DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AJMER vs. M/S SHRI RAJLAXMI DENIM, BHILWARA

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh jes'k lh 'kekZ] ys[kk lnL; ,oa Jh fot; iky jko] U;kf;d lnL; ds le{k BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA No. 1134/JP/2018 fu/kZkj.k o"kZ@Assessment Year :2015-16 cuke Deputy Commissioner of M/s Shri Rajlaxmi Denim, Vs. Income Tax, No. 35, Badal Complex, Central Circle, Ajmer. Bhilwara. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AASCS 5931 R vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Shri B.K. Gupta (CIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri O.P. Bhateja (ITP) lquokbZ dh rkjh[k@ Date of Hearing : 18/02/2019 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 05/03/2019 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the revenue is directed against the order dated

26/7/2018 of ld. CIT(A), Ajmer for the A.Y. 2015-16. The revenue has

raised following grounds: “1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in quashing the assessment order and not considering the facts that the assessee filed return with the ITO, Ward-3, Bhilwara and the same ITO issued notice u/s 143(2). Therefore, notice u/s 143(2) was issued validly by the ITO, Ward-3, Bhilwara. Subsequent to issue of notice case was transferred to ITO, Ward-4, Bhilwara who has ultimately passed the order u/s 143(3) of the I.T. Act. 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in quashing the assessment order and in not

ITA 1134/JP/2018_ 2 DCIT Vs. Shri Rajlaxmi Denim

considering the provisions of section 124(3) of the II Act wherein it is provided that if an assessee questions the jurisdiction of an assessing officer he has to raise objection within one month of the issue of notice u/s 143(2). However, no such objection was raised by the assessee and assessee filed reply to questionnaire before the ITO, Ward-3, Bhilwara on 26.05.2016 and before the ITO, Ward-4, Bhilwara is on 27.11.2017.

ITA 1134/JP/2018_ 3 DCIT Vs. Shri Rajlaxmi Denim

the absence of any notice u/s 143(2) of the Income tax Act issued by ITO, Ward-4, Bhilwara.

The appellant crave, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

total income of Rs. NIL. The said return was filed by the assessee with

the ITO, Ward (3), Bhilwara, accordingly, a notice U/s 143(2) of the

Income Tax Act, 1961 (in short the Act) was issued by the ITO, Ward

(3), Bhilwara on 10/5/2016. A notice U/s 142(1) of the Act was also

issued on 11/5/2016 fixing the hearing of scrutiny assessment on

26/5/2016. In response to the notice, the assessee filed written

submissions on 26/5/2016 thereafter the case was transferred to the

jurisdiction of Assessing Officer i.e. ITO, Ward (4), Bhilwara, who after

issuing the notice U/s 142(1) of the Act completed the assessment U/s

143(3) of the Act on 29/12/2017. Whereby an addition of Rs. 20.50

crores was made U/s 68 of the Act on account of share premium

received by the assessee company.

the ld. CIT(A) and also raised an objection against the validity of the

assessment for want of notice U/s 143(2) of the Act issued by the second

A.O. i.e. ITO, ward (4), Bhilwara who has completed the assessment.

ITA 1134/JP/2018_ 4 DCIT Vs. Shri Rajlaxmi Denim

The ld. CIT(A) accepted the contention of the assessee and quashed the

assessment by holding that in absence of notice issued U/s 143(2) of the

Act, the impugned assessment is illegal. The other grounds raised by the

assessee were not adjudicated by the ld. CIT(A). Thus, the grievance of

the revenue is that once the assessee has filed return of income with the

ITO Ward (3), Bhilwara who has duly issued notice U/s 143(2) of the Act

and was acknowledged by the assessee by filing the details and written

submissions then in absence of any objection raised by the assessee

against the jurisdiction of the ITO Ward (3), Bhilwara, the subsequent

transfer of the jurisdiction from one ITO to another ITO cannot be

challenged by the assessee. Therefore, the assessment proceedings were

transferred from one ITO to another ITO at the stage where it was

pending before the first ITO and it would resume from that very stage as

it was pending at the time of transfer.

this point as under:

(i) Abhishek Jain Vs ITO (2018) 94 taxmann.com 355 (Del) (ii) Elite Pharmaceuticals Vs. ITO (2016) 73 taxmann.com 69 (Cal). (iii) Bal Chand Jain & Sons Vs. DCIT (2014) 41 taxmann.com 524 (Allahabad)

ITA 1134/JP/2018_ 5 DCIT Vs. Shri Rajlaxmi Denim

(iv) Karandhai Tamil Sangam Vs Joint/Addl.CIT (2018) 97 taxmann.com 50 (Chennai Trib). The ld CIT-Dr has also advanced the arguments at length on the point

that once the notice U/s 143(2) of the Act was issued by the ITO Ward

(3), Bhilwara then no second notice was required to be issued by the ITO

Ward (4), Bhilwara on transfer of jurisdiction.

contention as raised before the ld. CIT(A) and submitted that when the

ITO Ward (3), Bhilwara was not having the jurisdiction over the assessee

at the time of issuing notice U/s 143(2) of the Act then the assessment

completed by the ITO Ward (4), Bhilwara without issuing the fresh notice

U/s 143(2) of the Act is invalid for want of jurisdiction. In support of his

contention, he has relied upon the series of decisions on the point that

an assessment completed without issuing notice U/s 143(2) of the Act is

invalid.

material on record. On carefully perusal of the record, we note that there

was a search and seizure action U/s 132 of the Act in the case of the

assessee on 27/8/2017. This fact is revealed by the revenue in grounds

No. 5 and 6 raised in this appeal. The assessee has not disputed the fact

of search and seizure action U/s 132 of the Act on 27/8/2017. It is also

ITA 1134/JP/2018_ 6 DCIT Vs. Shri Rajlaxmi Denim

not in dispute that on the date of search on 27/8/2017, the assessment

for the year under consideration was pending. Though, the validity of the

assessment is challenged by the assessee, however, once there is a

search U/s 132 of the Act and on the date of search i.e. on 27/8/2017,

the assessment proceedings for the year under consideration were

pending and assessment was not completed then in view of the provisions of Section 153A read with 2nd proviso to sub-section (1) of

Section 153A of the Act any assessment pending on the date of initiation

of search U/s 132 or requisition U/s 132A of the Act, as the case may be,

shall abate. For ready reference, we quote Section 153A of the Act as

under:

153A . 21[(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person 22 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 furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years 23[and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, 22so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;

(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 23[and for the relevant assessment year or years] : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years 23[and for the relevant assessment year or years] :

ITA 1134/JP/2018_ 7 DCIT Vs. Shri Rajlaxmi Denim Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years 23[and for the relevant assessment year or years] referred to in this 24[sub-section] pending25 on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate25 : 26[Provided also that the Central Government may by rules27 made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made 28[and for the relevant assessment year or years]:] 28[Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;

(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and

(c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.

Explanation 1.—For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.—For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.] 29[(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the 30[Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.—For the removal of doubts, it is hereby declared that,—

ITA 1134/JP/2018_ 8 DCIT Vs. Shri Rajlaxmi Denim

(i) save as otherwise provided in this section, section 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 respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.

The ld CIT-DR has filed a letter of the Assessing Officer whereby it has

been stated that the proceedings U/s 153A of the Act has been initiated

by issuing the notice on 31/10/2018 and therefore, the assessment

proceedings U/s 153A of the Act are pending before the Assessing

Officer. The ld counsel for the assessee has not disputed all these facts

of initiation of proceedings U/s 153A and the assessment proceedings in

pursuant to the search are pending before the Assessing Officer.

Therefore, the question arises whether the assessment completed by the

Assessing Officer after the search and seizure action U/s 132 of the Act

on 27/8/2017 will survive when the said pending assessment was already

got abated by virtue of the search. This issue was initially considered by

the Hon’ble Delhi High Court in the case of CIT Vs. Anil Kumar Bhatia 352

ITR 493 and held in para 22 as under:

“22. In the light of our discussion, we find it difficult to uphold the view of the Tribunal expressed in Para 9.6 of its order that since the returns of income filed by the assessee for all the six years under consideration before the search took place were processed under Section 143(1)(a) of the Act, the provisions of Section 153A cannot be invoked. The Assessing Officer has the power under Section 153A to make assessment for all the six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee filed returns before the date of search which stood processed under Section 143(1)(a). The other reason given by the Tribunal in the same

ITA 1134/JP/2018_ 9 DCIT Vs. Shri Rajlaxmi Denim

paragraph of its order that no material was found during the search is factually unsustainable since the entire case and arguments before the departmental authorities as well as the Tribunal had proceeded on the basis that the document embodying the transaction with Mohini Sharma was recovered from the assessee. While summarizing the contentions of the assessee in Paragraph 5 of its order, the Tribunal itself has referred to the contention that no document much less incriminating material was found during the search of the assessee's premises, except one unsigned undertaking for loan. Again in Paragraph 10 of its order, while dealing with the assessee's contention against the addition of Rs. 1,50,000/- being unexplained loan given to Mohini Sharma, the Tribunal has stated that it has analyzed "the subject document carefully, recovered from search" suggesting that the document was recovered during the search from the assessee. The Tribunal has even proceeded to delete the addition of Rs. 1,50,000/- as well as the notional interest on merits, holding that the document was unsigned, that Mohini Sharma was not examined by the income tax authorities and there was no corroboration of the unsigned document. If it is not in dispute that the document was found in the course of the search of the assessee, then Section 153A is triggered. Once the Section is triggered, it appears mandatory for the Assessing Officer to issue notices under Section 153A calling upon the assessee to file returns for the six assessment years prior to the year in which the search took place. There are contradictions in the order of the Tribunal. We are unable to appreciate how the Tribunal can say in Para 9.6 that no material was found during the search and at the same time in Paragraph 10 deal with the merits of the additions based on the document recovered during the search which allegedly contain the loan transaction with Mohini Sharma. Therefore, both the reasons given by the Tribunal for holding that the assessments made under Section 153A were bad in law do not commend themselves to us. The result is that the first substantial question of law is answered in the negative, in favour of the Revenue and against the assessee.”

Therefore, it is incumbent upon the Assessing Officer to issue notice U/s

153A of the Act for all the six assessment years falling within the period

as prescribed U/s 153A of the Act and thereafter has to determine the

total income of the assessee in whose case a search or requisition has

been initiated. The Hon'ble High Court has held in specific terms that it

has been provided in second proviso to sub-section (1) of Section 153A

ITA 1134/JP/2018_ 10 DCIT Vs. Shri Rajlaxmi Denim

that any proceedings for the assessment or reassessment of the

assessee which are pending on the date of initiation of search or making

requisition shall abate. Therefore, the Assessing Officer is empowered to

assess or reassess the total income of six assessment years relevant to

the immediately preceding assessment year relevant to the previous year

in which the search or requisition was made. The term assess in Section

153A is used in respect of the assessments which are pending as on the

date of search and got abated whereas the term reassess is used in

respect of those assessment years where the assessment was already

completed and was not pending as on the date of search, therefore, in

order to ensure that there cannot be more than one assessment order

for the same assessment year determining total income of the assessee

in respect of six assessment years only one determination of total income

has been provided U/s 153A of the Act. The Hon’ble Jurisdictional High

Court in the case of Jai Steel (India), Jodhpur Vs. ACIT 219 Taxman 223

had also occasion to consider this issue in para 14 to 24 as under:

ITA 1134/JP/2018_ 11 DCIT Vs. Shri Rajlaxmi Denim

(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed 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 such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous 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 such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [referred to in this sub-section] pending 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: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in case where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand 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 effect, if such order of annulment is set aside. Explanation. - For the removal of doubts, it is hereby declared that— (i) save as otherwise provided in this section, section 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 respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 15. A plain reading of the above provision would reveal that if a search or requisition is initiated after 31.05.2003, the AO is under an obligation to issue notice to such person, who has been subjected to search/requisition to furnish the return of income of six years

ITA 1134/JP/2018_ 12 DCIT Vs. Shri Rajlaxmi Denim

immediately preceding the year of search. The AO is then required to assess or reassess total income of the said six years and, out of the six years, if any assessment or reassessment is pending on the date of initiation of the search, the same would abate i.e. pending proceedings qua the said assessment year shall not proceed thereafter and the assessment has to be made under Section 153A(1)(b) of the Act read with the first proviso thereunder. 16. Further provisions have been made contemplating a situation where an assessment made under sub-section (1) is annulled in appeal or other legal proceedings. The Section starts with a non obstante clause, which removes the restrictions upon the AO from assuming jurisdiction to reopen the assessment under Sections 147, 148 and 151 etc. 17. Prior to introduction of Sections 153A to 153C, Chapter XIVB of the Act took care of the assessments to be made in cases of search and seizure, which were called 'block assessment', whereby, a single assessment was required to be in respect of a period of block of ten years prior to the assessment year, in which, the search was made. After the introduction of Sections 153A to 153C, a single block assessment concept has been given a go bye and now the AO has been given the power to assess or reassess the 'total income' of the six years in question in separate assessment orders. 18. To consider the rival submissions made at the Bar in the context of the present case and the substantial question of law framed, the scope of 'assessment and reassessment of total income' under Section 153A(1)(b) and the first and second proviso have to be considered. Further, for answering the above issues, guidance will have to be sought from Section 132(1) of the Act, as Section 153A of the Act cannot be read in isolation, inasmuch as, the same is triggered only on account of any search/requisition under Sections 132 or 132A of the Act. If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and, found in the course of search, such books of account or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of Section 153A of the Act. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of Sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. 19. The underline purpose of making assessment of total income under Section 153A of the Act is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, inasmuch as, once a assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of Section 153A a return is filed and the AO is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under Section 153A of the Act would be the assessment for the said year.

ITA 1134/JP/2018_ 13 DCIT Vs. Shri Rajlaxmi Denim 20. The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been 'completed' and assessment orders have been passed determining the assessee's total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessments already stands completed, the AO can reopen the assessments or reassessments already made without following the provisions of Sections 147, 148 and 151 of the Act and determine the total income of the assessee. 21. The argument raised by the counsel for the appellant to the effect that once a notice under Section 153A of the Act is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. 22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:— "19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which 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 been given the power to assess or reassess the 'total income' of the six assessment years in

ITA 1134/JP/2018_ 14 DCIT Vs. Shri Rajlaxmi Denim

question in separate assessment orders. 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 income would be brought to tax. 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 to the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub-Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income

ITA 1134/JP/2018_ 15 DCIT Vs. Shri Rajlaxmi Denim

of the assessee in which the undisclosed income would also be included, but in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, 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 orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made." (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. Thus, the Hon'ble High Court has concurred with the view of Hon’ble

Delhi High Court in the case of CIT Vs. Anil Kumar Bhatia (supra) and

held that the assessment or reassessment which stand abated in terms

of second proviso to Section 153A of the Act, the Assessing Officer acts

in his original jurisdiction for which the assessment has to be made. In

other words the jurisdiction of the Assessing Officer U/s 153A of the Act

in respect of the assessments which were pending as on the date of

search would be as his original jurisdiction for framing the regular

ITA 1134/JP/2018_ 16 DCIT Vs. Shri Rajlaxmi Denim

assessment and not as a reassessment. The only consequence of the

search and seizure action U/s 132 of the Act in respect of assessment

pending on the date of search is that the pending assessment shall stand

abated and there cannot be two assessment orders. The second proviso

also makes it clear that the assessment or reassessment if any relating to

six assessment years referred into in sub-section (1) of Section 153A of

the Act on the date of initiation of search U/s 132 or requisition U/s 132A

of the Act, as the case may be, shall abate and as per sub-section (2) of

Section 153A of the Act if any proceedings or any order of assessment or

reassessment made U/s 153A of the Act is annulled in appeal or any

other legal proceedings then the assessment or reassessment relating to

any assessment year which has abated under the second proviso would

stand revive. Thus, any proceedings of assessment or reassessment

falling within six years prior to the search or acquisition stand abated, the

total income of the assessee is required to be determined U/s 153A of

the Act and not under the proceedings U/s 143(3) which already stood

abated by virtue of search.

6.1 The Hon’ble Delhi High Court has again considered the issue of

abatement of pending assessments by virtue of search and seizure action

U/s 132 of the Act in the case of CIT Vs. Kabul Chawla 380 ITR 573, the

ITA 1134/JP/2018_ 17 DCIT Vs. Shri Rajlaxmi Denim

legal proposition laid down by the Hon'ble High Court has been

summarized in para 37 as under:

ITA 1134/JP/2018_ 18 DCIT Vs. Shri Rajlaxmi Denim

not produced or not already disclosed or made known in the course of original assessment.

Thus, it is a consistent view taken by the Hon’ble Delhi High Court as

well as the Hon’ble Jurisdictional High Court that there will be only one

assessment order in respect of each of six assessment years in which

both the disclosed and undisclosed income would be brought to tax. The

assessment or reassessment pending on the date of search shall abate

and total income for such assessment years will have to be computed by

the Assessing Officer as a fresh exercise. In the case in hand when the

assessment proceedings were pending on the date of search on

27/8/2017 then the said proceedings initiated U/s 143(3) stood abated

by virtue of search U/s 132(2) of the Act and the impugned order passed

by the A.O. is nonest. Consequently the order passed by the ld. CIT(A)

also becomes infructuous when the assessment proceedings itself got

abated and the only course of determination of the total income of the

assessee is in the proceedings initiated U/s 153A of the Act. We further

note that neither the assessee nor the Assessing Officer has brought this

fact to notice of ld. CIT(A) that a search and seizure action U/s 132 of

the Act was carried out in the case of the assessee during the pendency

of the assessment proceedings. Therefore, the impugned order passed

by the Assessing Officer as well as the ld. CIT(A) would otherwise not

ITA 1134/JP/2018_ 19 DCIT Vs. Shri Rajlaxmi Denim survive being nonest. Accordingly, the total income of the assessee

would be determined in the proceedings initiated U/s 153A of the Act and

there would be no consequence of the proceedings before us. Since the

order of the ld. CIT(A) is not valid as the assessment proceedings itself

stood abated and the question of validity of the assessment for want of

notice U/s 143(2) of the Act does not arise. Accordingly, we set aside the

order of the ld. CIT(A) as well as the assessment order passed by the

Assessing Officer.

Order pronounced in the open court on 05th March, 2019.

Sd/- Sd/- ¼jes'k lh 'kekZ½ ¼fot; iky jko½ (RAMESH C SHARMA) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 05th March, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The DCIT, Central Circle, Ajmer. 1. izR;FkhZ@ The Respondent- M/s Shri Rajlaxmi Denim, Bhilwara. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 1134/JP/2018) 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत