Case Law Details
It is held that the Assessing Officer while framing the assessment under Section 153A of the Act for the block period may make addition considering the incriminating material found for the year under consideration only which was collected during the search.
[1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal Ahmedabad “C” Bench (hereinafter referred to as “the learned tribunal”) dated 31/05/2016 in IT(SS)A No.341/AHD/2011 for the Assessment Year 2004-05, revenue has preferred the present Tax Appeal with the following proposed questions of law;
(a) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the scope of Section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income, that comes to the notice of the Assessing Officer?
(b) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in limiting the scope of Section 153A only to undisclosed income when as per the Section the Assessing Officer has to asses the total income of the six Assessment Year?
[2.0] We have heard Shri Manish R. Bhatt, learned Senior Advocate appearing on behalf of the revenue. The questions proposed in the present Appeal is squarely covered against the revenue in light of the decision of the Division Bench of this Court in the case of Principal Commissioner of Income Tax-1 Vs. Devangi Alias Rupa rendered in Tax Appeal Nos.54/2017 to 57/2017 by which with respect to the other assessee in whose case on the basis of the very search the additions were made under Section 153A of the Income Tax Act, which came to be deleted by the learned tribunal. Considering the decision of the Delhi High Court in the case of CIT Vs. Kabul Chawla reported in [2016] 380 ITR 573 (Delhi) as well as another decision of the Division Bench of this Court in the case of Principal Commissioner of Income Tax -4 Vs. Saumya Construction Pvt. rendered in Tax Appeal No.24/2016, it is held that the Assessing Officer while framing the assessment under Section 153A of the Act for the block period may make addition considering the incriminating material found for the year under consideration only which was collected during the search. It is required to be noted that while holding so the Division Bench has considered in paragraph nos.15, 16 and 19 in the case of Saumya Construction Pvt. (Supra) as under;
“15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person, requiring him to furnish the 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 and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the subsection pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Subsection (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under subsection (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding.
16. Section 153A bears the heading Assessment in case of search or requisition. It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of subsection (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act.
19.On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of Incometax1 v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.”
[3.0] At this stage, it is required to be noted that the aforesaid Tax Appeal Nos.54/2017 to 57/2017 were arising out of the very impugned judgment and order impugned in the present Appeal but with respect to other assessee and for different Assessment Years. However, the question remains the same.
[4.0] In view of the above and for the reasons stated hereinabove, more particularly, for the reasons stated in the Tax Appeal Nos.54/2017 to 57/2017, the present Appeal deserves to be dismissed and is accordingly dismissed.
