Appeal Details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 8962 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 1 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-12-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
07-09-2016
Assessment Year
2005-2006
Appeal Filed On
30-10-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS.927 TO 930/CHD/2014 (ASSESSMENT YEARS : 2005-06 TO 2008-09) ANIL VERMA, VS. THE D.C.I.T., H.NO. 1383, SECTOR 33C, CENTRAL CIRCLE-II, CHANDIGARH. CHANDIGARH. PAN: ABGPV4017P ITA NOS.933 TO 936/CHD/2014 (ASSESSMENT YEARS : 2005-06 TO 2008-09) RANI VERMA, VS. THE D.C.I.T., H.NO. 1383, SECTOR 33C, CENTRAL CIRCLE-II, CHANDIGARH. CHANDIGARH. PAN: AAIPV6878M ITA NOS.920 TO 923/CHD/2014 (ASSESSMENT YEARS : 2005-06 TO 2008-09) AKSHAY VERMA, VS. THE D.C.I.T., H.NO. 1383, SECTOR 33C, CENTRAL CIRCLE-II, CHANDIGARH. CHANDIGARH. PAN: ACGPV2609E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI RAVI SARANGAL, CIT DR DATE OF HEARING : 21.11.2016 DATE OF PRONOUNCEMENT: 28.11.2016 O R D E R PER BENCH . : THIS BUNCH OF 12 APPEALS FILED BY DIFFERENT ASSESSE S IS DIRECTED AGAINST THE SEPARATE/CONSOLIDATED ORDER S OF 2 LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRA L), GURGAON ALL DATED 28.08.2014 RELATING TO ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 AND 2008-09. 2. SINCE THE ISSUES INVOLVED IN ALL THE APPEALS WERE COMMON, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. WE SHALL BE DEALING WITH THE FACTS IN THE CASE OF ITA NO. 927/CHD/2014. BRIEFLY STATED, SEARCH AND SEIZUR E OPERATIONS WERE CONDUCTED IN THE VTC GROUP OF CASES , WHICH INCLUDED THE ABOVE ASSESSEES, ON 30.06.2010. ASSES SMENT UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS FRAMED MAKING ADDITION ON ACCOUNT OF DEEM ED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. IN APP EAL, THE ADDITION MADE WAS UPHELD BY THE LD. CIT (APPEALS). 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 5. BEFORE US, BESIDES CHALLENGING THE ADDITION ON MERITS THE ASSESSEE RAISED AN ADDITIONAL GROUND, CH ALLENGING THE ADDITION MADE IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL WITH REGARD TO THE SAME FOUND DURING SEARC H. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE READS AS U NDER : '1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 55,00,933/- UNDE R THE HEAD DEEMED DIVIDEND U/S 2(22)(E) AND THIS ADDITION WA S NOT CALLED FOR SINCE NO INCRIMINATING MATERIAL WITH RE GARD TO 3 THE ABOVE ADDITION HAS BEEN FOUND DURING THE COURSE OF SEARCH.' 6. DURING THE COURSE OF HEARING BEFORE US, THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIO NAL GROUND RAISED IS A LEGAL GROUND AND OUGHT TO BE ADMITT ED IN VIEW OF THE JUDGMENT OF THE HON'BLE APEX IN THE CASE OF NA TIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (S C). FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE STATE D THAT THE ADDITION MADE IN ALL THE ABOVE CASES PERTAINED TO DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT , WHICH WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH AND THEREFORE, COULD NOT BE MADE UNDER SE CTION 153A OF THE ACT AS HELD BY THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF M/S MALA BUILDERS PVT. LTD. VS. ACIT I N ITA NO.433 TO 437/CHD/2014 & OTHERS. 7. THE LD. DR, WHEN ASKED AT BAR TO PRODUCE THE INCRIMINATING MATERIAL WHICH FORMED THE BASIS FOR T HE ADDITIONS MADE, EXPRESSED HIS INABILITY TO DO SO. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. 9. WE SHALL FIRST DEAL WITH THE ADMITTANCE OF THE ADDITIONAL GROUND RAISED BEFORE US. WE FIND THAT THE GROUND RAISED BY THE ASSESSEE IS A LEGAL GROUND CHALLENGI NG THE 4 VALIDITY OF THE ADDITION MADE UNDER THE PROVISIONS OF SECTION 153A OF THE ACT, AND WHICH WE FIND CAN BE ADJUDICA TED ON THE BASIS OF MATERIALS AND FACTS AVAILABLE ON RECORD. THEREFORE IN VIEW OF THE DECISION OF THE APEX COURT IN NTPC LTD. VS. CIT (1998) 229 ITR 383,WE ADMIT THE SAME FOR ADJUDICATI ON. 10. HAVING ADMITTED THE ADDITIONAL GROUND ,WE FIND THAT THE ISSUE BEFORE US IS WHETHER IN CASE OF ASSESSMEN T FRAMED UNDER SECTION 153A OF THE ACT, ADDITION COULD BE MA DE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, IN THOSE YEARS WHERE NO ASSESSMENT PROCEEDINGS WERE PE NDING AND ASSESSMENT HAD BEEN MADE UNDER SECTION 143(1)/1 43(3) OF THE ACT. WE FIND THAT IDENTICAL ISSUE HAS BEEN DEC IDED BY THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF M/S MALA BUILDERS PVT. LTD. (SUPRA) WHEREIN IT WAS HELD AT PARAS 15 T O 40 AS UNDER : 15. THE ISSUE BEFORE US IS, WHETHER IN CASE OF ASSESSMENTS FRAMED UNDER SECTION 1 53A OF THE ACT, ADDITION COULD BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL IN THOSE YEARS WHERE NO ASSESSMENT PROCEEDINGS WERE PENDING AND ASSESSMENT HAD BEEN MADE U/S 143(1)/ 143(3) OF THE ACT. 16. WE ARE IN COMPLETE AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT THE ISSUE IS NO LONGE R RES INTEGRA IN VIEW OF VARIOUS DECISIONS OF THE HIGH CO URTS HOLDING THAT COMPLETED ASSESSMENTS CAN BE INTERFERE D WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSE D INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH 5 WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 17. WE FIND,THAT THE ISSUE FIRST CAME UP FOR CONSID ERATION BEFORE THE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. M/S MURLI AGRO PRODUCTS LTD. (SUPRA), WHEREIN ON TH E ISSUE OF EXERCISE OF REVISIONARY POWERS BY THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT, ON T HE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 1 53A, IT WAS CONTENDED BY THE REVENUE THAT THE IMPUG NED ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THE ASSESSING OFFICER HAD ONLY DETERM INED THE UNDISCLOSED INCOME AND NOT THE TOTAL INCOME WHI CH IS THE MANDATE OF SECTION 153A .THE HON'BLE HIGH COURT , WHILE ADJUDICATING THE ISSUE, DEALT AT LENGTH WITH THE PURPOSE OF INTRODUCTION OF THE NEW SEARCH ASSESSMEN T PROCEDURES, AS AGAINST THE EARLIER BLOCK ASSESSMENT PROCEDURES AND THEN WENT ON TO INTERPRET THE PROVIS O TO SECTION 153A(1 ), AND HELD THAT IT IS ONLY PENDING PROCEEDINGS WHICH ARE ABATED ON INITIATION OF PROCEEDINGS UNDER SECTION 153A OF THE ACT, WHILE TH E ASSESSMENTS WHICH HAVE ATTAINED FINALITY CANNOT BE DISTURBED UNLESS MATERIALS GATHERED IN THE COURSE O F PROCEEDINGS UNDER SECTION 153A OF THE ACT ESTABLISH ED OTHERWISE. 18. THEREAFTER, THE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA 352 ITR 493, INTERPRETED THE PROVISIONS OF SECTION 153A OF THE ACT AT LENGTH, AN D HELD THAT AS AGAINST THE EARLIER BLOCK ASSESSMENT PROCED URE WHICH ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS, UNDER THE PRESEN T ASSESSMENT PROCEDURES PRESCRIBED UNDER SECTION 153A/B/C OF THE ACT, ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS HAD TO BE PASSED. THE HON'BLE HIGH COURT HELD THAT THIS WAS SOUGHT TO BE ACHIEVED IN CASE OF THOSE ASSESSMENT Y EARS WHERE ASSESSMENT PROCEEDINGS WERE PENDING ON THE DA TE OF SEARCH BY ABATING THEM AND FRAMING FRESH ASSESSM ENT INCLUDING INCOMES RELATING TO INCRIMINATING MATERIA L 6 FOUND DURING SEARCH. IN CASE OF THOSE ASSESSMENT YE ARS WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED UNDER SECTION 143(1 )(A) OR 143(3), THOSE ASSESSMEN TS COULD BE REOPENED AND THE TOTAL INCOME REASSESSED TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY UNEART HED DURING SEARCH, THE FETTERS TO REOPENING, BEING REMO VED BY INSERTION OF THE NON-OBSTANTE CLAUSE TO SECTION 153 A. THE ENTIRE THRUST OF THE JUDGMENT RESTED ON THE INTERPR ETATION THAT THERE CANNOT BE MULTIPLE ASSESSMENT ORDERS IN CASE OF SEARCH ASSESSMENTS UNDER SECTION 153A/B/C OF THE ACT AND, THEREFORE, WHERE ASSESSMENTS WERE PENDING THEY WOULD ABATE TO ENABLE THE ASSESSING OFFICER TO ASSESS THE TOTAL INCOME INCLUDING UNDISCLOSED INCOM E, AND WHERE ASSESSMENTS OR REASSESSMENTS HAD BEEN COMPLETED, THEY WOULD NOT ABATE AND THE ASSESSING OFFICER WOULD ONLY REOPEN THE COMPLETED ASSESSMENTS AND INCLUDE THEREIN UNDISCLOSED INCOME. THE HIGH CO URT WENT ON TO HOLD THAT SUCH DETERMINATION WOULD BE SI MILAR TO ORDERS PASSED IN ANY RE-ASSESSMENT WHERE THE TOT AL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND ASSESSED AS TOTAL INCOME. 19. THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING (SUPRA) UPHELD THE INTERPRETATION OF THE SECTION BY THE DIVISION BENCH OF THE SAME COURT IN THE CASE OF MURLI AGRO (SUPRA) AND HE LD THAT FINALIZED ASSESSMENTS CANNOT BE TOUCHED BY RESORTING TO THE PROVISION OF SECTION 153A AND ADDI TION WAS TO BE MADE ONLY ON THE BASIS OF MATERIAL UNEART HED DURING SEARCH, SINCE 'SEARCH' AND 'REQUISITION' ARE THE CRUCIAL WORDS APPEARING IN THE SUBSTANTIVE PROVISIO N AND PROVISO AND THEY WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. THE COURT UPHELD TH E UNDERSTANDING OF THE LEGAL PROVISION OF SECTION 153 A BY THE SPECIAL BENCH IN THE I.T.A.T. IN THIS CASE AND FURTHER HELD THAT THE DELHI HIGH COURT HAD IN THE CASE OF A NIL KUMAR BHATIA ALSO REACHED TO THE SAME CONCLUSION. I T ALSO REFERRED TO THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOP MENT CO. VS. DCIT (2014) 49 TAXMANN..98 AND STATED THAT 7 EVEN AS PER THAT JUDGMENT, THE SCOPE OF ENQUIRY IN SEARCH CARRIED UNDER SECTION 153A HAD TO ESSENTIALLY REVOL VE AROUND SEARCH OR REQUISITION UNDER SECTION 132A OF THE ACT. 20. IN THE CASE OF KABUL CHAWLA (SUPRA), THE DELHI HIGH COURT AFTER CONSIDERING VARIOUS DECISIONS OF HIGH C OURTS, SUMMARIZED THE LEGAL POSITION IN PARAGRAPH 37, WHIC H IS REPRODUCED BELOW : '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE S EARCH TAKES PLACE. 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 A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE 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 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THA T THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WI TH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' 8 V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABAT ED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD ' REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION 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 AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DI SCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ' 21. THE DELHI HIGH COURT FURTHER REITERATED THE PROPOSITION LAID DOWN IN KABUL CHAWLA (SUPRA) IN TH E CASE OF CIT VS. RRJ SECURITIES, 380 ITR 612 AND PR. CIT VS. LATA JAIN IN ITA NO.274/2016 DT.29-04-2016. 22. ON GOING THROUGH THE ABOVE JUDGMENTS, WE FIND THAT THE REASON FOR UPHOLDING THE PROPOSITION THAT ADDIT ION U/S 153A, IN CASE OF EARLIER COMPLETED ASSESSMENTS, CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH OR REQUISITION IS THAT: 1. ASSESSMENT U/S 153A CAN BE FRAMED ONLY IN CASES WHERE A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACC OUNTS, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A OF THE ACT. MOREOVER NOTICES U/ S 153A(1 )(A) CAN BE ISSUED AND INCOME ASSESSED OR REASSESSED OF SIX YEA RS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS THE CRUCIAL WORDS 'SEARCH' AND 'REQUISITION' A PPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISO, WHICH 9 THROWS LIGHT ON THE ISSUE OF APPLICABILITY OF THE P ROVISION. SUCH ASSESSMENTS HAVE A VITAL LINK WITH THE INITIAT ION AND CONDUCT OF SEARCH SINCE SEARCH CAN BE AUTHORIZE D ONLY ON THE FULFILLMENT OF CONDITIONS ENUMERATED IN SECTION 132,THOSE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT WHILE INTERPRETING SECTION 153A AND THE INT ERP RETATION ARRIVED AT IS THAT IN RESPECT OF UNABATED PROCEEDINGS ASSESSMENT HAS TO BE MADE ON THE BASIS OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED I N THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COUR SE OF SEARCH AND UNDISCLOSED INCOME/PROPERTY DISCOVERED I N THE COURSE OF SEARCH. SECTION 153A BEING ENACTED TO A SEARCH AND REQUISITION, ITS CONSTRUCTION WOULD HAVE TO BE MADE ACCORDINGLY. 2. THE SECOND PROVISO TO SECTION 153A (1 ) STATES THAT ON INITIATION OF PROCEEDINGS U/S 153A, THE ASSESSMENT/REASSESSMENT PROCEEDINGS PENDING ON THE DATE OF CONDUCTING SEARCH OR MAKING REQUISITION U/S 132A OF THE ACT, SHALL STAND ABATED. THE CBDT CIRCULAR NO. 8 OF 2003 DT.18-09-03, CLARIFIES THAT PROCEEDINGS IN APPEAL, REVISION OR RECTIFICATION AGAINST FINALIZED ASSESSMENTS/REASSESSMENTS SHALL NOT ABATE. READING THE TWO TOGETHER, THE COURTS HAV E STATED THAT AS PER SECTION 153A, ASSESSMENTS/REASSESSMENTS ALREADY FINALIZED DO NOT ABATE, MEANING THEREBY THAT THEY ATTAIN FINALITY, W HICH CANNOT BE DISTURBED UNLESS SOME INCRIMINATING MATER IALS ARE GATHERED DURING THE COURSE OF SEARCH. 3. THAT THE WORDS 'ASSESS' OR 'REASSESS' HAS BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PR OVISION WOULD LEAD TO THE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND 'REASSESS' HAS BEEN USED FOR COMPLETED PROCEEDINGS WHICH WOULD NOT ABATE AS THEY ARE NOT PENDING ON TH E DATE OF INITIATION OF SEARCH OR MAKING OF REQUISITI ON. 10 23. WE MAY ADD THAT THAT THE REQUIREMENT OF THE SEC TION IS LIMITED TO OPENING OR REOPENING OF THE CASES FOR THE PURPOSE OF MAKING ASSESSMENT OR REASSESSMENT OF THE TOTAL INCOME OF PRECEDING SIX ASSESSMENT YEARS PRIO R TO THE YEAR OF SEARCH. IT DOES NOT CONTAIN ANY PROVISI ON REGARDING THE CONCEPT OF MAKING ASSESSMENT OF UNDISCLOSED INCOME AS WAS THERE IN THE EARLIER BLOC K ASSESSMENT REGIME UNDER CHAPTER XIVB. IT DOES NOT SPECIFICALLY CONTAIN ANY PROVISION REGARDING THE NA TURE OF ADDITION WHICH CAN BE MADE UNDER THIS SECTION. THE SECTION HAS PROVIDED, FOR THE REMOVAL OF DOUBTS, BY WAY OF INSERTION OF EXPLANATION AT THE END OF THE SECTI ON THAT SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO ASSESSMENT MADE UNDER THIS SECTION. THIS IMPLIES THAT NATURE OF ASSESSMENT OR REASSESSMENT M ADE UNDER THIS SECTION SHALL BE GOVERNED BY THE NORMAL PROVISIONS OF THE ACT. IN CASE IT IS AN ASSESSMENT MADE FOR THE FIRST TIME, ALL PROVISIONS OF ASSESSMENT WH ICH ARE APPLICABLE TO ASSESSMENTS MADE U/S 143(3) SHALL APP LY AND IN CASE IT IS A REASSESSMENT BEING MADE ALL PRINCIPLES OF REASSESSMENT WHICH ARE APPLICABLE IN CASE OF PROCEEDINGS U/S 147/148 SHALL BECOME APPLICABLE . THUS IN CASES WHERE ASSESSMENTS HAVE ALREADY BEEN MADE ADDITION TO BE MADE IN PROCEEDINGS U/S 153A IS TO BE RESTRICTED TO INCRIMINATING MATERIAL FOUND IF AN Y. 24. IT IS AMPLY EVIDENT FROM THE ABOVE THAT THE ISS UE IS SETTLED, WITH A NUMBER OF DECISIONS OF THE HIGH COU RTS HOLDING THAT IN THE CASE OF COMPLETED ASSESSMENTS, NO ADDITION CAN BE MADE IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL. THOUGH WE DO AGREE THAT THERE ARE DECISIO NS OF HIGH COURTS WHICH HOLD OTHERWISE AND STATE THAT U/S 153A , ADDITION IN CASE OF COMPLETED ASSESSMENTS NE ED NOT BE RESTRICTED TO INCRIMINATING MATERIAL, BUT IN VIEW OF THE APEX COURT DECISION IN CIT VS VEGETABLE PRODUCT S LTD.(1973) 88 ITR 192 WHICH STATES THAT WHERE THERE ARE TWO REASONABLE CONSTRUCTIONS OF A STATUTE ,THE CONSTRUCTION FAVOURING THE ASSESSEE SHOULD BE ADOPT ED, WE HOLD THAT IN CASE OF COMPLETED ASSESSMENTS UNDER SECTION 143(3)/143(1 ) OF THE ACT, IN THE ABSENCE O F ANY 11 INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE A NY ADDITION UNDER SECTION 153A OF THE ACT. 25. WE MAY ADD THAT DURING THE COURSE OF HEARING BE FORE US, THE LEARNED DR, SHRI MANJIT SINGH, VEHEMENTLY A RGUED AT LENGTH, RAISING SEVERAL ISSUES AGAINST THE PROPO SITION AND THOUGH AS OBSERVED ABOVE, THE ISSUE IS NO LONGE R RES INTEGRA, WE SHALL STILL DEAL WITH THE ARGUMENTS OF THE LEARNED D.R. 26. THE FIRST ARGUMENT OF THE LEARNED D.R. THAT THE ISSUE HAD BEEN DECIDED AGAINST THE ASSESSEE BY THE CHANDIGARH BENCH OF THE I.T.A.T. IN THE CASE OF VIP AN KUMAR VERMA VS. ACIT VIDE ITS ORDER DATED 22.8.2012 , MERITS NO CONSIDERATION IN VIEW OF THE NUMEROUS JUDGMENTS OF THE HIGHER AUTHORITIES I.E. HIGH COURT S ON THIS ISSUE. 27. THE ARGUMENT OF THE LEARNED D.R. THAT THE HON'BLE SUPREME COURT HAS GRANTED SLP AGAINST THE H IGH COURTS RULING IN THE CASE OF CONTINENTAL WAREHOUSIN G (SUPRA) DOES NOT DISTURB THE CURRENT STATUS OF THE INTERPRETATION OF THE PROPOSITION SINCE THE FACT RE MAINS THAT AS ON DATE THERE ARE SEVERAL JUDGMENTS OF THE HIGH COURTS UPHOLDING THE PROPOSITION THAT NO ADDITION C AN BE MADE IN THE ABSENCE OF INCRIMINATING MATERIAL IN TH E CASE OF COMPLETED ASSESSMENTS UNDER SECTION 153A OF THE ACT. 28. THE NEXT ARGUMENT OF THE LEARNED D.R. WAS THAT IF ADDITION UNDER SECTION 153A OF THE ACT IS T O BE RESTRICTED TO THE EXTENT OF INCRIMINATING MATERIAL FOUND/UNDISCLOSED INCOME' (TERM USED BY THE LEARNED D.R.) THERE WOULD BE NO DIFFERENCE BETWEEN THE PROCEDURES PRESCRIBED UNDER THE BLOCK ASSESSMENT REGIME PRESCRIBED IN CHAPTER XIV AND THE CURRENT SE ARCH ASSESSMENT PROCEEDINGS UNDER SECTION 153A AND THE V ERY PURPOSE OF INTRODUCING THE NEW PROCEDURE TO DO AWAY WITH CONTROVERSIES RELATING TO UNDISCLOSED INCOME, WOULD BE DEFEATED. WE FIND NO MERIT IN THIS CONTENTION OF THE LEARNED D.R. ALSO SINCE, THE RESTRICTION OF ADDITIO N UNDER 12 SECTION 153A OF THE ACT TO THE EXTENT OF INCRIMINAT ING MATERIAL FOUND, IS TO BE MADE ONLY IN THE CASE OF COMPLETED ASSESSMENTS OR RE-ASSESSMENTS, WHICH DO N OT ABATE UNDER SECTION 153A OF THE ACT. THERE IS THERE FORE NO SIMILARITY BETWEEN THE ASSESSMENT PROCEDURES PRESCRIBED UNDER BLOCK ASSESSMENT REGIME AND THE CURRENT PROCEDURES U/S 153A/B/C/D OF THE ACT. MOREOVER, BY PRESCRIBING ONE ASSESSMENT FOR EACH OF THE SIX YEARS, COVERED UNDER SEARCH, THE LEGISLATURE HA S DONE AWAY WITH THE REQUIREMENT OF MAKING ASSESSMENT ONLY OF UNDISCLOSED INCOME PRESCRIBED IN THE EARLIE R BLOCK ASSESSMENT REQUIREMENT, AND THUS DOING AWAY WITH CONSEQUENT LITIGATION REGARDING THE SAME. 29. THE LEARNED D.R. FURTHER ARGUED THAT EVEN THE CIRCULAR OUTLYING THE OBJECTIVE BEHIND BRINGING THE PRESENT SEARCH ASSESSMENT PROCEDURES STATED THAT TH E ASSESSEE SHALL ASSESS/REASSESS 'TOTAL' INCOME FOR E ACH OF THE SIX YEARS. THE LEARNED D.R. STATED THAT THE MANDATE OF THE CURRENT REQUIREMENT WAS TO ASSESS TH E 'TOTAL' INCOME, HENCE, IT CANNOT BE RESTRICTED TO T HE EXTENT OF INCRIMINATING MATERIAL ONLY. 30. WE FIND THAT THE MEANING OF THE WORD 'TOTAL' INCOME IN THE CONTEXT OF COMPLETED ASSESSMENT WAS INTERPRETED BY THE DELHI HIGH COURT IN THE CASE OF ANIL BHATIA(SUPRA), WHEREIN IN PARA 21 , THE COURT HELD THAT ' IN CASES WHERE THE ASSESSMENT OR REASSESSMENT PROCE EDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS H AVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN THE SEA RCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY AB ATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATTER SI TUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147 , 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 153A WOULD BE SIMILAR TO THE O RDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND THE INCOME 13 THAT ESCAPED ASSESSMENT ARE CLUBBED TOGETHER AND AS SESSED AS THE TOTAL INCOME.(EMPHASIS SUPPLIED BY US) IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROCEEDINGS FOR THE SIMPLE REASON THAT NO P ROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PENDING SINCE T HEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMENT OR DERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WA S MADE. 31. I T IS EVIDENT FROM THE SAME THAT THE UNDERSTAN DING OF THE LEARNED D.R. THAT BY INCLUDING ONLY UNDISCLOSED INCOME DISCOVERED AS A RESULT OF SEARCH, IN THE ASSESSMENT FRAMED UNDER SECTION 153A IN THOSE CASES WHERE ASSESSMENT HAVE BEEN COMPLETED EARLIER UNDER SECTION 143(3)/ 143(1) OF THE ACT, THE 'T OTAL INCOME', IS NOT ASSESSED IS MISPLACED. WHAT SECT ION 153A OF THE ACT PRESCRIBES IS THAT WHERE ASSESSMENT S ARE COMPLETED, THEY SHALL BE REOPENED, INCOMES RELATING TO INCRIMINATING MATERIAL FOUND DURING THE SEARCH DETERMINED AND ADDED TO THE ALREADY ASSESSED INCOME AND THUS TOTAL INCOME COMPUTED. THUS, RESTRICTING T HE ADDITION MADE TO THE EXTENT OF INCRIMINATING MATERI AL WOULD NOT MEAN, THAT TOTAL INCOME IS NOT DETERMINED . 32. AS FOR THE RELIANCE PLACED BY THE LEARNED D.R. ON THE DECISIONS AGAINST THE PROPOSITION, WE AGREE THA T THERE ARE DIVERGENT VIEWS OF THE HIGH COURTS ON THI S ISSUE, BUT AS STATED ABOVE WE UPHOLD THE VIEW FAVOU RING THE ASSESSEE IN VIEW OF THE APEX COURT DECISION IN CASE OF VEGETABLE PRODUCTS LTD.(SUPRA). FURTHER WE MAY ADD THAT THE HON'BLE DELHI HIGH COURT, IN ITS DECISION RENDE RED IN THE CASE OF KABUL CHAWLA (SUPRA),HAS DEALT AND DISTINGUISHED MOST OF THESE DECISIONS PRIMARILY BY FINDING THAT THOSE DECISIONS DEALT WITH THE FACT SI TUATION WHERE MATERIAL HAD BEEN UNEARTHED DURING SEARCH AND THEREFORE COULD NOT APPLY IN SITUATIONS WHERE NO MA TERIAL WAS FOUND DURING SEARCH. 33. THE LD. DR FURTHER CONTENTED THAT THE STATEMENT OF SH. KISHAN KUMAR GOYAL WHICH WAS RECORDED DURING TH E COURSE OF SEARCH CONDUCTED ON THE MODERN GROUP, CONSTITUTED INCRIMINATING MATERIAL. AS PER THE LD. DR, IN 14 THE STATEMENT, SH. KISHAN KUMAR GOYAL ADMITTED THAT INCRIMINATING DOCUMENTS RELATING TO VARIOUS INVE STMENT COMPANIES, EXCESS CASH AND JEWELLERY WERE FOUND. TH E ASSESSEE IN CONSEQUENCE THEREOF HAD SURRENDERED ADDITIONAL INCOME OF RS.11 CRORES . 34. THE STATEMENT REFERRED TO BY T HE LD. DR IS REPRODUCED AS UNDER: 'Q.3 DO YOU WANT TO SAY ANYTHING ELSE FURTHER? ANS. DURING THE COURSE OF SEARCH OPERATION CERTAIN INCRIMINATIN G DOCUMENTS RELATING TO VARIOUS INVESTMENT COMPANIES, EXCESS CASH & JEWELLERY WERE FOUND AT MY RESIDENCE. IN THI S CONNECTION I WOULD LIKE TO OFFER ADDITIONAL INCOME TO THE TUNE OF RS. 11 CRORE (RUPEES ELEVEN CRORE ONLY) TO AVOID LITIGATION WITH THE DEPARTMENTS, OVER AND ABOVE THE INCOME OF MY FAMILY AND INVESTMENT COMPANIES AS STATED ABOVE SUB JECT TO NO PENAL ACTION. THE DISCLOSURE IS MADE U/S 132(4) OF THE IT ACT, 1961 VOLUNTARILY. THE BREAK-UP OF THE SAME WIL L BE SUBMITTED IN THE NEXT TWO DAYS. A SEPARATE LETTER T O THIS EFFECT IS SUBMITTED HEREBY.' FROM A READING OF THE ABOVE ,IT IS EVIDENT THAT SH GOYAL ADMITTED THAT CERTAIN INCRIMINATING DOCUMENTS RELAT ING TO VARIOUS INVESTMENT COMPANIES, EXCESS CASH AND JEWEL LERY WAS FOUND AT HIS RESIDENCE. ADMITTEDLY THERE IS NO REFERENCE IN THE STATEMENT TO ANY DOCUMENT FOUND, W HICH REVEALED THAT THE ASSESSEE HAD WRONGLY CLAIMED INTE REST ON LOAN TAKEN FOR HIS HOUSE PROPERTY, WHICH WAS THE ONLY DISALLOWANCE MADE IN THE ASSESSMENT ORDER PASSED U/ S 153A FOR THE IMPUGNED YEAR. MOREOVER WE FIND THAT T HE DISALLOWANCE WAS MADE FOR WANT OF EVIDENCE AND NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURIN G SEARCH. FURTHER WE FIND THAT THE STATEMENT IS GENER AL WITH NO REFERENCE TO ANY SPECIFIC DOCUMENT OR ASSET FOUND DURING SEARCH AND THE ASSESSEE HAS ADMITTEDLY SURRENDERED RS. 11 CRORE ON ACCOUNT OF THE SAME AND PAID TAXES THEREON. THE STATEMENT THEREFORE CANNOT BE STATED TO BE INCRIMINATING MATERIAL FOR THE PURPOSE OF DISALLOWING INTEREST ON HOUSING LOAN. 15 35. MOREOVER THE DELHI BENCH OF THE ITAT IN THE CAS E OF M/S BEST INFRASTRUCTURE (INDIA) PVT. LTD. VS ACIT I N ITA NO.1698/DEL/2014 DT.31-05-2016, HELD THAT ANY STATEMENT RECORDED DURING SEARCH CANNOT ON STANDALO NE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCO VERED DURING SEARCH BE TREATED AS 'EVIDENCE FOUND DURING SEARCH'. THE RELEVANT FINDINGS OF THE COORDINATE BE NCH AT PARA 23 (II) IS AS FOLLOWS: '(II) ANY STATEMENT RECORDED DURING THE COURSE OF S EARCH CANNOT ON A STANDALONE BASIS WITHOUT REFERENCE TO A NY OTHER MATERIAL DISCOVERED DURING SEARCH AND SEIZURE OPERA TION WOULD EMPOWER THE ASSESSING OFFICER TO MAKE THE ADD ITION. THE WORDS 'EVIDENCE FOUND AS A RESULT OF SEARCH' WO ULD NOT TAKE WITHIN ITS SWEEP STATEMENT RECORDED DURING SEA RCH AND SEIZURE OPERATIONS. THEREFORE, THE REVENUE'S STAND THAT THE ADDITION U/S 153A CAN BE MADE IN RESPECT OF SHARE C APITAL ON ACCOUNT OF STATEMENT OF SHRI TARUN GOYAL AND SHRI A NU AGGARWAL CANNOT BE ACCEPTED.' 36. IN VIEW OF THE ABOVE THE STAND OF THE REVENUE THAT THE STATEMENT OF SH. KISHAN KUMAR GOYAL CONSTITUTED INCRIMINATING MATERIAL FOR THE PURPOSE OF MAKING DISALLOWANCE OF INTEREST ON HOUSING LOAN U/S 153A CANNOT BE ACCEPTED. 37. IN VIEW OF THE ABOVE WE HOLD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT PROCEEDINGS HAVING NOT ABATED AT THE TIME OF SEARCH, THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE THE ADDITION U/S 153A OF THE A CT. 38. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREF ORE ALLOWED. THE ADDITIONS MADE IN THE ORDER U/S 153A /143(3) ARE ACCORDINGLY DELETED. 39. SINCE THE JURISDICTION OF THE ASSESSING OFFICER TO MAKE ADDITION UNDER SECTION 153A HAS BEEN HELD TO B E NOT AS PER LAW, WE DO NOT FIND ANY NEED TO DECIDE T HE OTHER GROUNDS RAISED BY THE ASSESSEE ON MERITS. 16 40. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. 11. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTI CAL TO THAT IN THE CASE OF M/S MALA BUILDERS PVT. LTD. (S UPRA) WITH ASSESSMENT HAVING BEEN FRAMED UNDER SECTION 153A OF THE ACT MAKING ADDITION ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT, ADMITTEDLY, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND THE ASSESSMENT IN ALL THE ABOVE CASES HAVING BEEN C OMPLETED UNDER SECTION 143(1) OF THE ACT, THE AFORESTATED DE CISION OF THE CHANDIGARH BENCH IN THE CASE OF M/S MALA BUILD ERS PVT. LTD. (SUPRA) SQUARELY APPLIES TO THE PRESENT CASE A LSO, FOLLOWING WHICH WE HOLD THAT THE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE THE IMPUGNED ADDITION IN THE P RESENT CASE. 12. IN VIEW OF THE ABOVE, THE APPEALS OF THE ASSES SEE IN ALL THE ABOVE CASES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH NOVEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH
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