M/S. Jai Lokenath Oil Extraction (P) Ltd., Dakshin Dinajpur V. DCIT, CC-XXVII, Kolkata, Kolkata

ITSSA 188/KOL/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3278 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2014
• Court: TRIBUNAL
• Department Lawyers: GOULEN HANGSHING
• Keywords: Business income; Depreciation; Search and seizure; Documents seized; Revenue expenditure; Capital expenditure
• Section: 143(3); 153A; 148; 263; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM ] I.T.(SS)A NO. 188/KOL /2014 ASSESSMENT YEAR : 2009-1 0 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. -VS.- D.C.I.T., CENTRAL CIRCLE-XXVII, KOLKATA KOLKATA [PAN : AABCJ 3792 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI GOULEN HANGSHING, CIT(DR) DATE OF HEARING : 25.04.2017. DATE OF PRONOUNCEMENT : 03.05.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 10.09.2014 OF CIT(A)- CENTRAL-II, KOLKATA RELATING TO AY 2009-10. 2. THERE IS A DELAY OF 30 DAYS IN FILING THE APPEA L BY ASSESSEE. THE REASONS FOR THE DELAY IN FILING THE APPEAL HAS BEEN EXPLAINED BY THE ASSE SSEE IN AN APPLICATION FILED FOR CONDONATION OF DELY. THE APPEAL OUGHT TO HAVE BEEN FILED BY THE ASSESSEE WITHIN 60 DAYS FROM THE DATE OF RECEIPT OF CIT(A)S ORDER I.E. 60 DAYS FROM 25.09.2014. THE APPEAL PAPERS WERE PREPARED AND DISPATCHED BY THE ADVOCATE FOR THE ASSESSEE AROUND 17.11.2014 FOR ASSESSEES SIGNATURE. SINCE THE DIRE CTOR OF THE ASSESSEES ELDER BROTHER WAS CRITICALLY ILL THE ASSESSEES DIRECTOR COULD NO T SIGN THE PAPERS AND SEND BACK TO THE COUNSEL WITHIN THE DUE DATE FOR FILING THE APPEAL. THE DIRECTOR SIGNED THE RELEVANT APPEAL PAPERS ONLY ON 23.12.2014 AND THEREAFTER HAN DED OVER THE SAME TO THE ADVOCATE ON 24.12.2014. IN THE PROCESS THERE OCCURRED A DELA Y OF 30 DAYS IN FILING THE APPEAL. 3. AFTER CONSIDERING THE REASONS FOR THE DELAY IN FILING THE APPEAL AS STATED ABOVE, WE ARE SATISFIED THAT THERE WAS A REASONABLE AND SUFFI CIENT CAUSE FOR THE DELAY IN FILING THE APPEAL BY THE ASSESSEE. ACCORDINGLY THE SAME IS CON DONED. 2 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 2 4. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS FOLLOWS :- 1.FOR THAT THE LD. CIT(A) OUGHT TO HAVE QUASHED TH E ENTIRE ASSESSMENT COMPLETED U/S. 153A/ 143(3) BY THE A.O. VIDE ORDER DATED 27.0 3.2014 SINCE THE SAID ORDER IS BAD IN LAW. 2.FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. IN A DDING BACK THE ITEMS OF REGULAR ASSESSMENT IN THE PROCEEDINGS U/S.153A. 3. FOR THAT ON T E FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CARRIAG E INWARD AND CARRIAGE OUTWARD EXPENSES TO THE TUNE OF RS.19,89,870/- MADE BY THE A.O. BY WRONGLY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE INCOME TAX ACT, 1961. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.4,90,332/- MAD E BY THE A.O ON ACCOUNT OF ELECTRIC SERVICE CONNECTION CHARGES BY WRONGLY TREA TING THE SAME AS CAPITAL EXPENDITURE. 5. WITHOUT PREJUDICE TO THE GROUND NO.4, THE LD. CI T(A) OUGHT TO HAVE GIVEN A DIRECTION TO THE A.O. TO ALLOW THE DEPRECIATION ON THE SAID ALLEGED CAPITAL EXPENDITURE OF RS.4,90,332/- INCURRED ON ACCOUNT OF ELECTRIC SERVICE CONNECTION CHARGES. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 5. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSI NESS OF RICE AND FLOUR MILLING. THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED BY THE REVENUE U/S 132(1) OF THE INCOME TAX ACT, 1961 (ACT) IN THE PAUL GROUP OF CASES. TH E ASSESSEE WAS ALSO THE PART OF THE GROUP AND WAS ALSO SEARCHED ON 17.01.2012. NOTICE U/S 153A OF THE ACT WAS ISSUED ON 05.03.2013. THE ASSESSEE VIDE LETTER DATED 16.04.20 13 REQUESTED THE AO TO TREAT THE RETURN OF INCOME FILED FOR A.Y.2009-10 AS THE RETUR N FILED IN RESPONSE TO THE NOTICE ISSUED U/S 153A OF THE ACT FOR A.Y.2009-10. THE ASS ESSEE FILED RETURN FOR A.Y.2009-10 U/S 139(1) OF THE ACT ON 29.09.2009 DECLARING THE T OTAL INCOME OF RS.20,17,393/-. 6. IT IS NOT DISPUTED THAT IN THE COURSE OF SEAR CH NO INCRIMINATING MATERIAL WAS FOUND. IN THIS BACKGROUND THE AO EXAMINED THE CARRIAGE INW ARD EXPENSES IN THE PROFIT AND LOSS ACCOUNT AND CALLED UPON THE ASSESSEE TO FURNISH DET AILS OF THE CARRIAGE INWARD EXPENSES AS WELL AS TDS MADE ON CARRIAGE INWARD EXPENSES. TH E ASSESSEE TOOK A STAND THAT THE TDS PROVISION ARE NOT APPLICABLE FOR CARRIAGE INWAR D EXPENSES INCURRED BY THE SSESSEE. THEREFORE NO DISALLOWANCE OF CARRIAGE INWARD EXPEN SES CAN BE MADE U/S 40(A)(IA) OF THE 3 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 3 ACT. THE AO HOWEVER OBSERVED THAT THE REPLY OF THE ASSESSEE WAS NOT SATISFACTORY AND THAT NO DOCUMENTS LIKE LEDGER FOLIO WERE FURNISHED. THE AO THEREFORE DISALLOWED THE ENTIRE CARRIAGE INWARD EXPENSES OF RS.19,89,870/- U /S 40(A)(IA) OF THE ACT. THE AO ALSO DISALLOWED A SUM OF RS.15,200/- WHICH WAS PRELIMINA RY EXPENSES WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT. THE AO MADE THE DISALLOWAN CE BECAUSE THE ASSESSEE FAILED TO PROVE THE NATURE OF EXPENSES. THE AO ALSO NOTICED T HAT A SUM OF RS.4,90,332/- WAS CLAIMED AS REVENUE EXPENDITURE TOWARDS ELECTRIC SER VICE CONNECTION CHARGES. ACCORDING TO THE AO BY GETTING THE ELECTRICITY SERVICE CONNEC TION THE ASSESSEE HAS ACQUIRED A BENEFIT OF ENDURING NATURE. THEREFORE IT WAS A CAPI TAL EXPENDITURE. THE AO THEREFORE ADDED THE AFORESAID SUM ALSO TO THE TOTAL INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO IN THE ORDER PASS ED FOR A.Y.2009-10 U/S 153A OF THE ACT AS FOLLOWS :- COMPUTATION OF TOTAL INCOME RS. RS. BUSINESS INCOME 19,84,836/- ADD: CARRIAGE INWARD (AS DISCUSSED ABOVE) 19,89,870 /- ADD: DISALLOWANCE FOR PRELIMINARY EXPENSES WRITTEN OFF (AS DISCUSSED ABOVE) 15, 200/- ADD: DISALLOWANCE OF ELECTRIC SERVICE CONNECTION CHARGES (AS DISCUSSED ABOVE) 4,90,332/ - 24,95,402/- TOTAL BUSINESS INCOME 44,80,238/- 7. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRES ENT APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESEE ADDRESSED TH E ARGUMENTS ON GROUND NOS. 1 AND 2. IN THE AFORESAID GROUNDS THE PLEA TAKEN BY THE ASSESSE E IS THAT ORDER U/S 153A OF THE ACT WAS BAD IN LAW. THIS GROUND WAS NOT RAISED BEFORE A O OR CIT(A). SINCE THIS IS A LEGAL GROUND WHICH GOES TO THE VERY JURISDICTION OF THE A O TO MAKE THE IMPUGNED ADDITIONS IN THE ASSESSMENT COMPLETED U/S 153A OF THE ACT AND SI NCE THE FACTS NECESSARY FOR DECIDING THE LEGAL GROUND ARE ALSO AVAILABLE ON REC ORD, WE PERMIT THE ASSESSEE TO RAISE THE AFORESAID PLEA THE FOR THE FIRST TIME BEFORE TH E TRIBUNAL. 4 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 4 9. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT WITH REFERENCE TO THE RETURN OF INCOME FILED BY THE ASSESSEE FOR A.Y.2009-10 U/S 13 9 OF THE ACT ON 29.09.2009 THE AO DID NOT ISSUE ANY NOTICE U/S 143(2) OF THE ACT WITH IN THE TIME REQUIRED UNDER THE PROVISO TO SEC. 143(2) OF THE ACT NAMELY 30.09.2010. IT WAS HIS SUBMISSION THAT ON THE EXPIRY OF THE AFORESAID PERIOD FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT, THE ASSESSMENT FOR A.Y 2009-10 IS DEEMED TO HAVE BEEN CONCLUDED. IT WAS FU RTHER BROUGHT TO OUR NOTICE THAT THE SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 17.01.2012 .AND IN THE COURSE OF SUCH SEARCH NO INCRIMINATING DOCUMENTS WHATSOEVER W AS FOUND. IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE SCOPE OF THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT IN RESPECT OF AN ASSESSMENT WHICH HAS ALREA DY BEEN COMPLETED IS RESTRICTED ONLY TO MAKING AN ASSESSMENT OF INCOME WHICH ARE BASED O N INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN OTHER WORDS, IT WAS SUBMITTED THAT THE AO HAS NO JURISDICTION TO MAKE AN ASSESSMENT OF INCOME WHICH IS NOT BASED ON MATERIAL FOUND IN THE COURSE OF SEARCH, WHERE ASSESSMENT FOR THE RELE VANT ASSESSMENT YEAR HAS ALREADY BEEN CONCLUDED PRIOR TO THE DATE OF SEARCH AND WHER E SUCH ASSESSMENTS DOES NOT ABATE UNDER THE PROVISO TO SECTION 153A (1) OF THE ACT. 10. THE LEARNED DR HAS HOWEVER ARGUED WHERE AN ORIGINAL ASSESSMENT HAS NOT BEEN FINALIZED UNDER SECTION 143(3) OF THE ACT, THERE IS NO QUESTION OF ABATEMENT AND THAT IN THE PRESENT CASE ORIGINAL ASSESSMENT HAS BEEN MADE UNDER SECTION 143(1) OF THE ACT. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE THE PROVISI ONS OF SECTION 153A EMPOWER THE ASSESSING OFFICER TO ASSESS OR REASSESS THE TOTAL I NCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH A SEARCH WAS CONDUCTED AND, THEREFORE, UNDER THESE CI RCUMSTANCES THE ASSESSING OFFICER WAS DUTY BOUND TO ASSESS OR REASSESS TOTAL INCOME OF SUCH ASSESSMENT YEARS, AND, THEREFORE, THE IMPUGNED ADDITIONS WERE JUSTIFIABLY MADE IN THE ASSESSMENT MADE UNDER SECTION 143(3) R.W.S. 153A(1) OF THE ACT. 11. THE LEARNED COUNSEL FOR THE ASSESSEE ON THI S ASPECT SUBMITTED THAT THE SECOND PROVISO TO SEC 153A(1) OF THE ACT CONTEMPLATES THAT IF ANY OF THE SIX ASSESSMENTS ARE 5 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 5 PENDING ON THE DATE OF INITIATION OF THE SEARCH AND REQUISITION, THE SAME SHALL ABATE. HOWEVER, THERE IS NO PROVISION THAT EVEN THE COMPLE TED ASSESSMENT OF THE AFORESAID SIX YEARS SHALL ABATE. THEREFORE A DISTINCTION HAS BEEN MADE BETWEEN A PENDING ASSESSMENT AND A COMPLETED ASSESSMENT. THUS IT WAS SUBMITTED T HAT A COMPLETED ASSESSMENT BECOMES FINAL UNLESS SOME INCRIMINATING MATERIAL IS FOUND IN THE COURSE OF SEARCH. IT WAS ARGUED THAT SECTION 153A OF THE ACT DOES NOT AU THORIZE THE MAKING OF A DE NOVO ASSESSMENT. AN ASSESSMENT U/S 153A OF THE ACT IS NO T MEANT TO UNSETTLE THE INCOME SHOWN IN THE REGULAR RETURN IN RESPECT OF WHICH THE ASSESSMENT IS COMPLETE. SECTION 153A OF THE ACT DOES NOT LEAD TO A WHOLE EXERCISE O F ASSESSMENT TO BE MADE AFRESH IN RESPECT OF COMPLETED ASSESSMENTS. THEREFORE VIDE AS SESSMENT U/S 153A OF THE ACT, NO NEW DISALLOWANCE CAN BE MADE BY THE A.O. WHERE ADMI TTEDLY THE REGULAR ASSESSMENTS ARE SHOWN AS COMPLETED ASSESSMENTS ON THE DATE OF I NITIATION OF ACTION U/S 132. FURTHER AND VERY IMPORTANTLY, IN RELATION TO THE YEARS WHOS E ASSESSMENT IS COMPLETED, IT HAS BEEN LAID DOWN IN SEVERAL JUDICIAL PRONOUNCEMENTS THAT I N SUCH SITUATION OF COMPLETED ASSESSMENTS, ASSESSMENT U/S 153A OF THE ACT HOWEVER SHALL BE TO THE EXTENT OF INCOME ESCAPING ASSESSMENT WHICH COMES TO THE KNOWLEDGE OF THE AO DURING THE COURSE OF SEARCH WITH REFERENCE TO THE VALUABLE ARTICLES OR T HINGS FOUND OR DOCUMENTS SEIZED DURING THE SEARCH WHICH ARE NOT DISCLOSED IN THE OR IGINAL ASSESSMENT. THE POWER GIVEN BY THE 1ST PROVISO TO 'ASSESS' INCOME FOR SIX ASSES SMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANN OT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. W HEN NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS CANNOT BE DISTURBED. ITEMS OF REGULAR ASSESSMENT CA NNOT BE ADDED BACK IN THE PROCEEDINGS U/S 153A OF THE ACT WHEN NO INCRIMINATI NG DOCUMENTS WERE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PRO CEEDINGS. A SEARCH ASSESSMENT UNDER SECTION 153A OF THE ACT SHOULD BE EVIDENCE BASED. AN ASSESSMENT U/S 153A OF THE ACT IS NOT MEANT TO UNSETTLE THE INCOME SHOWN IN THE RE GULAR RETURN IN THE ABSENCE OF EVIDENCE FOUND AS A RESULT OF SEARCH. IT IS NOT MEA NT TO MAKE A ROVING AND FISHING 6 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 6 ENQUIRY. SECTION 153A OF THE ACT IS A SEPARATE AND SPECIAL PROVISION THAT HAS BEEN SPECIALLY ENACTED TO UNDERTAKE SEARCH RELATED ASSES SMENTS. A SEARCH U/S 132 OF THE ACT IS AUTHORIZED TO UNEARTH UNDISCLOSED ASSETS OR TRANSAC TIONS RESULTING IN INCOME WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT OF A PERSON. T HEREFORE, A SEARCH PUTS IN MOTION THE PROCESS OF ASSESSMENT OF THE UNDISCLOSED INCOME OF A TAX PAYER WHICH IS NOT DISCLOSED TO THE DEPARTMENT. THUS SECTION 153A OF THE ACT IS LIM ITED TO THE ASSESSMENTS OF INCOME WHICH ARE DISCOVERY OF SEARCH. 12. IN SUPPORT OF HIS CONTENTION AS ABOVE, THE L EARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 380 ITR 573 (DEL) AND THE HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION 374 ITR 645 (BO M) AND THE SPECIAL BENCH OF ITAT IN THE CASE OF ALLCARGO GLOBAL LOGISTICS 137 I TD 287 (SB)(MUM). 13. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION T O THE RIVAL SUBMISSIONS. THE PROVISIONS OF SECTION 153A OF THE ACT WERE INTRODUC ED BY THE FINANCE ACT, 2003 WITH EFFECT FROM 1-6-2003. SEC.153A OF THE ACT LAYS DOWN THAT IN RESPECT OF SEARCHES CARRIED OUT UNDER SECTION 132 OF THE ACT OR REQUISITION OF BOOKS AND OTHER DOCUMENTS MADE UNDER SECTION 132A OF THE ACT AFTER 31-5-2003, THE ASSESSING OFFICER SHALL ISSUE A NOTICE CALLING UPON ASSESSEE TO FURNISH RETURN OF I NCOME IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING ASSESSMENT YEAR RELEVAN T TO THE ASSESSMENT YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE ASS ESSING OFFICER IS EMPOWERED TO RE- ASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSME NT YEAR FALLING WITH SUCH SIX ASSESSMENT YEARS.SEC.153A OF THE ACT READS THUS: 153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION . (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 1 39, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN T HE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL- 7 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 7 (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF IN COME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIB ED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S UCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATI ON OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. 14. IT CAN BE SEEN FROM THE SECOND PROVISO TO SE C.153A(1) OF THE ACT THAT ANY ASSESSMENT PROCEEDINGS FOR ANY OF THE SIX ASSESSMEN T YEARS SET OUT IN SEC.153A (1) OF THE ACT, WHICH IS PENDING AS ON THE DATE OF INITIAT ION OF SEARCH U/S.132 OF THE ACT, THEN SUCH ASSESSMENT PROCEEDINGS WOULD ABATE AND THE AO WILL MAKE ONE ASSESSMENT AFTER CONSIDERING THE ORIGINAL RETURN OF INCOME AS WELL A S MATERIALS FOUND IN THE COURSE OF SEARCH. THE ASSESSMENT PROCEEDINGS WHICH HAVE BEEN COMPLETED AS ON THE DATE OF SEARCH U/S.132 OF THE ACT WILL HOWEVER CONTINUE TO REMAIN VALID. THUS THE FORMER PROCEEDINGS ARE REFERRED TO AS ABATED ASSESSMENT P ROCEEDINGS AND THE LATTER PROCEEDINGS ARE REFERRED TO AS UNABATED ASSESSMENT PROCEEDINGS. 15. THE SPECIAL BENCH ITAT MUMBAI, IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 287 (MUMBAI)(SB) HAD TO DEAL WITH THE SCOPE OF PROCEEDINGS U/S.153A OF THE ACT. THE FOLLOWING QUESTION WAS DET ERMINED BY THE SPECIAL BENCH:- 8 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 8 1. WHETHER, ON THE FACTS AND IN LAW, THE SCOPE OF ASSESSMENT U/S 153A ENCOMPASSES ADDITIONS, NOT BASED ON ANY INCRIMINATI NG MATERIAL FOUND, DURING THE COURSE OF SEARCH'? THE SPECIAL BENCH HELD AS FOLLOWS: 53. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASS ESSMENT OR REASSESSMENT OF TOTAL INCOME U/S 153A(1)(B) AND THE FIRST PROVIS O? WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF O RIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PR OVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR U NDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WOR DS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS : - A) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A ME RGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SHALL BE MA DE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M ATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, (B) IN RESPECT OF NON-ABATED ASSESSMENTS, THE ASSE SSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NO T PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF S EARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE CO URSE OF SEARCH 16. IT IS THUS CLEAR FROM THE AFORESAID RULING O F THE SPECIAL BENCH THAT WHERE ASSESSMENTS HAVE ALREADY BEEN COMPLETED U/S.143(3) OF THE ACT BEFORE INITIATION OF SEARCH U/S.132 OF THE ACT, THOSE ASSESSMENTS WILL A TTAIN FINALITY. THE EXCEPTION WOULD BE THAT IF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS WER E NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEAR CH OR WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY IS DISCOVERED IN THE COURSE OF SEARCH, THEN THE UNABATED ASSESSMENT WILL NOT ATTAIN FINALITY TO THE EXTENT OF MATERIAL FOUND IN THE COURSE OF SEARCH WHICH WILL HAVE A BEARING ON THE CONCLUSIONS ARRIVED AT IN THE UNABATED ASSESSMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWL A (SUPRA) 380 ITR 573 (DEL) AND 9 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 9 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . CONTINENTAL WAREHOUSING CORPORATION 374 ITR 645 (BOM) HAS ALSO TAKEN THE SA ME VIEW AS WAS TAKEN BY THE SPECIAL BENCH OF ITAT IN THE CASE OF ALLCARGO GLOBA L LOGISTICS (SUPRA). 17. IT IS NOT IN DISPUTE BEFORE US THAT WITH R ESPECT TO THE ADDITIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153A OF THE AC T, THERE WAS NO INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH AND THAT THE A O WHILE CONCLUDING THE ASSESSMENT U/S.153A OF THE ACT. IT IS ALSO NOT DISPUTED TH AT FOR A.Y.2006-07 THE ASSESSEE FILED HER RETURN OF INCOME U/S 139 OF THE ACT ON 29.09.2001 D ECLARING TOTAL INCOME OF RS. 20,17,393/-. NO NOTICE U/S 143(2) OF THE ACT WAS IS SUED FOR MAKING THE ASSESSMENT U/S 143(3) OF THE ACT WITHIN THE PERIOD LAID DOWN IN TH E PROVISO TO SECTION 143 (2) OF THE ACT NAMELY 30.09.2010. THEREFORE, ASSESSMENT PROCE EDINGS STOOD COMPLETED AND THAT IN ANY CASE ON THE DATE OF SEARCH I.E. ON 17.01.2012 T HE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR 2009-10 WAS NOT PENDING. THEREFORE THE ACCEPTANCE OF THE RETURN OF INCOME AMOUNTS TO AN ASSESSMENT AND SUCH ASSESSMENT DID NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. IT I S THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED ADDITIONS MADE BY TH E ASSESSING OFFICER COULD NOT HAVE BEEN MADE IN THE IMPUGNED ASSESSMENT PROCEEDINGS AS THEY ARE NOT BASED ON ANY MATERIAL SEIZED OR FOUND DURING THE COURSE OF SEARC H AT THE BUSINESS PREMISES OF THE ASSESSEE. 18. WE ARE OF THE VIEW THAT THE PROPOSITION CANVA SSED BY THE LEARNED COUNSEL FOR THE ASSESSEE FINDS SUPPORT FROM THE VARIOUS DECISIONS C ITED BY HIM. WE THEREFORE HOLD THAT THE SCOPE OF THE PROCEEDINGS U/S.153A IN RESPECT OF ASSESSMENT YEAR FOR WHICH ASSESSMENT HAVE ALREADY BEEN CONCLUDED AND WHICH DO NOT ABATE U/S.153A OF THE ACT, THAT THE ASSESSMENT WILL HAVE TO BE CONFINED TO ONL Y INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 19. THE NEXT ASPECT TO BE CONSIDERED IS AS TO WH EN RETURNS OF INCOME FILED U/S.139 OF THE ACT ARE SHOWN TO HAVE BEEN ACCEPTED WITHOUT AN INTIMATION U/S.143(1) OF THE ACT OR WITHOUT ANY NOTICE ISSUED U/S.143(2) OF THE ACT WIT HIN THE TIME LIMIT CONTEMPLATED BY 10 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 10 THE PROVISO THERETO, CAN BE SAID TO BE ASSESSMENT P ROCEEDINGS CONCLUDED THAT HAVE NOT ABATED U/S.153A OF THE ACT. SECTION 153A OF THE AC T, USES THE EXPRESSING PENDING ASSESSMENT OR REASSESSMENT'. WHEN A RETURN IS FILED AND WHEN NEITHER AN ACKNOWLEDGEMENT OR INTIMATION U/S.143(1)OF THE ACT IS ISSUED NOR A NOTICE U/S.143(2) OF THE ACT IS ISSUED WITHIN THE TIME LIMIT LAID DOWN I N THE PROVISO TO SECC.143(2) OF THE ACT, THE PROCEEDINGS INITIATED BY FILING THE RETUR N ARE CLOSED. IN THE PRESENT CASE, THE PERIOD FOR ISSUING THE NOTICE U/S 143(2) ELAPSED. T HEREFORE THE PROCESS HAS ATTAINED THE FINALITY WHICH CAN ONLY BE ASSAILED U/S 148 OR 263 OF THE ACT. IT CAN THUS BE CONCLUDED THAT MAKING OF AN ADDITION IN AN ASSESSMENT UNDER S ECTION 153A OF THE ACT, WITHOUT THE BACKING OF INCRIMINATING MATERIAL, IS UNSUSTAINABLE EVEN IN A CASE WHERE THE ORIGINAL ASSESSMENT ON THE DATE OF SEARCH STOOD COMPLETED BY ABSENCE OF ISSUE OF INTIMATION UNDER SECTION 143(1) OF THE ACT OR BY NOT ISSUING N OTICE U/S.143(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THE PROVISO TO SEC.143(2) O F THE ACT, RESULTS IN AN ASSESSMENT PROCEEDINGS AND WHERE SUCH ASSESSMENT PROCEEDINGS A RE COMPLETED PRIOR TO THE DATE OF SEARCH THEN THEY DO NOT ABATE IN TERMS OF THE SECON D PROVISO TO SECTION 153A(1) OF THE ACT. 20. IN THE LIGHT OF THE DISCUSSION ABOVE, OUR CO NCLUSION IS THAT IN THE PRESENT CASE, THE ISSUE DEALT WITH BY THE AO IN THE ASSESSMENT ORDER U/S.153A OF THE ACT, COULD NOT AND OUGHT NOT TO HAVE BEEN EXAMINED BY THE AO IN THE AS SESSMENT PROCEEDINGS U/S.153A OF THE ACT AS THE SAID ISSUE STOOD CONCLUDED WITH THE ASSESSEES RETURN OF INCOME BEING ACCEPTED PRIOR TO THE DATE OF SEARCH AND NO NOTICE HAVING BEEN ISSUED U/S.143(2) OF THE ACT WITHIN THE TIME LIMIT LAID DOWN IN THAT SECTION . SUCH ASSESSMENT DID NOT ABATE ON THE DATE OF SEARCH WHICH TOOK PLACE ON 17.01.2012. IN RESPECT OF ASSESSMENTS COMPLETED PRIOR TO THE DATE OF SEARCH THAT HAVE NOT ABATED, T HE SCOPE OF PROCEEDINGS U/S.153A OF THE ACT HAS TO BE CONFINED ONLY TO MATERIAL FOUND IN TH E COURSE OF SEARCH. SINCE NO MATERIAL WHATSOEVER WAS FOUND IN THE COURSE OF SEARCH, THE ADDITIONS MADE BY THE AO IN THE ORDER OF ASSESSMENT FOR BOTH THE ASSESSMENT YEARS C OULD NOT HAVE BEEN SUBJECT MATTER OF PROCEEDINGS U/.S.153A OF THE ACT. CONSEQUENTLY, TH E SAID VARIOUS ADDITIONS MADE IN THE 11 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 11 ORDERS OF ASSESSMENT OUGHT NOT TO HAVE OR COULD NOT BE MADE BY THE AO. GR.NO.1 RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ACCO RDINGLY ALLOWED. 21. IN VIEW OF THE ABOVE CONCLUSIONS, THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERITS, DO NOT REQUIRE ANY CONSIDERATIO N. 22. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT O N 03.05.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.05.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. JAI LOKENATH OIL EXTRACTION (P) LTD., THANA ROAD, GANGARAMPUR, DAKSHIN DINAPUR-733 124. 2. D.C.I.T., CENTRAL CIRCLE-XXVII, KOLKATA. 3. CIT(A)-CENTRAL-II, KOLKATA 4. C.I.T. (CENT RAL)-II, KOLKATA. 5..CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 12 IT(SS)A.188/KOL/2014 M/S. JAI LOKENATH OIL EXTRACTIONS (P)LTD. A.YR.2009-10 12