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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: S/SHRI SANJAY ARORA & AMARJIT SINGH
The revenue has filed the present appeal against the order dated 21.07.2014 passed by the Commissioner of Income Tax (Appeals)-39, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2005-06. The assessee has also filed the Cross Objection.
The assessee has raised the following grounds:-
“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs.5,00,00,000/- to the income of the assessee on account of alleged unexplained cash credit. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deciding that completion of assessment u/s.143(3) r.w.s. 153A is without jurisdiction.”
The brief facts of the case are that the search operation u/s.132 of the Income Tax Act, 1961 ( in short “the Act”) was conducted on 13.10.2010 in Welspun Group of cases. The assessee company was, inter alia, covered in the said search operations. These cases were centralized in this circle. A notice u/s.153A of the Act was issued on 04.08.2011 and served upon the assessee. The assessee filed its return of income on 09.09.2011 declaring total loss to the tune of Rs.5,60,83,847/-. The income as per original return and that of return u/s.153A of the Act remained the same. Thereafter, the notice u/s.143(2) and 142(1) of the Act were issued and served upon the assessee. Thereafter by giving an CO.51/M/16 Assessment Year: 2005-06 opportunity of being heard to the assessee the income in the nature of loss of the assessee was assessed to the tune of Rs.(-)60,83,847/. Feeling aggrieved the assessee has filed the appeal before the CIT(A) who set aside the order passed u/s.143(3) r.w.s.153A of the Act. Therefore, feeling aggrieved the revenue has filed the present appeal before us.
We have heard the arguments advanced by the learned representative of the parties and perused the record. The learned representative of the revenue has argued that the CIT(A) was erred in declaring the assessment u/s.143(3) r.w.s.153A of the Act without jurisdiction and was also erred in deleting the addition made by the Assessing Officer to the tune of Rs.5,00,00,000/-. Therefore, in the said circumstances the order dated 21.07.2014 passed by the CIT(A)-39 is wrong against law and facts and is liable to be set aside. However, on the other hand the learned representative of the assessee has placed reliance upon the order passed by the CIT(A) in question.
It is specifically argued that the Assessing Officer invoked the power u/s.153A of the Act by reopening the assessment whereas no material of any kind was found during the search conducted on 13.10.2010. Therefore, in the said circumstances the CIT(A) has rightly passed the order dated 25.03.2013 which is not liable to be interfered with at this appellate stage. The order dated 25.03.2013 perused which speaks about the search upon the assessee on 13.10.2010, the said order nowhere speaks about the CO.51/M/16 Assessment Year: 2005-06 material found for the re-assessment u/s.153A of the Act. After the search, the Assessing Officer invoked the provision u/s.153A of the Act and dealt the matter on merits and held that the assessee had issued 50,00,000 shares worth Rs.5,00,00,000/- to Nextgen Far East Ltd. The assessee had also submitted the address of Nextgen Far East Ltd. which was foreign entity. The assessee also received USS $ 1150000 equivalent to Rs.5,02,92,375 towards share application money and they were allotted 5,00,000 equity shares of Rs.10 each. The identity of the foreign company was not established, therefore the share application money treated as explained cash credit and treated the income of the assessee. On perusal of the said order nothing came to the notice that any material found during the search was taken into consideration while reopening this issue. It is not in dispute that the search was conducted on 13.10.2010 whereas assessee had already filed the return of income on 28.10.2005. It is necessary to advert the finding of the CIT(A) on record to know about the fact that how this issue was dealt:-
“5. I have considered the facts of the case, the assessment order passed by the Assessing Officer and the contentions as raised by the appellant. Admittedly in making the regular assessment under s.143(3) dated 13.12.2007, the Assessing Officer had enquired into the genuineness of the share application money and after taking into consideration the details as furnished
CO.51/M/16 Assessment Year: 2005-06 before the Assessing Officer, the claim had been accepted. The law requires that only pending assessment proceedings abate. In the case of the appellant, the addition as made with respect to the share application money is not tenable since regular return had been filed and the particulars pertaining to the said addition had been disclosed and the same had been accepted in the assessment made under s. 143(3). As per law, completed assessments do not abate. It is a fact that in the impugned case, the assessment had been completed under s. 143(3); no proceedings were pending on the date of search and no material with regard to the share application money that was discovered during the search, if any, has been brought on record so as to justify the said addition. Where the transactions are disclosed in the regular books of account prior to search and no incriminating documents have been found discovered during the course of search and if no proceedings are pending as on date of search, such matter is beyond the scope of assessment to be made under s. 153A. Section 153A provides that where a search is initiated under s. 132, the Assessing Officer shall ‘assess or reassess’ the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is CO.51/M/16 Assessment Year: 2005-06 made. The 1st Proviso states that the Assessment Officer shall “assess or reassess” the total income in respect of each assessment year falling with such six assessment years while the 2nd Proviso states that the assessment or reassessment relating to the said six assessment years ‘pending’ on the date of initiation of the search under 132 shall “abate”. While under the 1st Proviso, the Assessing Officer is empowered to frame assessment for six years, under the 2nd Proviso, only the assessment had been completed under s. 143(3); no proceedings were “pending” on the date of search and no material was found during the search as regards share application money received by the appellant.
5.1 The Hon’ble Mumbai ITAT Special Bench in the case of All Cargo Global Logistics Ltd. Vs. DCIT 137 ITD 287 has held, on the subject matter as under: a) In the assessments that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him under s. 153A for which assessments shall be made for each of the six assessment year separately; b) In other cases, in addition to the income that has already been assessed, the assessment under s. 153A will be made on the basis of incriminating material,
CO.51/M/16 Assessment Year: 2005-06 which in the context of relevant provisions means (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search.
5.2 Recently in the case of Jai Steel (India) V/s. Asst. CIT 219 Taxman 223 (Raj) it is held that in absence of any incriminating material, the completed assessment can be reiterated.
5.3 In view of the above discussion, following the decision of the Special Bench of Hon’ble Mumbai Tribunal in case of All Cargo Global Logistics Ltd. Vs. Deputy CIT 18 ITR 106 (Mumbai)(SB) it is held that in the instant case the Assessing Officer did not have power to make any addition in absence of incriminating material. Therefore, it follows that the addition made by the Assessing Officer to the income on account of cash credit is beyond the scope of section 153A. Ground 1 is decided in the favour of the appellant. Having decided on the validity of the assessment, if am not adjudicating on the rest of grounds i.e. Grounds 3, 4 and 5.”
On appraisal of the order passed by the Assessing Officer dated 25.03.2013 we are of the view that no material was found with regard to the Share Application Money during search. The CO.51/M/16 Assessment Year: 2005-06 provision of law has duly been discussed by the CIT(A) in his order which is not required to be discussed again. Since no material of any kind was found during the search, therefore in the said circumstances the CIT(A) has passed the order in question judiciously and correctly which does not require to be interfere with at this appellate stage. The decision by the Special Bench in All Cargo Global Logistics Ltd. (Supra) has in fact been subsequently applied by the Hon’ble Jurisdictional High Court. Therefore in the said circumstances the appeal of the revenue is Dismissed C.O.51/M/2016
Since the appeal filed by the revenue has been dismissed while deciding the appeal No.6303/M/2014, therefore, there is no need to decide the C.O. raised by the assessee, because the same would be academic in nature.