A.C.I.T., Circle-2, Gwalior V. M/s K.S. Food Products, Morena

ITA 519/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0586 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 6 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-05-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 12-11-2012

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.519/AGRA/2012 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S. K.S. F OOD PRODUCTS, CIRCLE-2, GWALIOR. JIWAJI GANJ, MORENA (M.P.) (PAN : AABFK 9917 F). C.O. NO.10/AGRA/2013 (ITA NO.519/AGRA/2012) ASSESSMENT YEAR: 2004-05 M/S. K.S. FOOD PRODUCTS, VS. ASSTT. COMMISSIONER OF INCOME TAX, JIWAJI GANJ, MORENA (M.P.). CIRCLE-2, GWALIOR. (PAN : AABFK 9917 F). (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : SHRI S.K. GARG, ADVOCATE DATE OF HEARING : 10.05.2013 DATE OF PRONOUNCEMENT : 17.05.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE AS SESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 31.08.2012 PASSED BY THE LD . CIT(A), GWALIOR FOR THE ASSESSMENT YEAR 2004-05. 2 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ITA NO.519/AGRA/2012 BY THE REVENUE 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) WAS RIGHT IN LAW AND ON FACTS IN CANCELLING THE ASSESSMENT COMPLETED BY THE AO UNDER SECTION 143(3)/153A OF TH E INCOME TAX ACT, 1961 DESPITE THE FACT THAT UNDER SECTION 153A OF THE INCOME TAX ACT, 1961, THE AO HAS TO MAKE ASSESSMENT OF THE TOT AL INCOME OF THE ASSESSEE FOR EACH OF THE SIX ASSESSMENT YEARS AS PE R PROVISIONS OF SECTION 142 TO 145 OF THE ACT I.E. ON THE BASIS OF MATERIAL OR EVIDENCE ON THE RECORD FURNISHED BY ASSESSEE; ON THE BASIS O F EVIDENCE GATHERED BY THE DEPARTMENT EITHER DURING THE COURSE OF SEARC H IN THE FORM OF INCRIMINATING DOCUMENTS, BOOKS OF ACCOUNTS ETC. OR BY INVESTIGATIONS CARRIED OUT BY THE DEPARTMENT BEFORE/AFTER THE SEAR CH AND DURING THE ASSESSMENT PROCEEDINGS ? 2. WHETHER OF THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN LAW AND ON FACTS IN HOLDING THA T SECTION 153A OF THE INCOME TAX ACT, 1961 DOES NOT EMPOWER THE A.O. TO GO INTO THE AREAS OTHER THAN THE AREAS IN RESPECT OF WHICH SOME MATERIAL OR DOCUMENTS OR ASSETS HAVE BEEN FOUND DURING THE COUR SE OF SEARCH PROCEEDINGS ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN LAW AND ON THE FACTS IN HOLDING THAT ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROC EEDINGS UNDER SECTION 153A OR 153C OF THE INCOME TAX ACT, 1961, W HEN NO INCRIMINATING DOCUMENTS ARE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS DURING THE COURSE OF SEARCH PROCEEDINGS. C.O. NO.10/AGRA/2013 BY THE ASSESSEE 3. IN THE CROSS OBJECTION, THE GROUNDS RAISED ARE I N SUPPORT OF THE ORDER OF CIT(A). THE CROSS OBJECTION IS TIME BARRED BY FOUR DAYS FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION IN CON DONING THE DELAY. WE, THEREFORE, CONDONE THE DELAY OF FOUR DAYS IN THE IN TEREST OF JUSTICE. 3 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AC TION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) HAS BE EN CARRIED OUT ON 11.03.2010. THE A.O. NOTICED THAT THE ASSESSEE COMPANY IS AN AS SOCIATE COMPANY OF K.S. OIL LIMITED GROUP IN WHICH SEARCH UNDER SECTION 132 OF THE ACT HAS BEEN CARRIED OUT ON 11.03.20-10. THE A.O. NOTICED THAT DURING THE CO URSE OF SEARCH PROCEEDINGS CONDUCTED IN K.S. OILS GROUP, IT WAS REVEALED THAT GROUP HAS INITIALLY BEEN ENGAGED IN MANUFACTURING AND TRADING OF EDIBLE OIL. THEY H AVE MADE HUGE UNACCOUNTED PURCHASES AND SALES EITHER THEMSELVES OR THROUGH BR OKERS. THEY HAVE ALSO FORMED SEVERAL DUMMY CONCERNS, COMPANIES AND OTHER ENTITIE S TO CARRY OUT BUSINESS OPERATION FOR GENERATING UNACCOUNTED INCOME. THE A .O. AT PAGE NOS.2 TO 4 NOTED LIST OF SUCH ASSOCIATE COMPANIES OF K.S. OILS GROUP . THE A.O. HAS ALSO NOTED THAT K.S. OILS LIMITED WAS HAVING UNDISCLOSED BANK ACCOU NTS. THE A.O. AT PAGE NO.5 & 6 HAS ALSO NOTED THAT IN K.S. OILS LIMITED GROUP SOME SURRENDER WERE MADE OF WHICH DETAILS OF STATEMENT OF THE PARTY RECORDED WE RE REPRODUCED. ON THE BASIS OF ABOVE OBSERVATION MADE IN RESPECT OF K.S. OILS LIMI TED GROUP, THE A.O. ON A PERUSAL OF ASSESSEES BALANCE SHEET NOTICED THE FOL LOWING LIABILITIES :- (PAGE NO.7) (I) PARTNERS CAPITAL ACCOUNT - RS.13,80,770/- (II) UNSECURED LOANS - RS.28,36,730/- (III) SUNDRY CREDITORS - RS.11.85,95,936/- (IV) ADVANCE FROM CUSTOMERS - RAS.2,53,768/- 4 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 5. THE A.O. MADE ADDITION OF ABOVE LIABILITIES RS.2 8,72,532/- UNDER SECTION 68 OF THE ACT. SIMILARLY, THE A.O. NOTICED THAT THREW WAS A SUNDRY CREDITORS OF RS.11,85,95,936/-. THIS AMOUNT HAS ALSO BEEN ADDED BY THE A.O. UNDER SECTION 68. OF THE ACT. THE A.O. ALSO MADE ADDITION OF RS.92,7 9,830/- INVOKING SECTION 40A(2)(B) OF THE ACT. THE A.O. ALSO MADE ADDITION OF RS.31,13,602/- ON ACCOUNT OF REJECTING ASSESSEES DEPRECATION CLAIM. THE A.O . HAS ALSO MADE ADDITION OF RS.2,53,768/- ON ACCOUNT OF ADVANCE FROM CUSTOMERS. THE TOTAL INCOME COMPUTED BY THE A.O. IS AS UNDER :- (PAGE NO.8) RETURN INCOME RS. 2,76,250/- ADD PARTNERS CAPITAL U/S 68 OF THE I.T. ACT RS. 28, 72,532/- ADD UNSECURED LOAN U/S 68 OF THE IT ACT RS. 28,36,7 30/- ADD SUNDRY CREDITORS U/S 68 OF THE IT ACT RS. 11,85 ,95,936/- ADD DISALLOWANCE U/S 40A(2)(B) OF THE IT ACT RS. 92,79,830/- ADD DISALLOWANCE OF DEPRECIATION RS. 31,13,602/- ADD ADVANCES FROM CUSTOMERS U/S 68 OF THE IT ACT RS. 2,53,768/- TOTAL = RS. 13,72,28,648/- 6. BEFORE THE CIT(A) THE ASSESSEE HAS CHALLENGED TH E ORDER OF A.O. ON THE GROUND THAT THE A.O. HAS MADE THE ADDITION WHEREAS NO INCRIMINATING DOCUMENTS OR MATERIALS WERE FOUND DURING THE COURSE OF SEARCH. THE CIT(A) ALLOWED THE ASSESSEES GROUND OF APPEAL AS UNDER :- (PARA NOS.3 .3 TO 3.7, PAGES NOS.4, 5, 6 & 7) 3.3 HOWEVER, THE APPELLANTS OBJECTION TO COMPLET ION OF ASSESSMENT U/S 153A BY MAKING VARIOUS ADDITIONS ON THE BASIS O F ITEMS DISCLOSED IN ITS BALANCE SHEET & TRADING ACCOUNT IN THE ABSEN CE OF ANY 5 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 INCRIMINATING MATERIAL FOUND OR SEIZED & THAT TOO B EFORE THE DATE GIVEN FOR FINAL HEARING ARE FOUND ACCEPTABLE. THE APPELLANT HAS FIELD RETURN U/S 153A ON 16.09.2011 WHICH IS SAME AS FILE D ON 21.10.2004 IN DUE COURSE FOR PRE-SEARCH PERIOD. ON RECEIPT OF NOTICE U/S 143(2) ISSUED ON 16.09.2011, THE APPELLANT HAS SUBMITTED B EFORE THE A.O. THAT NO INCRIMINATING DOCUMENTS HAVE BEEN FOUND DURING T HE COURSE OF SEARCH RELATING TO THE YEAR UNDER CONSIDERATION. I F THERE ARE SOME, THE APPELLANT BE MADE AWARE OF THE SAME FOR THEIR COMPL IANCE AND EXPLANATION. ON 26.09.2011, THE APPELLANT HAS ALSO SUBMITTED THE AUDIT REPORT AND BALANCE SHEET FOR F. YRS. 2003-04, 04-05 & 2005-06, AS DESIRED BY THE A.O. THEREFORE, A.O. HAS ISSUED DETAILED QUESTIONNAIRE/NOTICE U/S 142(1) ON 31.10.2011 ASKIN G FOR DETAILS REGARDING ADDITION TO FIXED ASSETS, UNSECURED LOAN, GROSS PROFIT, SUNDRY CREDITORS ETC. ON THE BASIS OF RETURN AND BA LANCE SHEET OF THE APPELLANT. AS REGARDS, SEIZED DOCUMENTS, IT STATES AS UNDER:- 9. AS PHOTOCOPIES OF THE SEIZED MATERIALS HAVE ALR EADY BEEN TAKEN, THEREFORE, YOU ARE REQUESTED TO PLEASE EXPLAIN EACH AND EVERY TRANSACTION OF THE SEIZED MATERIAL WHICH PERTAINS T O THE YEAR UNDER CONSIDERATION. YOU ARE ALSO REQUESTED TO PLEASE FU RNISH THE YEAR WISE BRAKE UP OF ALL THE SEIZED MATERIAL IN RESPECTIVE A SSESSMENT YEARS. IN RESPONSE, VIDE LETTER DATED 11.11.2011, THE APP ELLANT HAS SUBMITTED AS UNDER:- 8. TO THE BEST OF MY KNOWLEDGE OR BELIEF NO DOCUME NTS HAVE BEEN SEIZED BY THE DEPARTMENT RELATING TO THE CONCERN. AS REGARDS OTHER SEIZED MATERIAL WE HAVE TAKEN THE COPIES OF SEIZED MATERIAL AND NOTHING INCRIMINATING HAS BEEN FOUND SO AS TO DISCL OSE ANY UNDISCLOSED INCOME AS REGARDS THE ASSESSEE FROM THE SEIZED MATERIAL. PLEASE LET US KNOW WHICH LOOSE PAPER OR DOCUMENT SE IZED FROM WHICH PREMISES (AS SEARCHES WERE CONDUCTED IN SEVERAL LOC ATIONS) REQUIRES A SPECIFIC SHOW CAUSE FOR US TO EXPLAIN SO THAT ITS E XPLANATION COULD BE GIVEN. AS REGARDS THE ASSESSEE IT CAN GIVE AN EXPL ANATION IN RESPECT OF EACH AND EVERY SEIZED MATERIAL UNLESS THE SAME IS A DUMB DOCUMENT OR IT DOES NOT PERTAIN TO THE ASSESSEE. A.O. HAS AGAIN ISSUED DETAILED QUESTIONNAIRE ON 18. 11.2011 ASKING FOR FURTHER DETAILS ON VARIOUS ITEMS OF BALA NCE SHEET ETC. IN 6 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 RESPECT OF SEIZED DOCUMENTS, PARA 9 OF THE QUESTION NAIRE IS SAME AS MENTIONED IN PREVIOUS NOTICE/QUESTIONNAIRE. THUS, NO SPECIFIC SEIZED DOCUMENT, MUCH LESS INCRIMINATING, HAS BEEN FOUND, SEIZED OR BROUGHT ON RECORD BY THE A.O. IN CASE OF THE APPELLANT PERT AINING TO THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT ORDER ALSO A.O. HAS MADE DISCUSSION ABOUT LIST OF 61 DUMMY CONCERNS WITH BAN K ACCOUNTS, UNDISCLOSED BANK ACCOUNTS & UNACCOUNTED BUSINESS TR ANSACTIONS OF RS.46,20,98,097/- (PAGES 2-5 OF THE ASSESSMENT ORDE R) PERTAINING TO K.S. OILS LTD., BUT NONE OF THEM BELONGS OR PERTAIN S TO THE APPELLANT FOR THE YEAR UNDER CONSIDERATION NOR THERE IS ANY M ATERIAL ON RECORD PROVING APPELLANTS CONNECTION WITH THESE DUMMY CON CERNS OR UNDISCLOSED BANK ACCOUNTS OR UNACCOUNTED TRANSACTIO NS. 3.4 IT IS FURTHER SEEN FROM RECORDS THAT THE APPELL ANT HAS FILED RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN DUE COURSE ON 21.10.2004 DECLARING INCOME OF RS.2,76,250/- WHICH IS SAME AS PER RETURN NOW FILED U/S 153A ON 16.09.2011 AFTER THE S EARCH OPERATIONS ON 11.03.2010. ASSESSMENT ORDER U/S 143(3) HAS ALS O BEEN PASSED ON 6.12.2006 BY ITO, 2(2), GWALIOR ASSESSING TOTAL IN COME AT RS.4,25,590/- ALONG WITH AGRICULTURAL INCOME OF RS. 14,294/- AFTER MAKING ADDITIONS ON ESTIMATED BASIS FOR DISALLOWANC E OF DIESEL & FUEL EXPENSES, HAMMALI EXPENSES, FREIGHT, GENERAL REPAIR EXPENSES ETC. VIDE APPEAL ORDER DATED 17.10.2011 IN APPEAL NO. 64 1/IT/06- 07/GWL, RELIEF OF RS.70,000/- BEEN GRANTED OUT OF A DDITION MADE OF RS.95,000/- BY THE A.O. 3.5 IT HAS BEEN HELD BY VARIOUS COURTS MANISH MAHES HWARI VS. ACIT & ANOTHER, INDORE CONSTRUCTION PVT. LTD. VS. C IT (2007) 289 ITR 341 (SC), M/S S.K. JAIN VS ACIT (2010) 14 ITJ 4 34 (INDORE TRIBUNAL), LMJ INTERNATIONAL LTD. VS. DY. CIT (2008 ) 119 TTJ (KOL) 214, ANIL KUMAR BHATIA VS. ACIT (2010) 1 ITR (TRIB) 484 (DEL) THAT JURISDICTION TO ASSESS U/S 153A ARISES ONLY DUE TO SEARCH. THEREFORE, A.O. CANNOT DISTURB THE FINALITY OF CONCLUDED ASSES SMENTS WITHOUT ANY MATERIAL TO INDICATE UNDISCLOSED INCOME OF THE YEAR FOUND DURING THE COURSE OF SEARCH. THE SCHEME OF THE ACT IS VERY CL EAR REGULAR ASSESSMENTS ARE MADE IN ITEMS OF SEC.139, 142 & 143 ; CONCLUDED ASSESSMENTS CAN BE REOPENED AS PER SECTION 147 & 14 8 IN CASE A.O. HAS REASONS TO BELIEVE THAT THE INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT; AND THE PROVISIONS OF SECTION 153A TO 1 53C CAN BE 7 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 RESORTED TO FOR THE ASSESSMENT OF UNDISCLOSED INCOM E IN SEARCH CASES. ALL THE THREE PROCEDURES OF ASSESSMENT OPERATE IN D IFFERENT FIELDS AND HAVE DIFFERENT PURPOSE TO BE FULFILLED ALTOGETHER. ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BACK IN THE PROCEEDINGS U/S 153A/C WHEN NO INCRIMINATING DOCUMENTS ARE FOUND IN RESPECT OF THE DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. CHAPTER XIV-B D OES NOT AUTHORIZE THE A.O. TO REVIEW THE ASSESSMENT COMPLET ED UNLESS AND UNTIL THERE IS ANY DIRECT OR INDIRECT OR CLINCHING EVIDENCE TO INDICATE THAT THE APPELLANT HAS WITHHELD OR HAD NOT DISCLOSE D ANY INCOME. SECTION 153A DOES NOT EMPOWER THE A.O. TO GO INTO T HE AREAS OTHER THAN AREAS IN RESPECT OF WHICH SOME MATERIAL OR DOC UMENTS OR ASSETS HAVE BEEN FOUND. IN THE APPELLANTS CASE, ORIGINAL ASSESSMENT HAS ALREADY BEEN COMPLETED U/S 143(3) IN RESPECT OF RET URN FOR THE YEAR FILED IN DUE COURSE BEFORE SEARCH AND AS PER RECORD S, NO MATERIAL, MUCH LESS INCRIMINATING, HAS BEEN FOUND, IN SEARCH THEREAFTER; THUS NO ADDITION CAN BE MADE. THE ADDITIONS MADE BY THE A. O. FOR PARTNERS CAPITAL, SUNDRY CREDITORS, UNSECURED LOANS, ADVANCE S FROM CUSTOMERS, DISALLOWANCE OF DEPRECIATION AND DISALLOWANCE U/S 4 0A(2)(B), FOR WANT OF CONFIRMATIONS ETC. BEING ALL RELATING TO RE GULAR ASSESSMENT, ARE NOT FOUND SUSTAINABLE BY RESPECTFULLY FOLLOWING THE DECISIONS OF VARIOUS HIGHER APPELLATE AUTHORITIES, AS MENTIONED ABOVE. 3.6 IT IS FURTHER SEEN FROM PERUSAL OF RECORDS THAT THE A.O. HAS ISSUED LAST QUESTIONNAIRE/NOTICE SERVED ON THE APPE LLANT ON 24.11.2011, FIXING THE CASE FOR HEARING ON 28.11.20 11. HOWEVER, FOR THE REASONS BEST KNOWN TO HIM, A.O. HAS PASSED THE IMPUGNED ORDER UNDER APPEAL ON 25.11.2011, I.E. BEFORE THE DATE FI XED FOR HEARING AND GIVING THE APPELLANT OPPORTUNITY TO EXPLAIN THE VAR IOUS ISSUES, AS ASKED FOR VIDE THE NOTICE/QUESTIONNAIRE. THIS IS T OTALLY AGAINST PRINCIPLES OF NATURAL JUSTICE ENVISAGED IN THE STAT UTE. IT IS ALSO TO BRING ON RECORD THAT NO DAY-TO-DAY REGULAR ORDER SH EETS HAVE BEEN WRITTEN/MAINTAINED BY THE A.O. DURING ENTIRE COURSE OF ASSESSMENT PROCEEDINGS. THIS FACT HAS ALSO BEEN ADMITTED BY T HE A.O. DURING THE COURSE OF APPEAL PROCEEDINGS, AS PER DISCUSSION HEL D WITH HIM. AS PER RECORDS, THE APPELLANT IS FOUND TO HAVE DETAILS, AS ASKED FOR VIDE DIFFERENT QUESTIONNAIRES ISSUED BY THE A.O. THEREA FTER, NO FURTHER QUERY HAS BEEN RAISED BY THE A.O NOR FURTHER EXPLAN ATION/VERIFICATION SOUGHT OR DONE. HOWEVER, THE APPELLANTS SUBMISSIO NS, AS MADE & 8 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 FOUND PLACED ON RECORD, HAVE NOT BEEN ACCEPTED BY T HE A.O. WITHOUT ANY JUSTIFICATION FOR THE SAME. 3.7 AFTER PERUSAL OF RECORDS, SUBMISSIONS AND FACT S OF THE CASE, ASSESSMENT COMPLETED BY THE A.O. RESULTING INTO VAR IOUS ADDITIONS MADE IS NOT FOUND TO BE SUSTAINABLE IN THE EYES OF THE LAW. THE SAME IS, HEREBY, CANCELLED. ACCORDINGLY, MERITS OF THE ADDITION MADE ARE NOT BEING ADJUDICATED HEREUPON. 7. SINCE THE CIT(A) DECIDED THE LEGAL ISSUE IN FAVO UR OF THE ASSESSEE, THEREFORE, HE DID NOT ADJUDICATE THE GROUND ON MERIT. 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE CRUX OF THE MATTER TO BE EXAMINED IN THE CASE U NDER CONSIDERATION IS IN RESPECT OF MAKING SEARCH ASSESSMENT UNDER SECTION 153A OF T HE ACT WHERE NO INCRIMINATING MATERIALS WERE FOUND DURING THE COURS E OF SEARCH. TO EXAMINE THIS ISSUE, WE WOULD LIKE TO SEE THE SCHEME OF VARIOUS A SSESSMENTS UNDER THE ACT. 8.1 CHAPTER XIV OF THE ACT DEALS WITH THE PROCEDURE FOR REGULAR ASSESSMENT. IT BEGINS WITH SECTION 139, WHICH MAKES IT OBLIGATORY FOR A PERSON WHO IS ASSESSABLE UNDER THE ACT AND WHOSE INCOME EXCEEDS THE MAXIMUM LIMIT SHALL FURNISH RETURN OF HIS INCOME IN THE PRESCRIBED FORM. ASSESSMENT CAN B E MADE ON THE BASIS OF RETURN FILED UNDER SECTION 139 OF THE ACT. ON THE BASIS OF THE EVIDENCE ADDUCED. BEST JUDGMENT UNDER SECTION144 OF THE ACT. INCOME ESCAP ED ASSESSMENT AND ASSESSMENT 9 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 IN CASE OF SEARCH. THE WORD ASSESSMENT MUST BE UNDE R STOOD IN EACH SECTION OF THE ACT WITH REFERENCE TO THE CONTEXT IN WHICH IT IS US ED. SECTION 142 OF THE ACT PRESCRIBES THE PROCEDURE OF INQUIRY BEFORE ASSESSME NT. THIS SECTION CONFERS POWER UPON THE ASSESSING AUTHORITY TO MAKE INQUIRY BY ISS UING NOTICE UPON THE ASSESSEE FOR THE COMPLIANCE OF THE REQUIREMENTS OF THE ACT. AFTER FURNISHING OF THE RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE UNDER SECTION 142, THE ASSESSING AUTHORITY SHALL MAKE ASSESSMENT. UNDER SECTION 147 OF THE ACT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY ASSESS O R REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE PROCEEDING. HOWEVER, BEFORE MAKING SUCH ESCAPED ASSESSMENT OR REASSESSMENT OR R E COMPUTATION UNDER SECTION 147 OF THE ACT, THE ASSESSING OFFICER SHALL SERVE N OTICE TO THE ASSESSEE AS REQUIRED UNDER SECTION 148 OF THE ACT. SECTION 153 OF THE AC T SPECIFIES THE LIMIT WITHIN WHICH ASSESSMENT OR REASSESSMENT SHALL BE COMPLETED . 8.2 ASSESSMENT IN CASE OF SEARCH IS PROVIDED IN SEC TION 153A OF THE ACT. SECTION 132 OF THE ACT LAYS DOWN THE PROVISIONS OF SEARCH A ND SEIZURE. UNDER THIS SECTION, THE DIRECTOR GENERAL OR DIRECTOR OR CHIEF COMMISSIO NER OR COMMISSIONER OR JOINT COMMISSIONER MAY BE EMPOWERED BY THE BOARD TO MAKE SEARCH, AND SEIZURE WHEN 10 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 THEY HAVE REASON TO BELIEVE THAT ANY PERSON TO WHOM SUMMONSES OR NOTICES HAVE BEEN ISSUED UNDER THE PROVISIONS OF THE ACT REFERRE D TO THEREIN HAVE FAILED TO PRODUCE BOOKS OF ACCOUNT OR ANY OTHER DOCUMENTS REL EVANT FOR ANY ASSESSMENT PROCEEDING. THE PROVISION OF SECTION 132 UNDERWENT A SERIES OF AMENDMENTS WITH A VIEW TO ENLARGE THE POWER OF SEARCH AND SEIZURE VES TED IN THE INCOME-TAX AUTHORITY. BY SUBSEQUENT AMENDMENT THE POWER OF SEARCH AND SEI ZURE VESTED IN THE INSPECTING ASSISTANT COMMISSIONER ALSO. SUB-SECTION (3) OF SEC TION 132 EMPOWERS THE TAXING AUTHORITIES TO TAKE POSSESSION OR CONTROL OF THE SE IZED ARTICLES. BY THE 1991 AMENDMENT, THE OPERATION OF THE PROHIBITORY ORDER P ASSED CAN ALSO BE EXTENDED WITH THE APPROVAL OF THE COMMISSIONER. 8.3 IN THE YEAR 1995, THE SPECIAL PROCEDURE FOR ASS ESSMENT OF SEARCH CASES WAS INTRODUCED BY THE FINANCE ACT, 1995 (22 OF 1995). C HAPTER XIV-B CONTAINING SECTION 158B TO SECTION 158BH WAS INSERTED. UNDER T HE SAID SCHEME, THE UNDISCLOSED INCOME DETECTED AS A RESULT OF SEARCH I NITIATED AFTER 30-6-1995, IS ASSESSED SEPARATELY AS THE INCOME OF THE DESIGNATED PERIOD (BLOCK) CONSISTING OF 10 PREVIOUS YEARS OR SIX YEARS AS THE CASE MAY BE PRIO R TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED AND ALSO THE PERIOD OF CUR RENT PREVIOUS YEAR UP TO THE DATE OF SEARCH. THE UNDISCLOSED INCOME IS TAXED AT A FLAT RATE OF 60 PER CENT. UNDER THIS PROVISION, THE AUTHORITY COMPETENT TO MAKE THE BLOCK ASSESSMENT SHALL BE AN 11 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ASSESSING OFFICER NOT BELOW THE RANK OF THE ASSISTA NT COMMISSIONER AND THE TIME- LIMIT FOR COMPLETION OF BLOCK ASSESSMENT IS WITHIN ONE YEAR FROM THE END OF THE MONTH IN WHICH THE AUTHORIZATION FOR SEARCH UNDER S ECTION 132 AND REQUISITION UNDER SECTION 132A WAS EXECUTED. 8.4 IN 2003, NEW PROVISIONS, I.E., SECTIONS 153A, 153B AND 153C IN CHAPTER XIV HAVE BEEN INSERTED IN THE FINANCE ACT, 2003 RELATIN G TO ASSESSMENT IN THE CASE OF SEARCH OR REQUISITION MADE ON OR AFTER JUNE, 1, 200 3, SPECIFYING THE TIME-LIMIT FOR COMPLETION OF ASSESSMENT OR REASSESSMENT OF INCOME. BY VIRTUE OF THE AFORESAID AMENDMENTS, THE ASSESSMENT IN THE CASE OF SEARCH OR REQUISITION MADE ON OR AFTER 1-6-2003, IS TO BE GOVERNED BY THE PROVISIONS CONTA INED IN THE NEW SECTIONS 153A, 153B AND 153C AND NOT BY THE PROVISIONS CONTAINED I N CHAPTER XIV-B, I.E., SECTIONS 158B TO SECTION 158BH. FOR BETTER APPRECIATION, SECTIONS 153A, 153B AND 153C ARE REPRODUCED HERE IN BELOW: 153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION (1)NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 13 9, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CA SE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31-5-2003, T HE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF IN COME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRE SCRIBED MANNER AND 12 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES CRIBED AND THE PROVISIONS OF (B) THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 ; (C) (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: (D) PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSES S THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SUCH SIX ASSESSMENT YEARS: (E) PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER S ECTION 132A, AS THE CASE MAY BE, SHALL ABATE. 8.5 FOR GIVING EFFECT TO THE ABOVE NEWLY INSERTED P ROVISION SECTION 158BI HAS ALSO BEEN INSERTED BY THE FINANCE ACT OF 2003 WHICH PROVIDES THAT THE PROVISIONS OF CHAPTER XIV-B, SECTION 158B TO SECTION 158BH, SH ALL NOT APPLY WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A OF THE ACT AFT ER 31-5-2003. 8.6 FROM A READING OF THE PROVISIONS OF SECTION 153 A, IT IS CLEAR THAT THIS PROVISION PROVIDES FOR ASSESSMENTS OF UNDISCLOSED I NCOME OF A BLOCK PERIOD IN A CASE WHERE SEARCH IS CONDUCTED. IN OTHER WORDS, IN A CASE WHERE SEARCH IS CONDUCTED THERE SHALL BE BLOCK ASSESSMENTS FOR THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO SIX ASSESSMENT YEARS PRECEDING TH E PREVIOUS YEAR IN WHICH THE 13 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 SEARCH WAS CONDUCTED AND ALSO INCLUDES THE PERIOD U P TO THE DATE OF COMMENCEMENT OF SUCH SEARCH. IN SUCH CASES, THE ASS ESSING OFFICER SHALL ISSUE NOTICE TO THE ASSESSEE REQUIRING HIM TO FURNISH RET URN OF INCOME IN RESPECT OF THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UND ER SECTION 132 OR REQUISITION WAS MADE UNDER SECTION 132A. THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. SECTION 153B PROVIDES THE TIME LIMIT FOR COMPLETION OF ASSESSMENT. IT PROVIDES THA T THE ASSESSING OFFICER SHALL MAKE THE ORDER OF ASSESSMENT OR REASSESSMENT IN RES PECT OF THE EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS UNDER SECTION 153A WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A WAS EXECUTED. 8.7 THE SCOPE AND EFFECT OF SECTIONS 153A, 153B, 15 3C AND 158BI HAVE BEEN EXPLAINED ELABORATELY BY A DEPARTMENTAL CIRCULAR NO .7 OF 2003, DATED 05.09.2003 (SEE [2003] 263 ITR (ST.) 62), WHICH IS REPRODUCED HERE IN BELOW (PAGE 106): '65.1 THE EXISTING PROVISIONS OF THE CHAPTER XIV-B PROVIDE FOR A SINGLE ASSESSMENT OF UNDISCLOSED INCOME OF A BLOCK PERIOD, WHICH MEANS THE PERIOD COMPRISING PREVIOUS YEARS RELEVANT TO SIX ASSESSMEN T YEARS PRECEDING THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED AND ALSO INCLUDES THE PERIOD UP TO THE DATE OF THE COMMENCEMENT OF SUCH S EARCH, AND LAY DOWN THE MANNER IN WHICH SUCH INCOME IS TO BE COMPUTED. 14 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 65.2 THE FINANCE ACT, 2003, HAS PROVIDED THAT THE PROVISIONS OF THIS CHAPTER SHALL NOT APPLY WHERE A SEARCH IS INITIATED UNDER SECTION 132, OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER 31-5-2003, BY INSERTING A NEW SE CTION 158BI IN THE INCOME-TAX ACT. 65.3 FURTHER THREE NEW SECTIONS 153A, 153B AND 153 C HAVE BEEN INSERTED IN THE INCOME-TAX ACT TO PROVIDE FOR ASSESSMENT IN CASE OF SEARCH, OR MAKING REQUISITION. 65.4 THE NEW SECTION 153A PROVIDES THE PROCEDURE FO R COMPLETION OF ASSESSMENT WHERE A SEARCH IS INITIATED UNDER SECTIO N 132 OR BOOKS OF ACCOUNT, OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUI SITIONED UNDER SECTION 132A AFTER 31-5-2003. IN SUCH CASES, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH, WITHIN SUC H PERIOD AS MAY BE SPECIFIED IN THE NOTICE, RETURN OF INCOME IN RESPEC T OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UNDER SECTION 132 OR REQUISITION WAS MADE UNDER SECTION 132A. 65.5 THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSESSMENT OR REASSE SSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SI X ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UND ER SECTION 132 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIFIED THAT THE APPEAL, REVISION OR RECTIFICATIO N PROCEEDINGS PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITION SHALL NOT ABATE. SAVE AS OTHERWISE PROVIDED IN THE PROPOSED S ECTION 153A, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A. IT IS ALSO CLARIFIED THAT ASSESSMENT OR REASSESSMENT MADE UNDER SECTION 153A SHALL BE SUBJECT TO INTEREST, PENALTY AND PROSECUTION, IF APPLICABLE . IN THE ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APP LICABLE TO SUCH ASSESSMENT YEAR. 65.6 THE NEW SECTION 153B PROVIDES FOR THE TIME-LIM IT FOR COMPLETION OF SEARCH ASSESSMENTS. IT PROVIDES THAT THE ASSESSING OFFICER SHALL MAKE AN 15 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ORDER OF ASSESSMENT OR REASSESSMENT IN RESPECT OF E ACH ASSESSMENT YEAR, FALLING WITHIN, SIX ASSESSMENT YEARS UNDER SECTION 153A WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED. 65.7 THIS SECTION ALSO PROVIDES THAT ASSESSMENT IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 13 2A SHALL BE COMPLETED WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE FI NANCIAL YEAR IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, WAS EXECUTE D. 65.8 IT ALSO PROVIDES THAT IN COMPUTING THE PERIOD OF LIMITATION FOR COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT, THE PERIOD DURING WHICH THE ASSESSMENT PROCEEDING IS STAYED BY AN ORDER OR INJU NCTION OF ANY COURT; OR THE PERIOD COMMENCING FROM THE DAY ON WHICH THE ASS ESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB- SECTION (2A) OF SECTION 142 AND ENDING ON THE DAY ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB-SECTION, OR THE TIME TAKEN IN REOPENING THE WHOLE OR ANY PART OF THE PROCEEDING OR GIVING A N OPPORTUNITY TO THE ASSESSEE OF BEING RE-HEARD UNDER THE PROVISO TO SEC TION 129, OR IN A CASE WHERE AN APPLICATION MADE BEFORE THE SETTLEMENT COM MISSION UNDER SECTION 245C IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROC EEDED WITH BY IT, THE PERIOD COMMENCING ON THE DATE ON WHICH SUCH APPLICATION IS MADE AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB-SECTION (1) O F SECTION 245D IS RECEIVED BY THE COMMISSIONER UNDER SUB-SECTION (2) OF THAT SECTION, SHALL BE EXCLUDED. IF, AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION AVAILABLE TO THE ASSESSING OFFICER FOR M AKING AN ORDER OF ASSESSMENT OR REASSESSMENT, AS THE CASE MAY BE IS L ESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AN D THE PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY 65.9 THE NEW SECTION 153C PROVIDES THAT WHERE AN AS SESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISIT IONED BELONG OR BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SE CTION 153A, THEN THE BOOKS OF ACCOUNT, OR DOCUMENTS OR ASSETS SEIZED OR REQUIS ITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH OTHER PERSON AND 16 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 THAT ASSESSING OFFICER SHALL PROCEED AGAINST SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INC OME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. 65.10 AN APPEAL AGAINST THE ORDER OF ASSESSMENT OR REASSESSMENT UNDER SECTION 153A SHALL LIE WITH THE COMMISSIONER OF INC OME-TAX (APPEALS). 65.11 CONSEQUENTIAL AMENDMENTS HAVE ALSO BEEN MADE IN SECTIONS 132, 132B, 140A, 234A, 234B, 246A AND 276CC TO GIVE REFE RENCE TO SECTION 153A IN THESE SECTIONS. 65.12 THESE AMENDMENTS WILL TAKE EFFECT FROM 1-6-20 03.' 8.8 FROM A BARE READING OF THE PROVISIONS OF SECTIONS 1 53A, 153B AND 153C OF THE ACT AND THE DEPARTMENTAL CIRCULAR DATED 5-9-200 3 ( SEE [2003] 263 ITR (ST.) 62), IT IS MANIFESTLY CLEAR THAT AFTER 31-5-2003, T HE EARLIER PROVISION OF BLOCK ASSESSMENT IN THE CASE OF SEARCH INITIATED AGAINST THE ASSESSEE, SHALL NOT APPLY. INSTEAD, THE PROVISION THAT THERE SHALL BE ASSESSME NTS ON UNDISCLOSED INCOME COMPRISING PREVIOUS YEARS RELATING TO SIX ASSESSMEN T YEARS PRECEDING IN WHICH THE SEARCH WAS CONDUCTED, SHALL APPLY. 8.9 THE SECOND PROVISO TO SECTION 153A MAKES IT CLE AR THAT ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR FALLIN G WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A SHALL ABATE. THE WORD ABATE OR ABATEMENT HAS NOT BEEN DEFINED IN THE ACT OR IN CIRCULAR. THE WORDS ABATE ACCORDING TO 17 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 CHAMBER DICTIONARY MEANS DEMOLITION OR TO PUT AN EN D TO. THE LAW OF LEXICON DEFINES THE WORD ABATE WHICH MEANS TO THROW DOWN, DESTROY OR QUASH OR TO NULLIFY. ACCORDING TO BLACK DICTIONARY THE WORD AB ATEMENT MEANS THE ACT OF ELIMINATING OR NULLIFYING OR SUSPENSION OR DEFEAT O F PENDING ACTION. IT MEANS, IF ON THE DATE OF INITIATION OF SEARCH OR REQUISITION UND ER SECTION 132 OR 132A ANY ASSESSMENT OR REASSESSMENT PROCEEDING IS INITIATED RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS, IT SHALL STAND ABATED AND ASSESSING AUTHORITY CANNOT AND SHALL NOT PROCEED WITH SUCH PE NDING ASSESSMENT AFTER INITIATION OF SEARCH OR REQUISITION AS CONTEMPLATED HEREIN ABOVE. 8.10 TO EXAMINE THE SCOPE OF SEARCH ASSESSMENT UNDE R SECTION 153A OF THE ACT WE HAVE TO SEE THE BASIS AND REASONS FOR THIS ASSES SMENT WHICH ARE PROVIDED IN SECTION 132 AND 132A OF THE ACT, FOR THE PURPOSE OF READY REFERENCE THE SAME ARE REPRODUCED (FROM 2009 ACT) AS UNDER:- [ SEARCH AND SEIZURE.] 132. (1) WHERE THE 84 [DIRECTOR GENERAL OR DIRECTOR] OR THE 85 [CHIEF COMMISSIONER OR COMMISSIONER] 86-87 [ OR ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER ] 88 [ OR JOINT DIRECTOR OR JOINT COMMISSIONER ] IN CONSEQUENCE OF INFORMATION 89 IN HIS POSSESSION, HAS REASON TO BELIEVE 89 THAT ( A ) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1 ) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UN DER SUB-SECTION (1) OF SECTION 131 OF THIS ACT, OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT, 1922, OR UNDER SUB-SECTION (1) OF S ECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY BOO KS OF ACCOUNT OR OTHER 18 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE, OR CAUS E TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS AS REQUIRED BY SUCH SUMM ONS OR NOTICE, OR ( B ) ANY PERSON TO WHOM A SUMMONS OR NOTICE AS AFORESA ID HAS BEEN OR MIGHT BE ISSUED WILL NOT, OR WOULD NOT, PRODUCE OR CAUSE TO BE PRODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS WHICH WILL BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (1 1 OF 1922), OR UNDER THIS ACT, OR ( C ) ANY PERSON IS IN POSSESSION OF ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLE OR THING 90 AND SUCH MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY 91 [WHICH HAS NOT BEEN, OR WOULD NOT BE, DISCLOSED 90 ] FOR THE PURPOSES OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR THIS ACT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY), 92 [THEN, ( A ) THE 93 [DIRECTOR GENERAL OR DIRECTOR] OR THE 94 [CHIEF COMMISSIONER OR COMMISSIONER], AS THE CASE MAY BE, MAY AUTHORISE AN Y 94A [ ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR ] 95 [JOINT DIRECTOR], 96 [JOINT COMMISSIONER], 97 [ASSISTANT DIRECTOR 98 [OR DEPUTY DIRECTOR]], 99 [ASSISTANT COMMISSIONER 98 [OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER], OR ( B ) SUCH 94A [ ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR ] 95 [JOINT DIRECTOR], OR 96 [JOINT COMMISSIONER], AS THE CASE MAY BE, MAY AUTHO RISE ANY 97 [ASSISTANT DIRECTOR 98 [OR DEPUTY DIRECTOR]], 99 [ASSISTANT COMMISSIONER 98 [OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER], (THE OFFICER SO AUTHORISED IN ALL CASES BEING HEREI NAFTER REFERRED TO AS THE AUTHORISED OFFICER) TO] ( I ) ENTER AND SEARCH 1 ANY 2 [BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT] WHER E HE HAS REASON TO SUSPECT THAT SUCH BOOKS OF ACCOUNT , OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE KEPT; ( II ) BREAK OPEN THE LOCK OF ANY DOOR, BOX, LOCKER, SAF E, ALMIRAH OR OTHER RECEPTACLE FOR EXERCISING THE POWERS CONFERRED BY C LAUSE ( I ) WHERE THE KEYS THEREOF ARE NOT AVAILABLE; 3 [( IIA ) SEARCH ANY PERSON WHO HAS GOT OUT OF, OR IS ABOUT TO GET INTO, OR IS IN, THE BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT, IF TH E AUTHORISED OFFICER HAS REASON TO SUSPECT THAT SUCH PERSON HAS SECRETED ABO UT HIS PERSON ANY SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING;] 4 [( IIB ) REQUIRE ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE FORM OF ELECTRONIC RECORD AS DEFINED IN CLAUSE ( T ) OF SUB-SECTION (1) OF SECTION 2 OF THE 19 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2000) 5 , TO AFFORD THE AUTHORISED OFFICER THE NECESSARY FACILITY TO INSPECT SUCH BOOK S OF ACCOUNT OR OTHER DOCUMENTS;] ( III ) SEIZE 6 ANY SUCH 6 BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND AS A RESULT OF SUCH SEARCH: 7 [ PROVIDED THAT BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE O R THING, BEING STOCK-IN-TRADE OF THE BUSINESS, FOUND AS A RESULT O F SUCH SEARCH SHALL NOT BE SEIZED BUT THE AUTHORISED OFFICER SHALL MAKE A NOTE OR INVENTORY OF SUCH STOCK-IN-TRADE OF THE BUSINESS;] ( IV ) PLACE MARKS OF IDENTIFICATION ON ANY BOOKS OF ACC OUNT OR OTHER DOCUMENTS OR MAKE OR CAUSE TO BE MADE EXTRACTS OR COPIES THER EFROM; ( V ) MAKE A NOTE OR AN INVENTORY OF ANY SUCH MONEY, BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING : 8 [ PROVIDED THAT WHERE ANY BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT REFERRED TO IN CLAUSE ( I ) IS WITHIN THE AREA OF JURISDICTION OF ANY 9 [CHIEF COMMISSIONER OR COMMISSIONER], BUT SUCH 9 [CHIEF COMMISSIONER OR COMMISSIONER] HAS NO JURISDICTION OVER THE PERSON REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ), THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 10 [120 ], IT SHALL BE COMPETENT FOR HIM TO EXERCISE THE POWERS UNDER THIS SUB-SECTI ON IN ALL CASES WHERE HE HAS REASON TO BELIEVE THAT ANY DELAY IN GETTING THE AUT HORISATION FROM THE 11 [CHIEF COMMISSIONER OR COMMISSIONER] HAVING JURISDICTION O VER SUCH PERSON MAY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE :] 12 [ PROVIDED FURTHER THAT WHERE IT IS NOT POSSIBLE OR PRACTICABLE TO TA KE PHYSICAL POSSESSION OF ANY VALUABLE ARTICLE OR THING AND REM OVE IT TO A SAFE PLACE DUE TO ITS VOLUME, WEIGHT OR OTHER PHYSICAL CHARACTERISTICS OR DUE TO ITS BEING OF A DANGEROUS NATURE, THE AUTHORISED OFFICER MAY SERVE AN ORDER O N THE OWNER OR THE PERSON WHO IS IN IMMEDIATE POSSESSION OR CONTROL THEREOF THAT HE SHALL NOT REMOVE, PART WITH OR OTHERWISE DEAL WITH IT, EXCEPT WITH THE PREVIOUS PE RMISSION OF SUCH AUTHORISED OFFICER AND SUCH ACTION OF THE AUTHORISED OFFICER S HALL BE DEEMED TO BE SEIZURE OF SUCH VALUABLE ARTICLE OR THING UNDER CLAUSE ( III ):] 13 [ PROVIDED ALSO THAT NOTHING CONTAINED IN THE SECOND PROVISO SHALL APPLY IN CASE OF ANY VALUABLE ARTICLE OR THING, BEING STOCK-IN-TR ADE OF THE BUSINESS:] 13A [PROVIDED ALSO THAT NO AUTHORISATION SHALL BE ISSUED BY THE ADDITI ONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR JOINT DIRECTOR OR JOI NT COMMISSIONER ON OR AFTER THE 1ST DAY OF OCTOBER, 2009 UNLESS HE HAS BEEN EMP OWERED BY THE BOARD TO DO SO. ] 20 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 14 [(1A) WHERE ANY 15 [CHIEF COMMISSIONER OR COMMISSIONER], IN CONSEQUENC E OF INFORMATION IN HIS POSSESSION, HAS REASON TO SUSPEC T THAT ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IN RESPECT OF WHICH AN OFFICER HAS BEEN AUTHORISED BY THE 16 [DIRECTOR GENERAL OR DIRECTOR] OR ANY OTHER 17 [CHIEF COMMISSIONER OR [COMMISSIONER] OR 18 [ ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER ] 19 [ OR JOINT DIRECTOR OR JOINT COMMISSIONER ] TO TAKE ACTION UNDER CLAUSES ( I ) TO ( V ) OF SUB-SECTION (1) ARE OR IS KEPT IN ANY BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT NOT ME NTIONED IN THE AUTHORISATION UNDER SUB-SECTION (1), SUCH 20 [CHIEF COMMISSIONER OR COMMISSIONER] MAY, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 21 [120], AUTHORISE THE SAID OFFICER TO TAKE ACTION UNDER ANY OF THE CLAUSES AFORESAID IN R ESPECT OF SUCH BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT.] (2) THE AUTHORISED OFFICER MAY REQUISITION THE SERV ICES OF ANY POLICE OFFICER OR OF ANY OFFICER OF THE CENTRAL GOVERNMENT, OR OF BOTH, TO ASSIST HIM FOR ALL OR ANY OF THE PURPOSES SPECIFIED IN SUB-SECTION (1) 22 [OR SUB-SECTION (1A)] AND IT SHALL BE THE DUTY OF EVERY SUCH OFFICER TO COMPLY WITH SUCH REQUISITI ON. (3) THE AUTHORISED OFFICER MAY, WHERE IT IS NOT PRA CTICABLE 23 TO SEIZE ANY SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, 24 [FOR REASONS OTHER THAN THOSE MENTIONED IN THE SECO ND PROVISO TO SUB-SECTION (1),] SERVE AN ORDER ON THE OWNER OR TH E PERSON WHO IS IN IMMEDIATE POSSESSION 23 OR CONTROL THEREOF THAT HE SHALL NOT REMOVE, PART WITH OR OTHERWISE DEAL WITH IT EXCEPT WITH THE PREVIOUS PERMISSION OF SUCH OFFICER AND SUCH OFFICER MAY TAKE SUCH STEPS AS MAY BE NECESSARY FOR ENSURING CO MPLIANCE WITH THIS SUB-SECTION. 25 [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT SERVING OF AN ORDER AS AFORESAID UNDER THIS SUB-SECTION SHALL NOT BE DEEMED TO BE SEIZURE OF SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING UNDER CLAUSE ( III ) OF SUB-SECTION (1).] (4) THE AUTHORISED OFFICER MAY, DURING THE COURSE O F THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH E XAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. 21 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 25A [ EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT THE EXAMI- NATION OF ANY PERSON UNDER THIS SUB-SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND A S A RESULT OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PUR POSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN INCO ME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT.] 26 [(4A) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUME D ( I ) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS T O SUCH PERSON ; ( II ) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OT HER DOCUMENTS ARE TRUE ; AND ( III ) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH B OOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIG NED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN T HAT PERSONS HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.] (5) 27 [***] (6) 28 [***] (7) 29 [***] (8) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS SEIZED UNDER SUB-SECTION (1) 30 [OR SUB-SECTION (1A)] SHALL NOT BE RETAINED BY THE AUTH ORISED OFFICER FOR A PERIOD EXCEEDING 31 [THIRTY DAYS FROM THE DATE OF THE ORDER OF ASSESSME NT UNDER 32 [SECTION 153A OR] CLAUSE ( C ) OF SECTION 158BC ] UNLESS THE REASONS FOR RETAINING THE SAME ARE RECORDED BY HIM IN WRITING AND THE APPROVAL OF THE 33 [CHIEF COMMISSIONER, COMMISSIONER, DIRECTOR GENERAL OR DIRECTOR] FOR SUC H RETENTION IS OBTAINED : PROVIDED THAT THE 33 [CHIEF COMMISSIONER, COMMISSIONER, DIRECTOR GENERAL OR DIRECTOR] SHALL NOT AUTHORISE THE RETENTION OF THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS FOR A PERIOD EXCEEDING THIRTY DAYS AFTER ALL THE PROCEEDINGS UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR THIS A CT IN RESPECT OF THE YEARS FOR WHICH THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS ARE R ELEVANT ARE COMPLETED. 22 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 34 [(8A) AN ORDER UNDER SUB-SECTION (3) SHALL NOT BE I N FORCE FOR A PERIOD EXCEEDING SIXTY DAYS FROM THE DATE OF THE ORDER.] (9) THE PERSON FROM WHOSE CUSTODY ANY BOOKS OF ACCO UNT OR OTHER DOCUMENTS ARE SEIZED UNDER SUB-SECTION (1) 35 [OR SUB-SECTION (1A)] MAY MAKE COPIES THEREOF, OR TAKE EXTRACTS THEREFROM, IN THE PRESENCE OF THE AUT HORISED OFFICER OR ANY OTHER PERSON EMPOWERED BY HIM IN THIS BEHALF, AT SUCH PLA CE AND TIME AS THE AUTHORISED OFFICER MAY APPOINT IN THIS BEHALF. 36 [(9A) WHERE THE AUTHORISED OFFICER HAS NO JURISDICT ION OVER THE PERSON REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ) OF SUB-SECTION (1), THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS, OR ANY MONEY, BULLION, JEWELLERY O R OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS SECTION AND IN SECTIONS 132A AND 132B REFERRED TO AS THE ASSETS) SEIZED UNDER THAT SUB-SECTION SHALL BE HANDED OVER BY THE AUTHORISED OFFICER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH PER SON WITHIN A PERIOD OF SIXTY DAYS FROM THE DATE ON WHICH THE LAST OF THE AUTHORI SATIONS FOR SEARCH WAS EXECUTED AND THEREUPON THE POWERS EXERCISABLE BY THE AUTHORI SED OFFICER UNDER SUB-SECTION (8) OR SUB-SECTION (9) SHALL BE EXERCISABLE BY SUCH ASSESSING OFFICER.] (10) IF A PERSON LEGALLY ENTITLED TO THE BOOKS OF A CCOUNT OR OTHER DOCUMENTS SEIZED UNDER SUB-SECTION (1) 37 [OR SUB-SECTION (1A)] OBJECTS FOR ANY REASON TO THE APPROVAL GIVEN BY THE 38 [CHIEF COMMISSIONER, COMMISSIONER, DIRECTOR GENERAL OR DIRECTOR] UNDER SUB-SECTION (8), HE MAY MAKE AN APPLICATION T O THE BOARD STATING THEREIN THE REASONS FOR SUCH OBJECTION AND REQUESTING FOR THE R ETURN OF THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS 39 [AND THE BOARD MAY, AFTER GIVING THE APPLICANT AN O PPORTUNITY OF BEING HEARD, PASS SUCH ORDERS AS IT THINKS FIT]. (11) 40 [***] (11A) 41 [***] (12) 42 [***] 43 [(13) THE PROVISIONS OF THE CODE OF CRIMINAL PROCED URE, 1973 (2 OF 1974), RELATING TO SEARCHES AND SEIZURE SHALL APPLY, SO FA R AS MAY BE, TO SEARCHES AND SEIZURE UNDER SUB-SECTION (1) OR SUB-SECTION (1A).] 44 (14) THE BOARD MAY MAKE RULES IN RELATION TO ANY SE ARCH OR SEIZURE UNDER THIS SECTION ; IN PARTICULAR, AND WITHOUT PREJUDICE TO T HE GENERALITY OF THE FOREGOING POWER, SUCH RULES MAY PROVIDE FOR THE PROCEDURE TO BE FOLLOWED BY THE AUTHORISED OFFICER 23 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ( I ) FOR OBTAINING INGRESS INTO 45 [ANY BUILDING, PLACE, VESSEL, VEHICLE OR AIRCRAFT] TO BE SEARCHED WHERE FREE INGRESS THERETO IS NOT AV AILABLE ; ( II ) FOR ENSURING SAFE CUSTODY OF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED. 46 [ EXPLANATION 1. FOR THE PURPOSES OF SUB-SECTION (9A), EXECUTION OF AN AUTHORISATION FOR SEARCH SHALL HAVE THE SAME MEANI NG AS ASSIGNED TO IT IN EXPLANATION 2 TO SECTION 158BE.] EXPLANATION 2. IN THIS SECTION, THE WORD PROCEEDING MEANS ANY PR OCEEDING IN RESPECT OF ANY YEAR, WHETHER UNDER THE INDIAN INCOM E-TAX ACT, 1922 (11 OF 1922), OR THIS ACT, WHICH MAY BE PENDING ON THE DATE ON WH ICH A SEARCH IS AUTHORISED UNDER THIS SECTION OR WHICH MAY HAVE BEEN COMPLETED ON OR BEFORE SUCH DATE AND INCLUDES ALSO ALL PROCEEDINGS UNDER THIS ACT WHICH MAY BE COMMENCED AFTER SUCH DATE IN RESPECT OF ANY YEAR.] 47 [ POWERS TO REQUISITION BOOKS OF ACCOUNT, ETC. 48 132A. 49 (1) WHERE THE 50 [DIRECTOR GENERAL OR DIRECTOR] OR THE 51 [CHIEF COMMISSIONER OR COMMISSIONER], IN CONSEQUENCE OF IN FORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT ( A ) ANY PERSON TO WHOM A SUMMONS UNDER SUB-SECTION (1 ) OF SECTION 37 OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER SUB-SECTION (1) OF SECTION 131 OF THIS ACT, OR A NOTICE UNDER SUB-SECTION (4) OF SECTION 22 OF THE INDIAN INCOME-TAX ACT, 1922, OR UNDER SUB-SECTI ON (1) OF SECTION 142 OF THIS ACT WAS ISSUED TO PRODUCE, OR CAUSE TO BE P RODUCED, ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAS OMITTED OR FAILED TO PRODUCE, OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMEN TS, AS REQUIRED BY SUCH SUMMONS OR NOTICE AND THE SAID BOOKS OF ACCOUN T OR OTHER DOCUMENTS HAVE BEEN TAKEN INTO CUSTODY BY ANY OFFICER OR AUTH ORITY 52 UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE, OR ( B ) ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS WILL BE U SEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 192 2 (11 OF 1922), OR UNDER THIS ACT AND ANY PERSON TO WHOM A SUMMONS OR NOTICE AS AFORESAID HAS BEEN OR MIGHT BE ISSUED WILL NOT, OR WOULD NOT, PRODUCE OR CAUSE TO BE PRODUCED, SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS ON THE RETURN OF SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS BY ANY OFFICER OR AUTHORITY BY WHOM OR WHICH SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS H AVE BEEN TAKEN INTO CUSTODY UNDER ANY OTHER LAW FOR THE TIME BEING IN F ORCE, OR 24 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ( C ) ANY ASSETS REPRESENT EITHER WHOLLY OR PARTLY INCO ME OR PROPERTY WHICH HAS NOT BEEN, OR WOULD NOT HAVE BEEN, DISCLOSED FOR THE PURPOSES OF THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR THIS ACT BY A NY PERSON FROM WHOSE POSSESSION OR CONTROL SUCH ASSETS HAVE BEEN TAKEN I NTO CUSTODY BY ANY OFFICER OR AUTHORITY UNDER ANY OTHER LAW FOR THE TI ME BEING IN FORCE, THEN, THE [DIRECTOR GENERAL OR DIRECTOR] OR THE [CHIEF CO MMISSIONER OR COMMISSIONER] MAY AUTHORISE ANY [ ADDITIONAL DIRECTOR, ADDITIONAL COMMISSIONER, ] [JOINT DIRECTOR], 56 [JOINT COMMISSIONER], [ASSISTANT DIRECTOR 58 [OR DEPUTY DIRECTOR]], 59 [ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER] OR INCOME-TAX OFFICER] (HEREAFTER IN THIS SECTION AND IN SUB-SECTION (2) OF SECTION 278D REFERRED TO AS THE REQUISITIONING OFFICER) TO REQUIRE THE OFFICER OR AUTHORITY REFERRED TO IN CLA USE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ), AS THE CASE MAY BE, TO DELIVER SUCH BOOKS OF ACC OUNT, OTHER DOCUMENTS OR ASSETS TO THE REQUISITIONING OFFICER. (2) ON A REQUISITION BEING MADE UNDER SUB-SECTION ( 1), THE OFFICER OR AUTHORITY REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ), AS THE CASE MAY BE, OF THAT SUB- SECTION SHALL DELIVER THE BOOKS OF ACCOUNT, OTHER D OCUMENTS OR ASSETS TO THE REQUISITIONING OFFICER EITHER FORTHWITH OR WHEN SUC H OFFICER OR AUTHORITY IS OF THE OPINION THAT IT IS NO LONGER NECESSARY TO RETAIN TH E SAME IN HIS OR ITS CUSTODY. (3) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS HAVE BEEN DELIVERED TO THE REQUISITIONING OFFICER, THE PROVISIONS OF SUB-S ECTIONS (4A) TO (14) (BOTH INCLUSIVE) OF SECTION 132 AND SECTION 132B SHALL, SO FAR AS MAY BE, APPLY AS IF SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS HAD BEE N SEIZED UNDER SUB-SECTION (1) OF SECTION 132 BY THE REQUISITIONING OFFICER FROM THE CUSTODY OF THE PERSON REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ), AS THE CASE MAY BE, OF SUB-SECTION (1) OF THIS SECTION AND AS IF FOR THE WORDS THE AUTHORISE D OFFICER OCCURRING IN ANY OF THE AFORESAID SUB-SECTIONS (4A) TO (14), THE WORDS THE REQUISITIONING OFFICER WERE SUBSTITUTED.] 8.11 IN THE LIGHT OF ABOVE LEGAL POSITION, AFTER AB OVE DISCUSSIONS AND AFTER READING SECTIONS 132, 132A, 153A, 153B, 153C OF THE ACT AND THE DEPARTMENTAL CIRCULAR 25 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 DATED 5-9-2003, WE FIND THAT ASSESSMENT OF INCOME I N CASE OF SEARCH UNDER SECTION 153A IS TO ASSESS OR REASSESS INCOME FOR SPECIFIED PERIOD. IN THIS REGARD, WE WOULD LIKE TO REFER THE FOLLOWING DECISIONS:- ALL CARGO GLOBAL LOGISTICS LTD. VS. DEPUTY COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-44 [2012] 23 TAXMANN.COM 103 (M UM.) (SB). 8.12 IN THIS CASE DURING THE COURSE OF APPELLATE PR OCEEDINGS, A SPECIAL BENCH WAS CONSTITUTED TO DETERMINE THE QUESTION AS TO WHETHER THE SCOPE OF ASSESSMENT UNDER SECTION 153A ENCOMPASSES ADDITIONS, NOT BASED ON AN Y INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE I.T.A.T. HE LD AS UNDER:- THE PROVISION UNDER SECTION 153A IS APPLICABLE WHER E A SEARCH OR REQUISITION IS INITIATED AFTER 31-5-2003. IN SUCH A CASE THE ASSESSING OFFICER IS OBLIGED TO ISSUE NOTICE UNDER SECTION 153A IN RE SPECT OF SIX PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INITIATED. THEREAFTER HE HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF TH ESE SIX YEARS. IT IS OBLIGATORY ON THE PART OF THE ASSESSING OFFICER TO ASSESS OR REASSESS TOTAL INCOME OF THE SIX YEARS AS PROVIDED IN SECTION 153A (1)( B ) AND REITERATED IN THE 1ST PROVISO TO THIS SECTION. THE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION O F THE SEARCH OR REQUISITION SHALL ABATE. THERE IS NO DIVERGENCE OF VIEWS IN SO FAR AS THE PROVISION CONTAINED IN SECTION 153A TILL THE 1ST PROVISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEAN S THAT AN ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF S EARCH SHALL CEASE TO EXIST AND NO FURTHER ACTION SHALL BE TAKEN THEREON. THE A SSESSMENT SHALL NOW BE MADE UNDER SECTION 153A. THE CASE OF THE ASSESSEE I S THAT NECESSARY COROLLARY TO THIS PROVISION IS THAT COMPLETED ASSES SMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FAR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH . ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE REVENUE THAT ABATEMENT OF PE NDING ASSESSMENT IS ONLY FOR THE PURPOSE OF AVOIDING TWO ASSESSMENTS FO R THE SAME YEAR, ONE 26 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 BEING REGULAR ASSESSMENT AND THE OTHER BEING ASSESS MENT UNDER SECTION 153A. IN OTHER WORDS THESE TWO ASSESSMENTS COALESCE INTO ONE ASSESSMENT. THE SECOND PROVISO DOES NOT CONTAIN ANY WORD OR WOR DS TO THE EFFECT THAT NO REASSESSMENT SHALL BE MADE IN RESPECT OF A COMPLETE D ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITE RAL INTERPRETATION SHOULD BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANI FESTLY ABSURD OR UNJUST RESULTS AS SECTION 153A( I )( B ) AND THE FIRST PROVISO CLEARLY PROVIDE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSEES WHERE ONE OR MORE OF SUCH ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE DATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVANCE IN VIEW OF CLEAR AND UNAMBIGUOUS WORDS US ED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESULTS. THERE IS NO CASUS OMISUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISLATIVE INTENT AND AGAINST THE VERY RULE IN THIS BEHALF THAT IT SHOULD BE SUPP LIED FOR THE PURPOSE OF ACHIEVING LEGISLATIVE INTENT. THE SUBMISSIONS ARE M ANIFOLD, THE FOREMOST BEING THAT THE PROVISION UNDER SECTION 153A SHOULD BE READ IN CONJUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), THE REASON BEING THAT THE LATER DEALS WITH SEARCH AND SEIZURE AND THE FORMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TWO ARE INEXTRICABLY LINKED WITH EACH OTHER. [PARA 48] BEFORE PROCEEDING FURTHER, ONE MAY NOW EXAMINE THE PROVISIONS CONTAINED IN SUB-SECTION (2) OF SECTION 153. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUB-SECTION (1) IS ANNULLED IN APPEAL ETC., T HEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER NULL IFIED, THE ASSESSMENT AGAIN ABATES. THE CASE OF THE ASSESSEE IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOO TING FROM THE PENDING ASSESSMENTS BECAUSE APPEALS ETC. PROCEEDINGS CONTIN UE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPEND S UPON SUBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, IT IS FOUND THAT THIS PROVISION ALSO MAKES IT CLEAR TH AT THE ABATEMENT OF PENDING PROCEEDINGS IS NOT OF SUCH PERMANENT NATURE THAT TH EY CEASE TO EXIST FOR ALL TIMES TO COME. THE INTERPRETATION OF THE ASSESSEE, THOUGH NOT SPECIFICALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMEN T MADE UNDER SECTION 153(1), THE ASSESSING OFFICER GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EARLIER INDEPENDENT OF THE SEARCH AND WHICH CAME TO AN END DUE TO INITIATION OF THE SEARCH.[PARA 49) 27 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 THE PROVISION CONTAINED IN SECTION 132(1) EMPOWERS THE OFFICER TO ISSUE A WARRANT OF SEARCH OF THE PREMISES OF A PERSON WHERE ANY ONE OR MORE OF CONDITIONS MENTIONED THEREIN IS OR ARE SATISFIED, I.E . ( A ) SUMMONS OR NOTICE HAS BEEN ISSUED TO PRODUCE BOOKS OF ACCOUNT OR OTHE R DOCUMENTS BUT SUCH BOOKS OF ACCOUNT OR DOCUMENTS HAVE NOT BEEN PRODUCE D, ( B ) SUMMONS OR NOTICE HAS BEEN OR MIGHT BE ISSUED, HE WILL NOT PRO DUCE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED THEREIN, OR ( C ) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRESENTS WHOLLY OR PA RTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMENT, CALLED AS UNDISCLOSED INCOME OR PROPERTY. THE PROVISION IN SECTION 132(1) DOES NOT USE THE WORD ' INCRIMINATING DOCUMENT'. CLAUSES ( A ) AND ( B ) OF SECTION 132(1) EMPLOY THE WORDS 'BOOKS OF ACCO UNT OR OTHER DOCUMENTS'. FOR HARMONIOUS INTERPRETATION OF THIS PROVISION WITH PROVISION CONTAINED IN SECTION 153A, ALL THE THREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAV E TO BE TAKEN INTO ACCOUNT. [PARA 50] HAVING HELD SO, AN ASSESSMENT OR REASSESSMENT UNDER SECTION 153A ARISES ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDUCTED . THEREFORE, SUCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. A SEARCH CAN BE AUTHORIZED ON SATISFACTION OF ONE OF THE THREE CONDITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING T HE PROVISION CONTAINED IN SECTION 153A, ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, ONE PROCEEDS TO LITERALLY INTERPRET TO PROVIS ION IN SECTION 153A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINE D IN SECTION 132(1).[PARA 51] THE PROVISION COMES INTO OPERATION IF A SEARCH OR R EQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE ASSESSING OFFICER IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQU IRING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE WORD USED IS 'SHALL' AND, THUS, THERE IS NO OPTION BUT TO ISSUE SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOM E OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USED IS 'SHALL' AND, TH EREFORE, THE ASSESSING OFFICER HAS NO OPTION BUT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE PENDING PROCEEDINGS SHALL ABATE. THIS ME ANS THAT OUT OF SIX YEARS, IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDI NG PROCEEDINGS WILL NOT BE 28 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 PROCEEDED WITH THEREAFTER. THE ASSESSMENT HAS NOW T O BE MADE UNDER SECTION 153A(1)( B ) AND THE FIRST PROVISO. IT ALSO MEANS THAT ONLY ON E ASSESSMENT WILL BE MADE UNDER THE AFORESAID PROVISI ONS AS THE TWO PROCEEDINGS I.E. ASSESSMENT OR REASSESSMENT PROCEEDINGS AND PROCEED INGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB-SECTION (1) IS ANNULLED IN APPEAL OR OTHER LEGAL PROCEEDING S, THEN THE ABATED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR REASSESSMENT, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. [PARA 52] THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASSESSME NT OR REASSESSMENT OF TOTAL INCOME UNDER SECTION 153A(1)( B ) AND THE FIRST PROVISO? FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). 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 ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN I N A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATION WILL PROD UCE THE FOLLOWING RESULTS:- ( A ) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT UNDER SE CTION 153A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEA R SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEAR CH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE ASSESSING OFFICER, ( B ) IN RESPECT OF NON-ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE C OURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND U NDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SE ARCH. [PARA 53] THE INTERPRETATION PLACED BY THE TRIBUNAL TAKES INT O ACCOUNT THE PRINCIPLES OF LITERAL INTERPRETATION AND READING THE RELEVANT PROVISIONS TOGETHER. THIS INTERPRETATION DOES NOT IN ANY MANNER GIVE RESULTS WHICH CAN BE SAID TO BE ULTRA VIRES. IT ALSO DOES NOT GIVE ANY ABSURD OR UN JUST RESULTS. [PARA 56] THUS, QUESTION RAISED BEFORE THE SPECIAL BENCH NO.1 IS ANSWERED AS UNDER: 29 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 ( A ) IN ASSESSMENT THAT ARE ABATED, THE ASSESSING OFFI CER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; ( B ) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HA S ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS - BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COU RSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. [PARA 58] COMMISSIONER OF INCOME-TAX (CENTRAL), KANPUR VS. SMT. SHAILA AGARWAL [2011] 16 TAXMANN.COM 232 (ALL.) 8.13 THE BRIEF FACTS OF THIS CASE WERE THAT T HE ASSESSEE FILED A RETURN FOR THE ASSESSMENT YEAR 2002-03 ON 31-12-2002 DECLARING INC OME OF RS.3,66,438/-. THE CASE WAS SELECTED FOR SCRUTINY, ON WHICH A NOTICE U NDER SECTION 143(2) WAS ISSUED. ON 10-11-2004 THE ASSESSEE WAS REQUIRED TO PRODUCE THE DONORS ALONG WITH EVIDENCE, THE SOURCE OF GIFTS AND THE RELATIONSHIP BETWEEN THE DONORS AND THE DONEE IN RESPECT OF GIFTS OF RS.99,00,000. ON 30-3-2005 AN ASSESSMENT OF RS.1,16,65,376 WAS MADE UNDER SECTION 143(3). THE COMMISSIONER (AP PEALS) DISMISSED THE APPEAL ON 22-5-2006, AND CONFIRMED THE ADDITION OF RS.99,9 9,000, AS UNEXPLAINED CREDIT ON ACCOUNT OF BOGUS GIFTS. A RELIEF OF RS.1,20,000 WAS GIVEN ON ACCOUNT OF LOW WITHDRAWALS OUT OF RS.2,40,000, WHICH WAS ADDED BY THE ASSESSING OFFICER. AFTER THE DECISION OF THE APPEAL BY THE COMMISSIONER (APP EALS) ON 22-5-2006 A SEARCH UNDER SECTION 132 WAS CARRIED OUT ON 17-10-2006. A NOTICE UNDER SECTION 153A 30 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 WAS ISSUED TO THE ASSESSEE ON 26-9-2007, AS A RESUL T OF SEARCH AND SEIZURE, CALLING THE ASSESSEE TO FILE RETURN FOR SIX ASSESSMENT YEAR S INCLUDING ASSESSMENT YEAR 2002- 03. THE TRIBUNAL, HEARING THE APPEAL AGAINST THE OR DER OF THE COMMISSIONER (APPEALS) DATED 22-5-2006 ALLOWED THE APPEALS ACCEP TING THE ARGUMENTS MADE ON BEHALF OF ASSESSEE THAT ONCE A NOTICE UNDER SECTION 153A HAS BEEN ISSUED AFTER SEARCH AND SEIZURE OPERATIONS, AS PER THE PROVISION S OF SECTION 153A, ALL THE ASSESSMENTS OF THE SIX PRECEDING ASSESSMENT YEARS P RIOR TO THE DATE OF SEARCH HAVE TO ABATE AND THAT EVEN THE COMPLETED AND CONCLUDED ASSESSMENTS SHOULD STAND MERGED IN THE FRESH ASSESSMENT TO BE MADE BY THE AS SESSING OFFICER UNDER SECTION 153A IN PURSUANCE OF THE SEARCH. ON APPEAL THE COU RT HELD THAT AS UNDER:- A PLAIN READING OF SECTION 153A WOULD SHOW THAT WH ERE NOTICE UNDER THIS SECTION IS ISSUED AS RESULT OF ANY SEARCH UNDER SEC TION 132, ASSESSMENT OR REASSESSMENT IF ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO UNDER SECTION 1 53, PENDING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR REQUISITI ON UNDER SECTION 132A SHALL ABATE. THE WORDS, PENDING ON THE DATE OF INIT IATION OF SEARCH UNDER SECTION 132, OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, HAS TO BE ASSIGNED SIMPLE AND PLAIN MEANING. WH ERE THE ASSESSMENT OR RE-ASSESSMENT IS FINALISED, THERE ARE NO PENDING PR OCEEDINGS TO BE ABATED, AND RESTORED TO THE FILE OF THE ASSESSING OFFICER. TO ABATE MEANS TO DIMINISH OR TO TAKE AWAY. [PARA 12] THE WORD 'ABATEMENT' IS REFERABLE TO SOMETHING, WHI CH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION. THE ABATEMENT REFERS TO SUSPE NSION OR TERMINATION OF THE PROCEEDINGS EITHER OF THE MAIN ACTION, OR THE P ROCEEDINGS ANCILLARY OR COLLATERAL TO IT. THE WORD IS COMMONLY USED IN THE LEGISLATIONS, WHICH PROVIDE FOR ABATEMENT OF ACTION/ SUIT; ABATEMENT OF LEGACIES; ABATEMENT OF NUISANCE; AND ALL ACTIONS FOR SUCH NATURE, WHICH HA VE THE PENDENCY OR 31 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 CONTINUANCE. THE PROCEEDINGS, WHICH HAVE ALREADY TE RMINATED ARE NOT LIABLE FOR ABATEMENT UNLESS STATUTE EXPRESSLY PROVIDES FOR SUCH CONSEQUENCE THEREOF. [PARA 13] THE WORD 'PENDING' OCCURRING IN THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT. IT IS QUALIFIED BY THE WO RDS 'ON THE DATE OF INITIATION OF THE SEARCH', AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE LIABLE TO ABATE. [PARA 14] THE PENDENCY OF AN APPEAL IN THE TRIBUNAL AGAINST T HE ORDER OF ASSESSMENT AGAINST WHICH AN APPEAL HAS BEEN DECIDED BY COMMISS IONER (APPEALS) IS NOT A CONTINUATION OF THE PROCEEDINGS OF ASSESSMENT. AN APPEAL UNDER THE INCOME-TAX ACT LIES TO THE APPELLATE TRIBUNAL ON A QUESTION OF LAW. EVEN IF IT IS PENDING ON THE DATE OF SEARCH, NO SUCH INTENTION HAS INDICATED BY THE TRIBUNAL ARISES OUT OF THE PROVISIONS OF SECOND PRO VISO TO SECTION 153A, TO ABATE THE PROCEEDINGS, WHICH HAVE BEEN COMPLETED, O R CONCLUDED, AND TO RESTORE ASSESSMENT TO THE FILE OF THE ASSESSING OFF ICER. [PARA 15] THIS IS NO FORCE IN THE SUBMISSION THAT WHERE A NOT ICE UNDER SECTION 153A HAS BEEN GIVEN AFTER THE SEARCH OPERATIONS UNDER SE CTION 132, FOR FILING ASSESSMENT FOR THE BLOCK PERIOD OF 6 YEARS, AND IF SUCH PERIOD INCLUDES ANY OF THE ASSESSMENT YEAR, THE ABATEMENT OF ASSESSMENT AN D RE-ASSESSMENT PROCEEDINGS, TO GIVE WAY TO REASSESSMENT CONSIDERIN G THE ADDITIONS IN THE ASSESSMENT UNDER SECTION 153A, WILL ALSO INCLUDE TH E ASSESSMENT OR RE- ASSESSMENT, WHICH HAS BEEN COMPLETED. IF AS A RESUL T OF SEARCH, SOME UNDISCLOSED INCOME IS FOUND TO HAVE ESCAPED ASSESSM ENT, THE ASSESSING OFFICER, MAY INITIATE STEPS FOR REASSESSMENT AFTER SANCTION OF COMPETENT AUTHORITY, WITHIN THE PRESCRIBED PERIOD OF LIMITATI ON. [PARA 16] THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFE RS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMENT PROCEEDINGS. TH E WORD 'PENDING' DOES NOT OPERATE ANY SUCH INTERPRETATION, THAT WHEREVER THE APPEAL AGAINST SUCH ASSESSMENT OR REASSESSMENT IS PENDING, THE SAME ALO NG WITH ASSESSMENT OR REASSESSMENT PROCEEDINGS IS LIABLE TO BE ABATED. TH E PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTION 153A IN A MANNER THAT WHE RE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE COMPLETE, AND THE MATT ER IS PENDING IN APPEAL IN THE TRIBUNAL, THE ENTIRE PROCEEDINGS WILL ABATE. [PARA 19] 32 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY THAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUC H AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CONSEQUENCES THAT A RISE THEREAFTER. IN THE PRESENT CASE, AFTER DEDUCTING BOGUS GIFTS IN THE RE GULAR ASSESSMENT PROCEEDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN UNDER SECTION 271(1)(C). THE MATERIAL FOUND IN THE SEARCH MAY BE A GROUND FOR NOTICE AND ASSESSMENT UNDER SECTION 153A BUT THAT WOULD NOT EF FACE OR TERMINATE ALL THE CONSEQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR AS SESSMENT OR REASSESSMENT RESULTING INTO THE DEMAND OR PROCEEDIN GS OF PENALTY. [PARA 20] FOR THE AFORESAID REASONS, THE TRIBUNAL HAD ERRED I N LAW IN ABATING THE REGULAR ASSESSMENT PROCEEDINGS, WHICH HAD BECOME FI NAL, AND RESTORING THEM AS A CONSEQUENCE OF SEARCH UNDER SECTION 132, AND NOTICE UNDER SECTION 153A TO THE FILE OF THE ASSESSING OFFICER. [PARA 21] 8.14. WITH ABOVE BACK GROUNDS OF DISCUSSIONS, IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSIDERATION, WE NOTICE THAT IN RESPONSE, VI DE LETTER DATED 11.11.2011, THE ASSESSEE SUBMITTED THAT TO THE BEST OF ASSESSEES KNOWLEDGE OR BELIEF NO DOCUMENTS HAVE BEEN SEIZED BY THE DEPARTMENT RELATING TO THE CONCERN. AS REGARDS OTHER SEIZED MATERIAL, IT WAS SUBMITTED THAT NOTHING INCR IMINATING HAS BEEN FOUND SO AS TO DISCLOSE ANY UNDISCLOSED INCOME AS REGARDS THE ASSE SSEE FROM THE SEIZED MATERIAL. THE ASSESSEE SEEKS CLARIFICATION FROM THE A.O. SAYI NG THAT PLEASE LET THEM KNOW WHICH LOOSE PAPER OR DOCUMENT SEIZED FROM WHICH PRE MISES (AS SEARCHES WERE CONDUCTED IN SEVERAL LOCATIONS) REQUIRES A SPECIFIC SHOW-CAUSE TO EXPLAIN SO THAT ITS EXPLANATION COULD BE GIVEN. AS REGARDS THE ASSESSE E, IT CAN GIVE AN EXPLANATION IN RESPECT OF EACH AND EVERY SEIZED MATERIAL UNLESS TH E SAME IS A DUMB DOCUMENT OR IT DOES NOT PERTAIN TO THE ASSESSEE. BUT THE A.O. FAI LED TO POINT ANY MATERIAL IN THIS 33 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 REGARD. THE A.O. HAS AGAIN ISSUED DETAILED QUESTION NAIRE ON 18.11.2011 ASKING FOR FURTHER DETAILS ON VARIOUS ITEMS OF BALANCE SHEET E TC. IN RESPECT OF SEIZED DOCUMENTS, PARA 9 OF THE QUESTIONNAIRE IS SAME AS M ENTIONED IN PREVIOUS NOTICE/QUESTIONNAIRE. ON THE BASIS OF THE FACTS, T HE CIT(A) FOUND THAT NO SPECIFIC SEIZED DOCUMENT, MUCH LESS INCRIMINATING, HAS BEEN FOUND, SEIZED OR BROUGHT ON RECORD BY THE A.O. IN CASE OF THE ASSESSEE PERTAIN ING TO THE YEAR UNDER CONSIDERATION. THE CIT(A) NOTICED THAT IN THE ASSES SMENT ORDER THE A.O. HAS MADE DISCUSSION ABOUT LIST OF 61 DUMMY CONCERNS WITH BAN K ACCOUNTS, UNDISCLOSED BANK ACCOUNTS & UNACCOUNTED BUSINESS TRANSACTIONS OF RS. 46,20,98,097/- (PAGES 2-5 OF THE ASSESSMENT ORDER) PERTAINING TO K.S. OILS LTD., BUT NONE OF THEM BELONGS OR PERTAINS TO THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION NOR THERE IS ANY MATERIAL ON RECORD PROVING ASSESSEES CONNECTION WITH THESE DUMMY CONCERNS OR UNDISCLOSED BANK ACCOUNTS OR UNACCOUNTED TRANSACTIO NS. THE A.O. REFERRED THE MATERIAL/INCRIMINATING MATERIAL IN RESPECT OF THE G ROUP, K.S. OILS LIMITED AS NOTED BY THE CIT(A) IN HIS ORDER AND SAME IS STATED ABOVE AND NOT A SINGLE DOCUMENT HAS BEEN POINTED OUT RELATING TO THE ASSESSEE EVEN AFTE R SPECIFICALLY ASKED BY THE ASSESSEE. THE ADMITTED FACTS ARE THAT NO INCRIMINA TING DOCUMENTS OR MATERIAL WERE FOUND DURING THE COURSE OF SEARCH IN THE CASE OF TH E ASSESSEE. THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FA CTS RECORDED AND FINDING GIVEN 34 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 THEREON BY THE CIT(A). THEREFORE, AS PER THE DETAI LED DISCUSSIONS MADE ABOVE, THE ADDITIONS ARE NOT WARRANTED IN THE HANDS OF THE ASS ESSEE. 8.15 THE CIT(A) NOTICED THAT THE ASSESSEE HAS FILED RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN DUE COURSE ON 21.10.2004 DEC LARING INCOME OF RS.2,76,250/- WHICH IS SAME AS PER RETURN FILED U/S. 153A ON 16.0 9.2011 AFTER THE SEARCH OPERATIONS ON 11.03.2010. ASSESSMENT ORDER U/S. 14 3(3) HAS ALSO BEEN PASSED ON 6.12.2006 BY ITO, 2(2), GWALIOR ASSESSING TOTAL INC OME AT RS.4,25,590/- ALONG WITH AGRICULTURAL INCOME OF RS.14,294/- AFTER MAKIN G ADDITIONS ON ESTIMATED BASIS FOR DISALLOWANCE OF DIESEL & FUEL EXPENSES, HAMMALI EXPENSES, FREIGHT, GENERAL REPAIR EXPENSES ETC. VIDE APPEAL ORDER DATED 17.10 .2011 IN APPEAL NO.641/IT/06- 07/GWL, RELIEF OF RS.70,000/- HAS BEEN GRANTED OUT OF ADDITION MADE OF RS.95,000/- BY THE A.O. IN THE LIGHT OF JUDGMENT O F HONBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX (CENTRAL) , KANPUR VS. SMT. SHAILA AGARWAL [2011] 16 TAXMANN.COM 232 (ALL.) AND ALL CA RGO GLOBAL LOGISTICS LIMITED VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENT RAL CIRCLE-44 [2012] 23 TAXMANN.COM 103 (MUM.) (SB), THERE ARE NO PENDING P ROCEEDINGS TO BE ABATED, THEREFORE, ROUTINE ADDITIONS ARE NOT WARRANTED. 35 ITA NO.519/AGRA/2012 & CO NO.10/AGRA/2013 A.Y. 2004-05 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE NOTICE THAT THE CIT(A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN TH E LIGHT OF THE DETAILED DISCUSSIONS MADE AS ABOVE, WE CONFIRM THE ORDER OF CIT(A) ON TH E ISSUE. 10. SINCE WE CONFIRMED THE ORDER OF CIT(A) ON THE L EGAL ISSUE AND CIT(A) HAS ALSO NOT ADJUDICATED THE GROUND ON MERIT, THEREFORE , WE ARE ALSO NOT EXPRESSING ANY OPINION IN RESPECT OF MERIT OF THE CASE. 11. SINCE THE CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF CIT(A), IN THE LIGHT OF THE FACT, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND IN VIEW OF IT CROSS OBJECTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT, AGRA BENCH, AGRA BY ORDER 6. GUARD FILE SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY