Case Law Details
CA Sandeep Kanoi
Where a search is initiated u/s 132 of the Act etc., the A.O shall issue a notice requiring the person searched etc. to furnish his return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Once such returns are filed, the Assessing Officer has to assess or reassess the total income of such assessment years. The decisive words used in the provisions are to ‘assessee or reassess the total income’. Thus, it is manifest that a duty has been cast on the Assessing Officer to determine the ‘total income’ of the assessee for such six assessment years. Obviously ‘total income’ refers to the sum total of income in respect of which a person is assessable. It covers not only the income emanating from declared sources or any material placed before the Assessing Officer but from all sources including the undeclared ones, or unplaced material before the AO. The position which emerges on a reading of clauses (a) or (b) of sec. 153A(1) along with the first proviso is that the Assessing Officer is supposed to determine the ‘total income’ of the assessee in respect of the relevant six assessment years. Second proviso to sec. 153A(1) eclipses the afore discussed determination of ‘total income’. Such proviso mandates that any pending assessment or reassessment relating to any assessment year falling within the period of six years referred to in sub-sec. (1) on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. The effect of the second proviso is that any pending assessment or reassessment on the date of search for any assessment year falling within the period of relevant six assessment years shall abate and a fresh determination of ‘total income would be required. Now a question arises that what is the effect of second proviso on the assessments for any assessment years falling within the period of six assessment years, which are not pending on the date of search. We are unable to accept the contention urged on behalf of the Revenue for the reason that if both the pending and completed assessment were to be taken on same pedestal, then there was no need to enshrine second proviso to sec. 153A(1) providing that the pending assessments within the period of six assessment years shall abate. The effect of the second proviso in the entire setting of section is that the assessment for any assessment year which is not pending as on the date of search cannot include an item of income for which no incriminating material was found. Our view finds support from para no. 11 of the judgment in Chetan Das Lachman Das (supra), in which it has been held that : “Obviously an assessment has to be made under this section only on the basis of seized material.”
This brings us to the next contention put forth on behalf of the Revenue that since there is no specific mention of correlating addition with the incriminating material found during the course of search, the tribunal should not venture to make such a provision in the Act. We find this contention as bereft of merits. The major reason for our this decision is that we are not trying to legislate by inserting such a provision in the language of section 153A. In fact, the special bench of the tribunal in holding so has interpreted the provision in its existing form in this way so as to prohibit the making of any addition in the assessment for those years the assessment of which was not pending on the date of search. This view has been followed in several cases including Kabul Chawla (ITA No. 779/D/2013), to which one of us, namely ,the AM is party, Thus, we do not find any merit in the contention raised on behalf of the Revenue that the tribunal should not legislate. As it is a case of interpretation of the provision and not that of legislating, we find no force in the contention advanced on behalf of the Revenue. The same is jettisoned.
The next judgment relied on by the ld. AR is Anil Kumar Bhatia (supra). In that case, the Hon’ble High Court held that even if assessment order had already been passed in respect of one or any of the six relevant assessment years either u/s 143(1)(a) or 143(3) prior to the initiation of search, still the AO is empowered to reopen those proceedings u/s 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during the search. It is clear that the Hon’ble High Court dealt with a situation in which some incriminating material was found in respect of a non-pending assessment. It was in that background that the Hon’ble High Court held that sec. 153A applies if incriminating material is found even if assessments are completed. The question as to whether any addition can be made in respect of completed assessments when no incriminating material was found, was apparently left open. However, we find that there are sufficient indirect hints given by the Hon’ble Delhi High Court in the case of Anil Kumar Bhatia (supra) about not making of any addition in respect of an assessment year for which the assessment is already completed unless some incriminating material is found during the course of search. This can be seen from the following observations of the Hon’ble High Court :-
“20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. …”
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