DCIT, CC-1(3), Kolkata, Kolkata V. M/S. Bonai Industrial Company Ltd., Kolkata

ITSSA 35/KOL/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3072 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 08-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2015
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Search and seizure; Block assessment
• Section: 43B; 143(3); 153A; 148; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.(SS)A NO. 35/KOL/ 2015 ASSESSMENT YEAR : 2010-1 1 D.C.I.T., CENTRAL CIRCLE-1(3), -VS.- M/S. BONAI INDUSTRIAL COMPANY KOLKATA LTD.KOLKATA [PAN : AAACB 9156 F] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI G.MALLIKA RJUNA, CIT(DR) FOR THE RESPONDENT : SHRI SUBASH AGARWAL, ADV OCATE DATE OF HEARING : 08.03.2017. DATE OF PRONOUNCEMENT : 22.03.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 11.12.2014 OF C.I.T.(A)-20, KOLKATA RELATING TO A.Y.2010-11. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) IS ERRED IN DELETING THE ADDITIONS WITHOUT GOING INTO THE MERIT OF THE A DDITIONS. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER OF THE CIT(A) IS ERRONEOUS AS BECAUSE IT IGNORED THE CASE LAWS WHIC H ARE IN FAVOUR OF ADDITION U/S 153A WITHOUT THE MATERIALS SEIZED IN COURSE OF SEAR CH & SEIZURE OPERATION. (3) THE APPELLANT CRAVE THE LEAVE TO MAKE ANY ADDIT ION, ALTERATION, MODIFICATION ETC OF GROUND OR GROUNDS OR IN COURSE OF APPELLATE PROC EEDINGS. 3. THE ASSESSEE IS A COMPANY. IT CARRIED ON THE BUS INESS OF MINING DURING THE RELEVANT PREVIOUS YEAR. THERE WAS A SEARCH AND SEIZURE OPERA TION CARRIED OUT U/S 132 OF THE INCOME TAX ACT, 1961 (ACT) IN THE RUNGTA GROUP OF C ASES ON 06.02.2012. THE ASSESSEE 2 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 2 WAS ALSO SEARCHED AS IT WAS A PART OF THE SAID GROU P. SO FAR AS A.Y.2010-11 IS CONCERNED THE ASSESSEE FILED RETURN OF INCOME ON 04.09.2010 D ECLARING TOTAL INCOME OF RS.189,54,33,075/-. NO ORDER OF ASSESSMENT WAS PASS ED U/S 143(3) OF THE ACT. THE RETURN WAS ACCEPTED U/S 143(1) OF THE ACT. AFTER TH E SEARCH AND SEIZURE OPERATION ON 06.02.2012 NOTICE U/S 153A OF THE ACT DATED 16.08.2 013 WAS ISSUED TO THE ASSESSEE CALLING UPON THE ASSESSEE TO FILE THE RETURN OF INC OME U/S 153A OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME ON 30.09.2013 DECLARING THE SAME INCOME AS WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 04.09.201 0 U/S 139(1) OF THE ACT . 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO WENT INTO THE QUESTION AS TO WHETHER THE PAYMENT MADE BY THE ASSESSED DURING THE PREVIOU S YEAR TO M/S. RUNGTA MINES LTD., M/S. FEEGRADE & CO.(P)LTD AND M/S. RUNGTA SONS PVT. LTD. , TOWARDS WAGON FACILITATING CHARGES UNDER THE WAGON INVESTMENT SCH EME OF THE RAILWAYS ATTRACTED THE PROVISION OF TAX DEDUCTION AT SOURCE (TDS) AND SINC E THE ASSESSEE DID NOT DEDUCT TAX ON THE AFORESAID PAYMENTS WHETHER THE SAME SHOULD BE D ISALLOWED U/S 40(A)(IA) OF THE ACT. THE AO ULTIMATELY CAME TO THE CONCLUSION THAT THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE ATTRACTED AND ACCORDINGLY DISALLOWED THE P AYMENTS MADE BY THE ASSESSEE TOWARDS WAGON FACILITATING CHARGES U/S 40(A)(IA) OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AS FOLLOWS :- TOTAL INCOME IS COMPUTED AS UNDER : RS. INCOME AS DECLARED IN COMPUTATION OF INCOME 189, 54,33,076 ADD: (I) DISALLOWANCE U/S 40(A)(IA) (AS DISCUSSED) 41,00,000 (II) DISALLOWANCE U/S 43B (AS DISCUSSED) 18,782 41,18,782 TOTAL INCOME 189,95,51,858 TOTAL INCOME R/O 189,95,51,860 THE ADDITION WITH REGARD TO SECTION 43B OF THE ACT WAS FOR NON- PAYMENT OF SERVICE TAX. 3 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 3 5. IT CAN BE SEEN FROM THE ADDITIONS MADE BY THE ABOVE THAT ADDITIONS WERE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND IN THE COURSE O F SEARCH AND SEIZURE BUT WAS ON THE BASIS OF THE RECORDS OF ASSESSMENT ALREADY EXISTING . IN THIS BACKGROUND THE ASSESSEE CONTENDED BEFORE CIT(A) THAT BOTH THE AFORESAID ADD ITIONS MADE IN THE PROCEEDINGS U/S 153A OF THE ACT CANNOT BE SUSTAINED AS THE ASSESSME NT FOR THE RELEVANT ASSESSMENT YEAR HAD ALREADY BEEN CONCLUDED BY THE FACT THAT NO NOTI CE U/S 143(2) WAS ISSUED WITHIN THE TIME CONTEMPLATED IN LAW AFTER THE ASSESSEE FILED I TS RETURN OF INCOME U/S 139(1) OF THE ACT ON 04.09.2010. IT WAS SUBMITTED THAT THE ASSESS MENT PROCEEDINGS THAT BECAME FINAL PRIOR TO THE DATE OF SEARCH CANNOT BE DISTURBED. I T WAS REITERATED THAT IN RESPECT OF AN UNABATED ASSESSMENT, NO ADDITION U/S 153A OF THE AC T CAN BE MADE WITHOUT THAT THERE BEING INCRIMINATING DOCUMENTS FOUND IN THE SEARCH. THE ABOVE ARGUMENTS OF THE ASSESSEE FOUND FAVOUR WITH CIT(A) AND HE HELD THAT THE IMPUGNED ADDITIONS MADE WERE NOT ON THE BASIS OF MATERIALS FOUND DURING THE COUR SE OF SEARCH AND THEREFORE THE ADDITIONS CANNOT BE SUSTAINED. EVEN ON MERITS THE C IT(A) FOUND THAT THE ITAT CUTTACK BENCH IN ASSESSEES OWN CASE FOR A.Y.2008-09 IN ITA NO.43/CTK/2012 ORDER DATED 25.06.2012 HELD THAT WAGON FACILITATING CHARGES ARE NOT IN THE NATURE OF RENT WITHIN THE MEANING OF SECTION 194I OF THE ACT AND THEREFORE TH ERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. THE CIT(A) ALSO FOUND THAT THE ADDITION U/S 43B AS UNPAID SERVICE TAX WAS ALSO DELETED BY ITAT IN THE ORDER C ITED ABOVE. FOLLOWING THE DECISION IN ASSESSEES OWN CASE, THE CIT(A) DELETED THE ADDITIO NS MADE BY AO ON MERITS ALSO. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE BEFORE US THAT WITH RESPECT TO THE ADDITIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S.153 A OF THE ACT, THERE WAS NO INCRIMINATING MATERIAL FOUND AT THE TIME OF SEARCH AND THAT THE AO WHILE CONCLUDING THE 4 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 4 ASSESSMENT U/S.153A OF THE ACT DEALT WITH ISSUES IN THE COURSE OF VERIFICATION OF CLAIMS MADE IN THE RETURN OF INCOME FILED IN RESPONSE TO T HE NOTICE U/S.153A OF THE ACT. IT IS ALSO NOT DISPUTED THAT WITH REFERENCE TO THE ORIGIN AL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT ON 4.9.2010 FOR RELEVANT AY 2010- 11, NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED WITHIN THE TIME LIMIT PRESCRI BED U/S.143(2) OF THE ACT AND, THEREFORE, SUCH ASSESSMENT PROCEEDINGS STOOD COMPLE TED AND THAT IN ANY CASE ON THE DATE OF SEARCH I.E. ON 26.3.2008, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEARS 2010-11 WAS NOT PENDING. THEREFORE THE ASSESSMENT U/S.143(1 ) OF THE ACT, FOR THIS AY DID NOT ABATE IN TERMS OF THE SECOND PROVISO TO SECTION 153 A(1) OF THE ACT. IT IS THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER COULD NOT HAVE BEEN MADE IN THE IMPUGNED AS SESSMENT PROCEEDINGS AS THEY ARE NOT BASED ON ANY MATERIAL SEIZED OR FOUND DURING TH E COURSE OF SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE. THE LEARNED DR HAS HOWEV ER 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. DEPARTMEN TAL REPRESENTATIVE THE PROVISIONS OF SECTION 153A EMPOWER THE ASSESSING OFFICER TO ASSES S OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH A SEARCH WAS CONDUCTED AND, THEREFORE, UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER WAS DUTY BOUND TO ASSESS OR REASSESS TOTAL INCOME OF SUCH ASSESSMENT YEARS, AND, THEREFORE, THE IMPUG NED ADDITIONS WERE JUSTIFIABLY MADE IN THE ASSESSMENT MADE UNDER SECTION 143(3) R.W.S. 153A(1) OF THE ACT. 8. IN SUPPORT OF HIS CONTENTION AS ABOVE, THE LEA RNED 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). 5 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 5 9. THE LEARNED DR SUBMITTED THAT THE HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DELHI) AFTER EXAMINING THE SCHEME OF SEC.153A OF THE ACT HAS HELD THAT UNDER THE PROVISI ONS OF SECTION 153A OF THE ACT, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO THE A SSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH OR REQUISITION WAS MADE. HE IS ALSO EMPOWERED TO ASSESS OR REASSESS TH E 'TOTAL INCOME' OF THE AFORESAID YEARS. UNDER SECTION 153A, HOWEVER, THE ASSESSING O FFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX AS SESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONL Y ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. ACCORDING TO HIM T HEREFORE IN ASSESSMENT COMPLETED U/S.153A OF THE ACT, THE AO CAN BRING TO TAX INCOME WHICH ESCAPES ASSESSMENT WHICH NEED NOT BE RESTRICTED TO EVIDENCE FOUND AS A RESUL T OF SEARCH. HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT COMPANY VS. DCIT (2014) 114 DTR 162 ( KARN) WHEREIN THE HONBLE KARNATAKA HIGH COURT HELD THAT EVEN IF AN ASSESSMEN T ORDER IS PASSED UNDER SECTION 143(1) OR 143(3) OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NO TE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. AFTER SUCH REOPENING O F THE ASSESSMENT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTA L INCOME OF THE AFORESAID YEARS. HE DREW OUR ATTENTION TO THE FOLLOWING OBSERVATIONS OF THE HONBLE KARNATAKA HIGH COURT: ..THE CONDITION PRECEDENT FOR APPLICATION OF SECT ION 153A IS THERE SHOULD BE A SEARCH UNDER SECTION 132. INITIATION OF PROCEEDINGS UNDER SECTION 153A IS NOT DEPENDENT ON ANY UNDISCLOSED INCOME BEING UNEARTHED DURING SUCH SEARCH. THE PROVISO TO THE AFORESAID SECTION MAKES IT CLEAR THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESS MENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. IF ANY ASSESSMENT PROCEEDINGS ARE PENDING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THE A FORESAID SUB-SECTION ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132, THE SAID PROCEEDING SHALL ABATE. IF 6 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 6 SUCH PROCEEDINGS ARE ALREADY CONCLUDED BY THE ASSES SING OFFICER BY INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE LEGAL EFFECT IS THE ASSESSMENT GETS REOPENED. THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSESSING OFFICER HAS BE EN GIVEN THE POWER TO ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMEN T YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THE ASSESSING OFFICER IS EMPOWER ED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING N OTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. HE HAS BEEN EN TRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME OF AN ASSESSEE WHO SE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETT ERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INC OME WOULD BE BROUGHT TO TAX. WHEN ONCE THE PROCEEDINGS ARE INITIATED UNDER SECTI ON 153A OF THE ACT, THE LEGAL EFFECT IS EVEN IN CASE WHERE THE ASSESSMENT O RDER IS PASSED IT STANDS REOPENED. IN THE EYE OF LAW THERE IS NO ORDER OF AS SESSMENT. RE-OPENED MEANS TO DEAL WITH OR BEGIN WITH AGAIN. IT MEANS TH E ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS. ONCE THE ASSESSMENT IS REOPENED, THE ASSESSING AUTHORITY CAN TAKE NOTE OF THE INCOME DISCLOSED IN THE EARLIER RETURN, ANY UNDISCLOSED IN COME FOUND DURING SEARCH OR AND ALSO ANY OTHER INCOME WHICH IS NOT DISCLOSED IN THE EARLIER RETURN OR WHICH IS NOT UNEARTHENED DURING THE SEARCH, IN ORDE R TO FIND OUT WHAT IS THE TOTAL INCOME OF EACH YEAR AND THEN PASS THE ASSES SMENT ORDER . (EMPHASIS SUPPLIED) THEREFORE ACCORDING TO THE LEARNED DR THE AO IN AN ASSESSMENT U/S.153A OF THE ACT CAN BRING TO TAX ANY INCOME AND THERE ARE NO FETTERS ON HIS POWERS VIS--VIS A COMPLETED UNABATED ASSESSMENT U/S.143(3) OF THE ACT, THAT DET ERMINATION OF TOTAL INCOME HAS TO BE BASED ONLY ON MATERIAL FOUND IN THE COURSE OF SEARC H. HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF EN GOPAKUMAR VS. CIT 75 TAXMANN.COM 215 (KER) TAKING THE SAME VIEW AS THAT OF THE HONBLE KARNATAKA HIGH COURT. 10. 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 7 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 7 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- (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. (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APP EAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINE D IN SUB-SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATIN G TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SE CTION (1), SHALL STAND 8 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 8 REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER : PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION : FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT,- (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SEC TION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPE CT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. IT CAN BE SEEN FROM THE SECOND PROVISO TO SEC.153A( 1) OF THE ACT THAT ANY ASSESSMENT PROCEEDINGS FOR ANY OF THE SIX ASSESSMENT YEARS SET OUT IN SEC.153A (1) OF THE ACT, WHICH IS PENDING AS ON THE DATE OF INITIATION OF SE ARCH 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. 11. THE SPECIAL BENCH ITAT MUMBAI, IN THE CASE O F 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:- 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 9 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 9 132(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 IT IS THUS CLEAR FROM THE AFORESAID RULING OF THE S PECIAL BENCH THAT WHERE ASSESSMENTS HAVE ALREADY BEEN COMPLETED U/S.143(3) OF THE ACT B EFORE INITIATION OF SEARCH U/S.132 OF THE ACT, THOSE ASSESSMENTS WILL ATTAIN FINALITY. T HE EXCEPTION WOULD BE THAT IF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS WERE NOT PRODUCED IN TH E COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH OR WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY IS DISCOVERED IN THE COURSE OF SEARCH, THEN THE UNABAT ED ASSESSMENT WILL NOT ATTAIN FINALITY TO THE EXTENT OF MATERIAL FOUND IN THE COURSE OF SE ARCH WHICH WILL HAVE A BEARING ON THE CONCLUSIONS ARRIVED AT IN THE UNABATED ASSESSMENT. 12. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS EXPLAINED THE SCOPE OF UNABATED AND ABATED ASSESSME NT PROCEEDINGS AND HAS DRAWN THE FOLLOWING CONCLUSIONS: 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 T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: 10 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 10 I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDI NG THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAK ES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEAR S. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUG HT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATE RIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONL Y ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMP LETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EA CH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXIST ING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED 11 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 11 INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURS E OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STO OD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEA RCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED . 13. IT IS NOT IN DISPUTE BEFORE US THAT WITH RES PECT 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. IT IS THE PL EA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED ADDITIONS MADE BY THE AS SESSING 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. THE LEARNED DR HAS HOWEVER ARGUED THAT T HE PROVISIONS OF SECTION 153A OF THE ACT EMPOWER THE ASSESSING OFFICER TO ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH A SEARCH WAS CONDUCTED AND, THEREFORE , UNDER THESE CIRCUMSTANCES THE ASSESSING OFFICER WAS DUTY BOUND TO ASSESS OR REASS ESS TOTAL INCOME OF SUCH ASSESSMENT YEARS, AND, THEREFORE, THE IMPUGNED ADDI TIONS WERE JUSTIFIABLY MADE IN THE ASSESSMENT MADE UNDER SECTION 143(3) R.W.S. 153A(1) OF THE ACT. 14. WE ARE OF THE VIEW THAT THE PROPOSITION CANV ASSED BY THE LEARNED COUNSEL FOR THE ASSESSEE FINDS SUPPORT FROM THE VARIOUS DECISIONS C ITED BY HIM. THE PROPOSITION CANVASSED BY THE LEARNED DR IS SUPPORTED BY THE DEC ISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING (SUPRA) IN WHICH THE RULING OF THE SPECIAL BENCH IN THE CASE OF ALCARGO LOGISTICS (SUPRA) HAS NOT BEEN ACCEPTED. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTA L WAREHOUSING CORPORATION ITA NO.523/2013 JUDGMENT DATED 21.4.2015 AFTER REFERRIN G TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA ( SUPRA) AND OF THE HONBLE 12 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 12 KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING (SUPRA) HAS TAKEN THE VIEW THAT THE DECISION RENDERED BY THE SPECIAL BENCH IS TO BE FOL LOWED. IN THE SUBSEQUENT DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CAS E OF KABUL CHAWLA (SUPRA), THE VIEW EXPRESSED BY THE SPECIAL BENCH OF ITAT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS (SUPRA) HAS BEEN ACCEPTED. THERE IS NO DECISION OF THE HONBLE CALCUTTA HIGH COURT, WHICH IS THE JURISDICTIONAL HIGH COURT ON THE ISSUE . WE ARE OF THE VIEW THAT THE VIEW EXPRESSED BY THE HONBLE BOMBAY HIGH COURT AND THE HONBLE DELHI HIGH COURT HAS TO BE FOLLOWED BEING VIEWS IN FAVOUR OF THE ASSESSEE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 15. HAVING HELD THAT THE SCOPE OF THE PROCEEDING S U/S.153A IN RESPECT OF ASSESSMENT YEAR FOR WHICH ASSESSMENT HAVE ALREADY BEEN CONCLUD ED AND WHICH DO NOT ABATE U/S.153A OF THE ACT, THAT THE ASSESSMENT WILL HAVE TO BE CONFINED TO ONLY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, THE QUESTION TO BE DECIDED IS AS TO WHETHER THE PROCEEDINGS U/S.143(1) OF THE ACT CAN BE SAID TO BE ASSESSMENT PROCEEDINGS CONCLUDED THAT HAVE NOT ABATED U/S.153A OF THE ACT. SECTION 153A OF THE ACT, USES THE EXPRESSING PENDING ASSESSMENT OR REASSESSMENT'. WHEN A RETURN IS FILED AND ACKNOWLEDGEMENT OR INTIMATION ISSUED U/S.143(1), THE PROCEEDINGS INITI ATED BY FILING THE RETURN ARE CLOSED, UNLESS A NOTICE U/S 143(2) OF THE ACT IS ISSUED. IN THE PRESENT CASE, THE PERIOD FOR ISSUING THE NOTICE U/S 143(2) ELAPSED. THEREFORE TH E PROCESS HAS ATTAINED THE FINALITY WHICH CAN ONLY BE ASSAILED U/S 148 OR 263 OF THE AC T. IT CAN THUS BE CONCLUDED THAT MAKING OF AN ADDITION IN AN ASSESSMENT UNDER SECTIO N 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 UN DER SECTION 143(1) OF THE ACT, THEREBY RESULTING IN NON-ABATEMENT OF SUCH ASSESSME NT IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. 16. IN THE LIGHT OF THE DISCUSSION ABOVE, OUR CON CLUSION 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 13 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 13 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 U/S.143(1) OF THE ACT 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 U/S.143(1) OF THE ACT DID NOT ABATE ON T HE DATE OF SEARCH WHICH TOOK PLACE ON 28.3.2008. IN RESPECT OF ASSESSMENTS COMPLETED PRIO R TO THE DATE OF SEARCH THAT HAVE NOT ABATED, THE SCOPE OF PROCEEDINGS U/S.153A OF THE AC T HAS TO BE CONFINED ONLY TO MATERIAL FOUND IN THE COURSE OF SEARCH. SINCE NO MATERIAL W HATSOEVER WAS FOUND IN THE COURSE OF SEARCH, THE VARIOUS ADDITIONS MADE BY THE AO IN TH E ORDER OF ASSESSMENT COULD NOT HAVE BEEN SUBJECT MATTER OF PROCEEDINGS U/.S.153A OF THE ACT. CONSEQUENTLY, THE VARIOUS ADDITIONS MADE IN THE ORDER OF ASSESSMENT OUGHT NOT TO HAVE OR COULD NOT BE MADE BY THE AO. 17. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT S IN GROUND NO.2 RAISED BY THE REVENUE. AS FAR AS GROUND NO.1 IS CONCERNED, THE DE CISION OF ITAT CUTTACK BENCH IN ASSESSEES OWN CASE IN A.Y.2008-09 CLEARLY SUPPORTS THE CONCLUSIONS ARRIVED AT BY CIT(A). CONSEQUENTLY WE FIND NO MERITS IN THIS APPE AL BY THE REVENUE AND THEREFORE THE APPEAL BY THE REVENUE IS DISMISSED. 18. IN THE RESULT THE APPEAL BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 22.03.2017. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVA N ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22.03.2017. [RG PS] 14 IT(SS) NO.35/KOL/2015 M/S. BONAI INDUSTRIAL COMPANY LIMITED A.YR.2010-11 14 COPY OF THE ORDER FORWARDED TO: 1. M/S. BONAI INDUSTRIAL COMPANY LIMITED, 8A, EXPRE SS TOWER, 42A, SHAKESPEARE SARANI, KOLKATA-700017. 2. D.C.I.T., CENTRAL CIRCLE-1(3), KOLKATA. 3. CIT(A)-20, KOLKATA 4. C.I.T.-CENTRAL-I , KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES