENT DEBATE RELATING TO THE INCRIMINATING MATERIAL BASED ADDITIONS IN THE CA SES OF COMPLETED ASSESSMENTS. DECISION OF THE TRIBUNAL: 9. WE HAVE HEARD BOTH THE PARTIES ON THE LEGAL ISSUE RELATING TO THE SUSTAINABILITY OR VALIDITY OF THE ADDITIONS MADE IN THE ASSESSMENTS MADE U/S 153A READ WITH SECTION 143(3) OF THE ACT IN RESPECT OF COMPLETED ASSESSMENTS. 10. THE STAND OF THE REVENUE IS THAT THE FIRST PROVISO TO SECTION 153A EMPOWERS THE AO TO ISSUE NOTICE U/S 153A OF THE ACT IN RESPECT OF THE 6 AYS PRIOR TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TOOK PLACE. THE RELEVANCE OF THE EXISTENCE OF INCRIMINATING MAT ERIAL IS NOT PROVIDED IN THE SAID PROVISIONS. AS PER THE REVENUE THERE SHOULD NOT BE ANY DIFFERENCE QUA THE COMPLETED ASSESSMENTS AND THE ABATED ASSESSMENTS FOR ALL SIX AYS IN SO FAR AS THE POWERS OF THE AO IS CONCERNED AND HE IS EMPOWERED TO ISSUE NOTICE U/S 153A AND MAKE ADDITIONS EITHER BASED IN THE INCRIMINATING MATERIAL OR OTHERWISE. 11. PER CONTRA, THE CASE OF THE ASSESSEE IS THAT THE AO MAY BE EMPOWERED TO ISSUE NOTICES FOR ALL THE SIX AYS IN VIEW OF THE CITED DECISIONS IE JAI STEEL (INDIA) LTD (S UPRA), SCOPE (P) LTD (SUPRA) ETC. HOWEVER, IN CASE OF COMPLETED ASSESSMENTS, AO IS EMPOWERED TO MADE ADDITIONS ONLY BASED ON THE INCRIMINATING MATERIALS AND NOT OTHERWISE JAI STEEL (INDIA) LTD (SUPRA), LMJ INTERNATIONAL LTD (SUPRA) , GURINDER SINGH BAWA (S UPRA) ETC . FOR MAKING THE ROUTINE ADDITIONS, WHICH ARE NORMALLY DONE IN THE REGULAR ASSESSMENTS, THE COMPLETED ASSESSMENT NEED NOT BE DISTURBED BY INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT IF NOT FOR REITERATING THE RETURNED OR ASSESSED INCOME AS THE CASE MAY BE. JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD (SUPRA) SUPPORTS THE ABOVE LEGAL PROPOSITION. AS PER THE ASSESSEE, REGARDING THE CASES OF ABATED ASSESSMENTS, CONSIDERING THE SCHEME OF ASSESSMENTS U/S 153A, PER CONTRA, EVEN THE ROUTINE ADDITI ONS ARE DONE IN THESE ASSESSMENTS. 12. WE HAVE HEARD THE PARTIES AND THEIR DIVERGENT STANDS ON THE LEGAL ISSUE AND THE VALIDITY OF THE INSTANT ASSESSMENT/REASSESSMENT WITH THE ROUTINE ADDITIONS U/S 68 AND SECTION 14A OF THE ACT BASED ON THE ACCOUNTED TRANS ACTIONS. THE INSTANT CASE FOR THE AY 2002 - 03 DEALS WITH THE CASE OF DISTURBING THE COMPLETED ASSESSMENT. EARLIER 7 THE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT. COMPLETENESS OF THE SUMMARY ASSESSMENT IS CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE V IDE MANY JUDGMENTS CITED ABOVE. IN THE ASSESSMENT U/S 153A, THE AO MADE (I ) ADDITION U/S 68 ON ACCOUNT OF ARTIFICIALLY INFLATED INVESTMENT IN HOUSE DULY DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE RS.31,33,070/ - ; AND (II) DISALLOWANCE U/S 14A: RS. 23, 31,469/ - . ADMITTEDLY, THERE IS NO INCRIMINATING MATERIAL BEFORE THE AO TO SUPPORT THE ABOVE ADDITIONS. THE VALUATION REPORT, WHICH IS GARNERED BY THE AUTHORITIES CONSTITUTES MERE ESTIMATES AND THE PROVISIONS OF SECTION 132 IS NOT REQUIRED TO OBTAIN SUCH RE PORT FROM THE DVO. AS SUCH, FOR MAKING AFORESAID ADDITIONS OF RS 31,33,070/ - , AO HAS NOT USED EVEN THE SAID VALUATION REPORT AND THE AO DISALLOWED WHAT IS REPORTED IN THE BOOKS. SIMILAR IS THE CASE WITH THE ADDITIONS U/S 14A OF THE ACT. THEREFORE, UNDISPUT EDLY, THE IMPUGNED QUANTUM ADDITIONS ARE MADE MERELY BASED ON THE ENTRIES IN THE ACCOUNTED BOOKS AND CERTAINLY NOT BASED ON EITHER THE UNACCOUNTED BOOKS OF ACCOUNTS OF THE ASSESSEE OR BOOKS NOT PRODUCED TO THE AO EARLIER OR THE INCRIMINATING MATERIAL GATHE RED BY THE INVESTIGATION WING OF THE REVENUE. CONSIDERING THE LEGAL PROPOSITIONS PLACE BEFORE US BY THE ASSESSEES COUNSEL, WE ARE OF THE OPINION, SUCH ASSESSMENTS OR ADDITIONS ARE UNSUSTAINABLE IN LAW. 13. FOR THE SAKE COMPLETENESS OF THE ASSESSEE, WE IN SERT HERE SOME OF THE EXTRACTS FROM RELEVANT JUDGMENTS AND THEY ARE: A. [2013 36 TAXMANN.COM 523 (RAJASTHAN) IN THE CASE OF JAI STEEL (INDIA) VS. ACIT - FROM HELD PORTION: .THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE , WHICH WOULD REQUIRE MORE REITERATION AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. FROM A PLAIN READING 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, IT IS APPARENT THAT: ( A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STANDS ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A, THE ASSESSING OFFICER ACTS UNDER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MADE; ( B ) REGARDING OTHER CASES, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND ( C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE . .. THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSING OFFICER IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIMINATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED ABOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. PARA 26 OF THE JUDGMENT: 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 WITHIN THE SIX ASSESSMENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND N OT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN US ED IN THE CONTEXT OF AN 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 SUPP ORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. 8 B. [2012] 28 TAXMANN.COM 328 (MUMBAI TRIB.) IN THE CASE OF GURINDER SINGH BAVA VS. DCIT . WHETHER SINCE ASSESSMENT UNDER SECTION 153A WAS PASSED BY ASSESSING OFFICER ON BASIS OF MATERIAL AVAILABLE IN RETURN OF INCOME AND THERE WAS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURING SEARCH AND SINCE NO ASSESSM ENT WAS ABATED, ASSESSMENT UNDER SECTION 153A WAS TO BE QUASHED BEING MADE WITHOUT JURISDICTION AVAILABLE UNDER SECTION 153A - HELD, YES [PARA 6.2] [IN FAVOUR OF ASSESSEE] PARA 6.1 OF THE ORDER: THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. ( SUPRA ), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MA DE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERT Y DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASS ESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. B. ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX, CEN TRAL CIRCLE - 44 [2012] 23 TAXMANN.COM 103 (MUM.) (SB) PARA 58 OF SB DECISIONS: THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : ( A ) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; ( B ) IN OTHER CASES , IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL , WHICH IN T HE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 14. THUS, IN CASE OF THE COMPLETED ASSESSMENTS EITHER U/S 143(1) OR 143(3), THE ABOVE EXTRACTS ARE UNIFORM IN ADVOCATING AGAINST MAKING ADDITIONS IN ROUTINE MANNER IN THE ASSESSMENTS MADE U/S 153A OF THE ACT WHEN THERE IS NO INCRIMINATING MATERIAL GATHERED IN THE SEARC H ACTION. STATUTORY NOTICE U/S 153A OF THE ACT CAN ALSO BE ISSUED TO REITERATE THE RETURNED INCOME OR FOR MAKING ADDITIONS BASED ON THE INCRIMINATING MATERIAL OR UNPRODUCED BOOKS OF ACCOUNT. OTHERWISE, ADDITIONS MADE IN ROUTINE MATTER AS IN THE PRESENT AP PEAL ARE NOT SUSTAINABLE. FURTHER, FOR THE SAKE COMPLETENESS OF THE ORDER, WE HAVE PERUSED THE ORDERS/JUDGMENTS RELIED UPON BY LD DR FOR THE REVENUE AND FOUND THEY ARE D ISTINGUISHABLE ON FACTS FOR ONE REASON OR OTHER. TO START WITH, WE HAVE PERUSED THE JUDGMENT OF HONBLE HONBLE DELHI HIGH COURT IN THE CASE OF MADUGULA VENU (SUPRA) AND FIND THAT, THOUGH EXPLAINED THE PROVISIONS IN PLAIN LANGUAGE, IT DOES NOT DEALT WITH THE RELEVANCE OR FACTUM OF INCRIMINATING MATERIAL. FURTHER, THE JUDGMENT OF ANDHRA PRADESH HIGH COURT IN THE CASE OF GOPAL LAL BHADRUKA (SUPRA) IS NOT ON THE NOTICES ISSUED U/S 153A OF THE ACT AND THE SAME IS PRONOUNCED IN THE CONTEXT OF THE NOTICE U/S 153C OF THE ACT. FU RTHER, ALSO, THE COORDINATE BENCH DECISION IN THE CASE OF SCOPE (P) LTD (SUPRA) HAS GRANTED RELIEF TO THE ASSESSEE THOUGH THE NOTICE ISSUED U/S 153A OF THE ACT WAS UPHELD. HOWEVER, THIS ORDER HAS NOT CONSIDERED THE THEN EXISTING DECISION OF THE COORDINATE BENCH DECISION IN THE CASE OF PRATIBHA INDUSTRIES LTD (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE COMPLETED ASSESSMENT MAY NOT BE DISTURBED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL SPECIFIC TO THE ASSESSEE. IN FACT, ALL THESE JUDGMENTS TAK E SPIRIT FROM THE 9 SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD (SUPRA), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL SUCH AS BOOKS OF ACCOUNTS, OTHER DOCUMENT S FOUND IN THE SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH. 15. WE ALSO FIND THAT THE CIT(A) MADE A REFERENCE TO THE INCRIMINATING MATERIAL, WHICH YIELDED DISCLOSU RE OF SOME UNDISCLOSED INCOME. BUT, ON PERUSAL OF THE DOCUMENTS, WE FIND THAT THE CIT(A) ENTERED INTO AN ERROR ZONE AND THE DISCLOSURE IS ONLY RS 5 CRORES IN THIS CASE AND THE SAME RELATES TO THE LANDS DEALS. IN PRINCIPLE THIS DISCLOSURE HAS NOTHING DO WIT H THE IMPUGNED ADDITIONS U/S 68 OR 14A OF THE ACT. IN THE INSTANT CASE, SPECIFIC TO THE ASSESSEE, NO INCRIMINATING MATERIAL WITH THE DETAILS WAS REFERRED EITHER IN THE ASSESSMENT ORDER OR IN THE ORDER OF THE CIT (A) FOR MAKING THE IMPUGNED ADDITIONS. AS PE R THE CITED JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, THE ASSESSMENT U/S 153A IS ONLY FOR REITERATION RATHER THAN MAKING ANY ADDITIONS IN A ROUTINE MANNER WITHOUT THE STRENGTH OF THE INCRIMINATING MATERIALS. SIMILAR VIEW WAS TAKEN UP BY THE ITAT, DELH I H BENCH, IN THE CASE OF V.K. FISCAL SERVICES P LTD VS. DCIT VIDE ITA NOS.5460 TO 5465/DEL/2012 ( WWW.ITATONLINE.ORG ). IN THIS REGARD, PARA 13 FROM THE SAID ORDER OF THE ITAT DELHI BENCH (SUPRA) IS RELEVANT AND TH E SAME READS AS UNDER: 13. APPLYING THE ABOVE CASE LAWS TO THE FACTS OF THE CASE, WE HAVE TO NECESSARILY QUASH THE ASSESSMENT PROCEEDINGS FOR AY 2004 - 2005, 2005 - 06, 2007 - 08, 2008 - 09 ON THE FOLLOWING GROUNDS. (A) NO BOOKS OF ACCOUNTS BELONGING TO THE ASSESSE WERE FOUND AND SEIZED IN THE PREMISES OF THE OTHER PERSON. WHAT WAS FOUND WAS IN THE HARD DISK WAS ONLY A CONFIRMATION OF ACCOUNT THAT AN ATTACHED ANNEXURES. SUCH DOCUMENTS CANNOT BE SAID TO BE BOOKS OF ACCOU NTS OR DOCUMENTS BELONGING TO THE ASSESSEE. (B) THE REVENUE HAS NOT PRODUCED THE RECORD OF THE SEARCHED PERSON TO DEMONSTRATE THAT SATISFACTION WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. GLOBAL REALITY VENTURES P. LTD. ON T HE DATE OF RECORDING OF SATISFACTION, FIRST NOTICE U/S 153(C) WAS ISSUED. THERE IS NO INDICATION WHATSOEVER, THAT THE ASSESSMENT PROCEEDINGS IN THE CASE OF GLOBAL REALITY VENTURES P. LTD WERE IN PROGRESS OR NOT, AT THE POINT OF TIME AND THAT THE AO DURING THE COURSE OF THAT PROCEEDINGS RECORDED THIS SATISFACTION. THE PROCEDURE CONTEMPLATED UNDER THE ACT WAS NOT FOLLOWED. (C) THE SATISFACTION IS RECORDED ON 23 RD JULY, 2010. THE RELEVANT AY WOULD BE 2011 - 12. THE SIX PRECEDING AYS RELEVANT TO THIS AY WOULD BE 2 005 - 06 / 2006 - 07 / 2007 - 08 / 2008 - 09 / 2010 - 11. THUS, THE NOTICE ISSUED U/S 153C FOR THE AY 2004 - 05 IS CLEARLY BARRED BY LIMITATION. (D) EVEN OTHERWISE, AS THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THE AO SHOULD HAVE DROPPED THE PROCEEDINGS INITIATED U/S 153C OF THE ACT. (E) AS THERE IS NO DISPUTE THAT NO ASSESSMENT OR REASSESSMENT HAS ABATED IN THIS CASE FOR THE REASON, THAT THE DATE OF SEARCH, THE DATE OF SEARCH WHICH IN THE CASE ON HAND WOULD BE 25.3.2010, BY VIRTUE OF FIRST PROVISO TO SECTION 153C, I.E., THE DATE OF PASS ING AN ORDER U/S 127 TRANSFERRING THE CASES OF THE ASSESSEE TO THE PRESENT ASSESSING OFFICER NO ASSESSMENT OR REASSESSMENT WAS PENDING. WHEN NO ASSESSMENT HAS ABATED, THE QUESTION OF MAKING ANY ADDITION OR MAKING DISALLOWANCE WHICH ARE NOT BASED ON ONLY M ATERIAL FOUND DURING THE SEARCH IS BAD IN LAW. 16. IN THESE CIRCUMSTANCES, WE HAVE NO DOUBT ABOUT THE ABSENCE OF ANY SEIZED MATERIAL WHICH ARE INCRIMINATING IN NATURE TO BACK THE ADDITIONS U/S 68 OR 14A O THE ACT MADE IN THE ASSESSMENT MADE U/S 153A OF THE ACT FOR THE AY UNDER CONSIDERATION. REGARDING THE DVOS REPORT GATHERED DURING THE SEARCH ACTION, WE FIND THAT THE REPORT SUFFERS FROM CERTAIN DEFICIENCIES QUA COST OF CONSTRUCTION OF RESIDENTIAL PROPERTY AND THE LAND OBTAINED THERETO. THE SAID REPORT CONSTITUTES AN OPINION OF THE THIRD PARTY WHICH CANNOT BE USED BY THE AO FOR MAKING ADDITIONS AND SUCH ADDITIONS, IF ANY, CANNOT BE SUSTAINED LEGALLY. AS SUCH, WE FIND THAT THE AO HAS NOT USED THE SAID REPORT OF THE DVO ALSO FOR MAKING ADDITIONS OF RS. 3 1,33,007/ - , THE DIFFERENCE BETWEEN ACCOUNTED AMOUNT OF RS. 46,13,007/ - , CLAIMED AS THE AMOUNT SPENT ON CONSTRUCTION OF HOUSE AND 10 ACQUISITION OF LAND AS ON 31.3.2002 MINUS RS. RS. 14.8 LAKHS, THE INVESTMENT MADE ON THE LAND PLOTS. AO MADE ADDITION FOR ASSE SSEES FAILURE TO PROVIDE EVIDENCES / BILLS IN SUPPORT OF THE CLAIM OF EXPENDITURE ON THE CONSTRUCTION. IT THE PRESUMPTION OF THE AO THAT THE PLOTS SINCE ACQUIRED ONLY BY JULY 2001, THE ASSESSEE WOULD NOT HAVE SPEND RS. 31,33,007/ - BY 31.3.2002. THIS IS MERELY A PRESUMPTION RATHER CONCLUSION BASED ON ANY EVIDENCES. SUCH ADDITIONS ARE UNSUSTAINABLE IN LAW IN THE ASSESSMENTS MADE U/S 153A R.W.S 143(3) OF THE ACT. 17 . RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) (SUPRA), VIDE PARA 18, IT IS CATEGORICALLY MENTIONED THAT THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UNDER THE SAID SECTION (153A) HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A OF T HE ACT, INASMUCH AS, IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THEN THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE, WHICH WOULD MORE REITERATION.. THUS, THE JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF JAI STEEL LTD, SUPRA AND ABOVE DECISIONS OF THE TRIBUNAL ARE CATEGORICAL IN CONCLUDING THAT, IN CASE OF THE CONCLUDED ASSESSMENTS LIKE THE PRESENT ONE, THE ADDITIONS ARE MADE ONLY BASED ON THE INCRIMINATING MATERIAL DISCOVERED DURING THE SEARC H ACTION. THE FACTS OF THE JAI STEEL LTD (SUPRA) ARE IDENTICAL TO THE PRESENT ONE IE AO MADE ADDITIONS BY REASSESSING U/S 153A ON THE COMPLETED ASSESSMENT U/S 143(1) OF THE ACT. THUS, CONSIDERING THE JUDGMENT IN THE CASE OF THE JAI STEEL LTD (SUPRA), THE A RGUMENTS ON THE LEGAL ISSUE RAISED BEFORE US STANDS COVERED. THEREFORE, CONSIDERING THE RAJASTHAN HIGH COURTS JUDGMENT IN THE CASE OF JAI STEELS LTD, SUPRA, WE HAVE NO DIFFICULTY IN (I) UPHOLDING THE ISSUE OF NOTICE U/S 153A OF THE ACT AND (2) IN DISAPPRO VING THE MAKING OF THE IMPUGNED ADDITIONS U/S 68 AND 14A OF THE ACT, WHICH ARE NOT BACKED BY THE INCRIMINATING MATERIALS. IN THE ABSENCE OF INCRIMINATING MATERIAL, THE ROLE OF THE AO IS ONLY TO REITERATE THE RETURNED INCOME FILED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT. ACCORDINGLY, IN SUBSTANCE, THE COMMON LEGAL ISSUE RAISED IN THE GROUNDS FOR BOTH THE APPEALS OF THE ASSESSEE (ITA NO 3389&3390/M/2011 ) IS ALLOWED. 18. REGARDING OTHER TWO GROUNDS ON THE MERITS OF THE ADDITIONS RAISED IN BOTH THE APPEA LS, CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON THE LEGAL GROUND, WE FIND THE ADJUDICATION IS ONLY OF ACADEMIC IMPORTANCE. THEREFORE, WE DISMISS THE SAME ACADEMIC. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . 7 . FROM THE ABOVE, IT IS EVIDENT THAT THE ARGUMENTS RELATING TO THE VALIDITY OF THE NOTICE U/S 153 ARE DISAPPROVED. CONSEQUENTLY, WE CONFIRM THE VALIDITY OF THE NOTICE ISSUED U/S 153A OF THE ACT. HOWEVER, CONSIDERING THE JUDGMENT OF THE RAJASTHAN HIGH COURT JUDGMENT IN THE CASE OF JAI STEEL (INDIA) LTD AND OTHER ORDERS OF THE TRIBUNAL (SUPRA), WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY THE AO IN THE ABSENCE OF ANY INCRIMINATING MATERIAL ARE NOT SUSTAINABLE. ACCORDINGLY, ADDITIONS ARE DELETED AND THE G ROUND NOS.1 & 2 R AISED BY THE ASSESSEE ARE ALLOWED . 8 . IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ./I.T.A. NO.879/M/2011 (AY: 2003 - 2004) (BY REVENUE) 9 . THIS APPEAL FILED BY THE REVENUE ON 31.01.2011 IS AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.11.2010 FOR THE AY 2003 - 2004. 11 10 . IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: I) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERRED IN ADMITTING AND ACCEPTING NEW ARGUMENT OF ASSESSEE DURING THE APPELLATE PROCEEDINGS THAT THE TRANSACTION OF PURCHASE OF SHARES WERE OFF MARKET TRANSACTIONS WITHOUT PROVIDING ANY OPPORTUNITY TO THE AO. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERR ED IN TREATING THE PURCHASE AS WELL AS THE SALE TRANSACTIONS OF T HE SHARES OF THE M/S. DATABASE F INANCIAL LTD AS GENUINE WITHOUT TAKING INTO ACCOUNT THE FOLLOWING FACTS. A. THE PURCH ASE AS WELL AS SALE OF THE SAID S H ARES WERE ADMITTED ON OATH U/S 131 DATED 3. 1.2008 AND U/S 132(4) DATED 4.2.2008 ON THE BEHALF OF THE ASSESSEE, AS TO BE NON GENUINE AND TAX THERE UPON WAS ALSO PAID BY THE ASSESSEE. B. THE AUTHENTICITY OF THE DOCUMENTS RELATED TO PURCHASE AND SALE OF THE SAID SHARES IS NOT CONFIRMED BY THE BROKER OR ANY OTHER PARTY AND THESE VERY DOCUMENTS WERE ADMITTED TO BE CREATED FOR THE PURPOSE OF THE MANAGED CAPITAL GAIN BY THE ASSESSEE / ASESSEES REPRESENTATIVE U/S 131 AND 132(4) OF THE ACT. C. THE ASSESSEE HAD PURCHASED THE SAID SHARES ON PRICE BEFORE SPLIT EV EN AFTER THE SPLIT OF THE SHARES HAD TAKEN PLACE. D. THE SALE PRICE OF SHARES WERE MANIPULATED AND THE ACTIVITY OF THE COMPANY AND ITS BALANCE SHEET DOES NOT SHOW THAT THE S HARE OF FACE VALUE OF RS. 1 SHOUL D BE SOLD AT AN AVERAGE PRICE OF RS. 85.06. III) WHETHER THE LD CIT (A) HAS ERRED IN RELYING ON THE DECISION OF HONBLE JODHPUR TRIBUNAL IN THE CASE OF ACIT VS. CHANDRESH KUMAR MAHESWARI 120 TTJ 132 JDH AS THE FACTS ARE DISTINGUISHABLE? IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,74,375/ - MADE ON ACCOUNT OF UNEXPLAINED EXPENSES INCURRED BY THE ASSESSE FOR ARRANGING THE BOGUS LONG TERM CAPITAL GAIN. V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE L D CIT (A) WAS JUSTIFIED TO ACCEPT THE GENUINENESS OF THE QUESTIONABLE SHARE TRANSACTIONS WITHOUT TAKING INTO ACCOUNT THE RATIO DECIDENDI LAID DOWN IN THE CASE OF SOMNATH MAINI VS. CIT [2008] 306 ITR 414 (P &H) WHICH HAS UNDER SIMILAR FACTS AND CIRCUMSTANCE S HELD THAT THE BURDEN TO PROVE THE GENUINENESS OF SUCH TRANSACTIONS WAS PRIMARILY ON THE ASSESSEE AND MERE LEADING OF EVIDENCE BY THE ASSESSEE THAT THE TRANSACTIONS WERE GENUINE CANNOT BE TREATED AS CONCLUSIVE. 11 . THE ISSUES RAISED BY THE REVENUE IN TH IS APPEAL RELATES TO THE ADDITIONS MADE BY THE AO ON ACCOUNT OF SALE PROCEEDS ON SHARES OF DATABASE FINANCE LTD, WHICH ARE OTHERWISE ACCOUNTED IN THE BOOKS OF ACCOUNTS, TOWARDS UNEXPLAINED EXPENDITURE RELATING TO THE LONG TERM CAPITAL GAINS ON SALE OF TH E SAME SHARES. NO INCRIMINATING MATERIAL SUGGESTING THE BOGUS NATURE OF THE TRANSACTIONS IS BROUGHT TO OUR NOTICE BY THE REVENUE. CONSIDERING THE FACT THAT WE HAVE ALREADY DELETED THE ADDITIONS MADE BY THE AO IN THIS REGARD, W HILE ADJUDICATING THE APPEAL CO NO. 204/M/2013 IN THE ABOVE PARAGRAPHS OF THIS ORDER. WE RELY ON THE JUDGMENT IN THE CASE OF JAI STEEL (INDIA) (SUPRA) TOO. THEREFORE, THE ADJUDICATION OF THESE GROUNDS BECOMES ACADEMIC. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED AS ACA DEMIC. 12 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 12 ./I.T.A. NO.8915/M/2010 (AY: 2004 - 2005) (BY ASSESSEE) 13 . THIS APPEAL FILED BY THE ASSESSEE ON 21.12.2010 IS AGAINST THE ORDER OF THE CIT - 41, MUMBAI DATED 25.11.2010 FOR THE AY 2004 - 2005. 14 . IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1.0. THE ORDER PASSED BY THE LD CIT (A) CONFIRMING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153A OF THE ACT IS BOTH BAD - IN - LAW AND BAD - IN - FACTS. 1.1. IN DOING SO, HE DID NOT APPRECIATE THAT NO ADDITION COULD HAVE BEEN MADE WHILE COMPLETING ASSESSMENT U/S 153A OF THE ACT IN THE CASE OF COMPLETED ASSESSMENTS IF NO UNDISCLOSED INCOME WAS DETERMINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. 2.0 T HE L D CIT (A) ERRED IN LAW AS W EL L AS THE FACTS, IN CONFIRMING THE ADDITION U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED GIFTS RECEIVED BY THE ASESSEE DURING THE YEAR FROM THE FOLLOWING FAMILY MEMBERS OF SHRI B.R. AGARWAL. NAME OF THE DONOR AMOUNT RS. SHRI ASHISH AGARWAL RS. 8,00,000 SHRI PREETI AGARWAL RS.10,00,000 15 . GROUND NO.1 RAISED IN THIS APPEAL IS IDENTICAL TO THAT OF THE GROUND RAISE D BY THE ASSESSEE VIDE CO NO. 204/M/2013 FOR THE ASSESSMENT YEAR 2003 - 2004, WHICH IS ADJUDICATED BY US IN THE ABOVE PARAGRAPHS OF THIS ORDER. WHILE ADJUDICATING THE SAID APPEAL , WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SAME AND FOLLOWING THE PRINCIPLES OF CONSISTENCY, GROUND NO.1 OF THE INSTANT APPEAL SHOULD ALSO BE DECIDED IN FAVOU R OF THE ASSESSEE. ACCORDINGLY, THE LEGAL ISSUE INVOLVED IN GROUND NO.1 IS ALLOWED IN FAVOUR OF THE ASSESSEE . 16 . GROUND NO.2 RELATES TO THE ADDITION U/S 68 ON ACCOUNT OF UNEXPLAINED GIFTS RECEIVED BY THE ASESSEE . IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GOVIND AGARWAL (HUF) VS. DCIT VIDE ITA NO.8917/M/2010 , DATED 16.5.2013, FOR THE AY 2005 - 06 AND READ OUT THE RELEVANT PARAS 6 & 7 OF THE SAID ORDER OF THE TR IBUNAL DATED 16.5.2013 (SUPRA) WHICH READ AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE PRELIMINARY ISSUE AS TO WHETHER THE ADDITION CAN BE MADE IN THE PRESENT CASE ONCE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF S EARCH. ON A PERUSAL OF THE RECORDS AND THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), WE FIND THAT THERE IS NO REFERENCE TO ANY 13 SEIZED MATERIAL OR ANY INCRIMINATING DOCUMENTS SO AS TO SUGGEST THAT ADDITION MADE IN THE ASSESSM ENT ORDER ARE BASED ON ANY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. ONCE THAT IS SO AND ALSO THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINALITY BEFORE THE DATE OF SEARCH, THEN NO ADDITION CAN BE MADE UNDER SECTION 153A. TH E MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA), AFTER ANALYZING THE RELEVANT PROVISIONS OF THE ACT, CAME TO THE FOLLOWING CONCLUSION AND RATIO: (A) IN ASSESSMENT THAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASS ESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDI SCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH . 7. IN THIS CASE, THE QUESTION ANSWERED IN CLAUSE (B) WOULD BE APPLICABLE AS THE ADDITION IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A, CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATER IAL FOUND IN THE COURSE OF SEARCH IN CASE WHERE THE ASSESSMENT HAS ALREADY BEEN FINALIZED. THUS, IN THIS CASE, NO ADDITION CAN BE MADE OVER AND ABOVE THE RETURNED INCOME WHICH HAS BECOME FINAL PRIOR TO THE DATE OF SEARCH AND THERE IS NO MATERIAL FOUND AT T HE TIME OF SEARCH. THE AFORESAID MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) HAS ALSO BEEN REAFFIRMED AND APPLIED BY THE CO ORDINATE BENCH IN GURINDER SINGH BAWA (SUPRA). THE RELEVANT OBSERVATION OF THE TRIBUNAL IS REPRODUCED HEREIN BELOW: 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF THE ACT. UNDER THE PROVISIONS OF SECTION 153A, IN ALL C ASES, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN PERIOD OF SIX ASSESSMENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDISCLOSED INCOME. SOME OF THE TRIBUNAL BENCHES HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT J URISDICTION UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HA D JURISDICTION UNDER SECTION 153A, ADDITION CAN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BEEN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABA TED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF N O INCRIMINATING MATERIAL HAS BEEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUME NTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143( 1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. THUS, ON THE FACTS OF THE CASE, WE HOLD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO UNEXPLAINED GIFT OF RS. 10,00,000, MADE UNDER SECTION 68 AND DISALLOWANCE OF RS. 1,01,300 UNDER SECTION 14A, ARE BEYOND THE SCOPE OF SECTION 153A / 153C . CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ON THE PRELIMINARY GROUND ITSELF, BOTH THE ADDITIONS ARE DELETED. THUS, THE ISSUES ARISI NG OUT OF THE GROUND ARE TREATED AS ALLOWED. 14 17 . CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF TH E OPINION THAT THE DISALLOWANCE MADE U/S 68 IS UNCALLED FOR AS THE SAME IS BEYOND THE SCOPE OF SECTION 153A / 153C OF THE ACT. NO INCRIMINA TING MATERIAL IN SUPPORT OF THE ADDITIONS MADE U/S 68 OF THE ACT WAS BROUGHT TO OUR NOTICE BY THE REVENUE. THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT IS DELETED AND THE GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED . 1 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ./I.T.A. NO.8916/M/2010 (AY: 2005 - 2006 ) (BY ASSESSEE) 19 . THIS APPEAL FILED BY THE ASSESSEE ON 21.12.2010 IS AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.11.2010 FOR THE ASSESSMENT YEA R 2005 - 2006. 20 . IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1.0. THE ORDER PASSED BY THE LD CIT (A) CONFIRMING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961, IS BOTH BAD - IN - LAW AND BAD - IN - FACTS. 1.1 IN DOING SO, HE DID NOT APPRECIATE THAT NO ADDITION COULD HAVE BEEN MADE WHILE COMPLETING ASSESSMENT U/S 153A OF THE ACT IN CASE OF COMPLETED ASSESSMENTS IF NO UNDISCLOSED INCOME WAS DETER MINABLE FROM THE MATERIAL FOUND AS A RESULT OF SEARCH. 2.0 THE L D CIT (A) ERRED IN LAW AS WELL AS IN FACTS, IN CONFIRMING THE ADDITION U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED GIFTS RECEIVED BY THE ASSESSEE DURING THE YEAR FROM THE FOLLOWING FAMILY MEMBERS OF SHRI B.R. AGARWAL. SMT. LEELADEVI AGARW AL (DONOR) : RS.10,00,000/ - 3.0 THE LD CIT (A) ERRED IN DIRECTING THE AO TO RE - COMPUTE DISALLOWANCE U/S 14A ON THE BASIS OF JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD VS. DCIT (328 ITR 81) WITHOUT REAL IZING THAT NO EXPENDITURE WHATSOEVER WAS INCURRED BY THE ASSESSEE AND CLAIMED AS A DEDUCTION WHILE COMPUTING HER TOTAL INCOME. 21 . GROUND NO.1 RAISED IN THIS APPEAL IS IDENTICAL TO THAT OF THE GROUND RAISED BY THE ASSESSEE VIDE CO NO. 204/M/2013 FOR THE ASSESSMENT YEAR 2003 - 2004, WHICH IS ADJUDICATED BY US IN THE ABOVE PARAGRAPHS OF THIS ORDER. WHILE ADJUDICATING THE SAID APPEAL, WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SAME AND FOLLOWING THE PRINCIPLES OF CON SISTENCY, GROUND NO.1 OF THE INSTANT APPEAL SHOULD ALSO BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE LEGAL ISSUE INVOLVED IN GROUND NO.1 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 15 22 . GROUND NO.2 RELATES TO THE DISALLOWANCE U/S 68 OF THE ACT ON ACCOU NT OF UNEXPLAINED GIFTS RECEIVED BY THE ASESSEE . THIS GROUND IS EXACTLY IDENTICAL TO THAT OF THE GROUND NO.2 RAISED BY THE ASSESSEE FOR THE AY 2004 - 05. KEEPING IN VIEW THE FINDINGS GIVEN BY US IN ASSESSEES APPEAL ITA NO. 8915/M/2010 (AY: 2004 - 2005) , VIDE PARA .OF THIS ORDER AND FOLLOWING THE SAME, WE HOLD THAT THE DISALLOWANCE MADE U/S 68 IS BEYOND THE SCOPE OF SECTION 153A, THEREFORE, THE GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED . 23 . GROUND NO.3 RELATES TO THE DISALLOWANCE U/S 14A OF THE ACT. IN THIS REGARD, LD COUNSEL IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. GOVIND AGARWAL (HUF) VS. DCIT VIDE ITA NO.8917/M/2010 , DATED 16.5.2013, FOR THE AY 2005 - 06 AND READ OUT THE RELEVANT PARAS 6 & 7 OF THE SAID ORDER OF THE TRIBUNAL DATED 16.5.2013 (SUPRA) WHICH READ AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE PRELIMINARY ISSUE AS TO WHETHER THE ADDITION CAN BE MADE IN THE PRESENT CASE ONCE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 H AS ATTAINED FINALITY AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. ON A PERUSAL OF THE RECORDS AND THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), WE FIND THAT THERE IS NO REFERENCE TO ANY SEIZED MATERIA L OR ANY INCRIMINATING DOCUMENTS SO AS TO SUGGEST THAT ADDITION MADE IN THE ASSESSMENT ORDER ARE BASED ON ANY INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH. ONCE THAT IS SO AND ALSO THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005 06 HAS ATTAINED FINA LITY BEFORE THE DATE OF SEARCH, THEN NO ADDITION CAN BE MADE UNDER SECTION 153A. THE MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA), AFTER ANALYZING THE RELEVANT PROVISIONS OF THE ACT, CAME TO THE FOLLOWING CONCLUSI ON AND RATIO: (A) IN ASSESSMENT THAT ARE ABATED, THE ASSESSING OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN TH E COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH . 7. IN THIS CASE, THE QUESTION ANSWERED IN CLAUSE (B) WOULD BE APPLICABLE AS THE ADDITION IN THE ASSESSMENT ORDE R PASSED UNDER SECTION 153A, CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH IN CASE WHERE THE ASSESSMENT HAS ALREADY BEEN FINALIZED. THUS, IN THIS CASE, NO ADDITION CAN BE MADE OVER AND ABOVE THE RETURNED INCOME WHICH HAS BECOME FINAL PRIOR TO THE DATE OF SEARCH AND THERE IS NO MATERIAL FOUND AT THE TIME OF SEARCH. THE AFORESAID MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) HAS ALSO BEEN REAFFIRMED AND APPLIED BY THE CO ORDINAT E BENCH IN GURINDER SINGH BAWA (SUPRA). THE RELEVANT OBSERVATION OF THE TRIBUNAL IS REPRODUCED HEREIN BELOW: 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS REGARDING LEGAL VALIDITY OF ADDITION MADE BY AO UNDER SECTION 153A OF THE ACT. UNDER THE PROVISIONS OF SECTION 153A, IN ALL CASES, WHERE SEARCH IS CONDUCTE D UNDER SECTION 132 OF THE ACT, AO IS EMPOWERED TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR IN WHICH SEARCH WAS CONDUCTED. THE SECTION ALSO PROVIDES THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEA R FALLING WITHIN PERIOD OF SIX ASSESSMENT YEAR IF PENDING ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THERE HAVE BEEN DIVERGENT VIEWS REGARDING SCOPE OF APPLICATION OF SECTION 16 153A IN CASES WHERE NO INCRIMINATING MATERIAL WAS FOUND INDICATING ANY UNDI SCLOSED INCOME. SOME OF THE TRIBUNAL BENCHES HAD TAKEN THE VIEW THAT IN CASE NO INCRIMINATING MATERIAL WAS FOUND AO HAD NO JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT UNDER SECTION 153A WHILE SOME OTHER BENCHES HELD THAT JURISDICTION UNDER SECTION 153A WAS AUTOMATIC TO REASSESS SIX IMMEDIATE PRECEDING ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. ANOTHER ASPECT ON WHICH THERE HAD BEEN DIVERGENT VIEWS WAS WHETHER EVEN IF AO HAD JURISDICTION UNDER SECTION 1 53A, ADDITION CAN BE MADE IN ASSESSMENT / REASSESSMENT ONLY WHEN SOME INCRIMINATING MATERIAL HAS BEEN FOUND. ALL THESE ASPECTS HAD BEEN REFERRED TO THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF ALCARGO GLOBAL LOGISTICS LTD. AND ORDER OF SPECIAL BENCH DATED 6.7.2012 HAS BEEN REFERRED. 6.1 THE SPECIAL BENCH IN THE CASE OF ALCARGO GLOBAL LOGISTICS LTD. (SUPRA), HAS HELD THAT PROVISIONS OF SECTION 153A COME INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003 AND ON SATISFACTION OF THIS CONDIT ION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME FOR SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE SPECIAL BENCH FURTHER HELD THAT IN CASE ASSESSMENT HAS ABATED, THE AO RETAINS THE ORIGIN AL JURISDICTION AS WELL AS JURISDICTION UNDER SECTION 153A FOR WHICH ASSESSMENT SHALL BE MADE FOR EACH ASSESSMENT YEAR SEPARATELY. THUS IN CASE WHERE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDITIONS IN THE ASSESSMENT, EVEN IF NO INCRIMINATING MATERIAL HAS B EEN FOUND. BUT IN OTHER CASES THE SPECIAL BENCH HELD THAT THE ASSESSMENT UNDER SECTION 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOUND IN THE COURSE OF SEA RCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME OR PROPERTY DISCLOSED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH. THEREFORE, THERE WAS NO ASSESSMENT PENDING IN THIS CASE AND IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOU ND DURING SEARCH. THUS, ON THE FACTS OF THE CASE, WE HOLD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO UNEXPLAINED GIFT OF RS. 10,00,000, MADE UNDER SECTION 68 AND DISALLOWANCE OF RS. 1,01,300 UNDER SECTION 14A, ARE BEYOND THE SCOPE OF SECTION 153A / 153C. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ON THE PRELIMINARY GROUND ITSELF, BOTH THE ADDITIONS ARE DELETED. THUS, THE ISSUES ARISING OUT OF THE GROUND ARE TREATED AS ALLOWED. 24 . CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE DISALLOWANCE MADE U/S 14A IS UNCALLED FOR AS THE SAME IS BEYOND THE SCOPE OF SECTION 153A / 153C OF THE ACT. NO INCRIMINATING MATERIAL WAS BROUGHT TO OUR NOTICE BY THE REV ENUE IN SUPPORT OF THE ADDITIONS MADE U/S 14A OF THE ACT. THEREFORE, THE ADDITION MADE U/S 14A OF THE ACT IS DELETED AND THE GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED . 25 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ./I.T.A. NO.880 /M/2011 (AY: 2005 - 2006) (BY REVENUE) 26 . THIS APPEAL FILED BY THE REVENUE ON 31.01.2011 IS AGAINST THE ORDER OF THE CIT (A) - 41, MUMBAI DATED 25.11.2010 FOR THE ASSESSMENT YEAR 2005 - 2006. 27 . IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DIRECTING THE AO TO RECOMPUTED THE DISALLOWANCE U/S 14A BY ADOPTING REASONABLE BASIS FOR EFFECTING APPORTIONMENT OF THE EXPENDITURE. 17 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN HOLDING THAT PROVISIONS OF RULE - 8D DOES NOT HAVE RETROSPECTIVE EFFECTIVE FOLLOWING THE DECISION OF MUMBAI HIGH COURT IN THE CASE OF M/S. GODREJ AND BOYCE MANUFACTURI NG COMPANY LTD. 28 . THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 14A OF THE ACT. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE ISSUE BEING APPLICABILITY OF SECTION 14A, THE AO ERRONEOUSLY APPLIED THE RULE - 8D FOR THE ASSESSME NT YEAR IN QUESTION WHICH ACTUALLY APPLICABLE FROM THE ASSESSMENT YEAR 2008 - 2009 AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT REPORTED IN 328 ITR 81 (BOM). IN THIS REGARD LD COUNSEL MENTIONED THAT THE ISSUE MAY HAVE TO BE SENT BACK TO THE FILES OF AO FOR FRESH ADJUDICATION AND DECIDING THE ISSUE AFRESH ON THE REASONABLE BASIS AFTER REJECTING THE BASIS ADOPTED BY THE ASSESSEE FOR DETERMINING THE DISALLOWABLE SUM U/S 14A OF THE ACT. 29 . ON THE OTH ER HAND, LD DR HAS NO OBJECTION TO REMAND THE MATTER TO THE FILES OF AO FOR FRESH ADJUDICATION ON THIS ISSUE. 30 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. CONSIDERING THE FACTUAL MATRIX OF THE CASE AS WELL AS THE PRAYER OF THE LD COUNSEL F OR REMANDING, WE PROCEED TO SET ASIDE THE GROUND RAISED BY THE ASSESSEE FOR FRESH ADJUDICATION CONSIDERING THE SAID JUDGMENT AND ADOPTING THE REASONABLE BASIS AND AFTER REJECTING THE BASIS ADOPTED BY THE ASSESSEE . AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 & 2 RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 31 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 201 4. SD/ - SD/ - (DR. S.T.M. PAVALAN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 22/01/2014. . . ./ OKK , SR. PS 18 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI