ACIT CC 22 & 30 CEN RF 5, MUMBAI vs. WELSPUN POWER & STEEL LTD, MUMBAI

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.

“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.”

“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.”