Scope (P.) Ltd. v. Dy. CIT - Taxpublishers.in

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The Tax Publishers2013 TaxPub(DT) 1547 (Mum-Trib) : (2013) 052 (II) ITCL 0504 : (2013) 142 ITD 0515 Income Tax Act, 1961 --Search and seizure--Applicability of provisions of section 153ANo undisclosed income--A survey and search action was carried out in assessees case. Assessing officer issued notice under section 153A and initiated proceedings thereafter. Assessee filed return declaring certain income. Assessing officer made assessment under section 143(3) read with section 153A making certain additions. Assessee contended that assessment under section 143(3), for relevant assessment year, was already passed, prior to date of search and additions made by passing order under section 153A read with section 143(2) were not based on any seized material and as such, assessing officer had no jurisdiction to reopen completed assessment under section 143(3) by invoking provisions of section 153A. *Held:* Not acceptable. Once a search action was carried out under section 132, assessing officer was bound to proceed under section 153A for all preceding six assessment years preceding to assessment year in which search was carried out, even if there was no incriminating material to indicate any undisclosed income during original assessment completed under section 143(3) for any particular assessment year. Once a search/requisition is made under section 132 of the Income Tax Act, the assessing officer is bound to issue notice under section 153A to the assessee to furnish the return for each assessment years falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search conducted or requisition was made. Consequently, the assessing officer is empowered to assess or reassess the total income of all these six assessment years. [Para 5.1] The assessee's main contention against the validity of initiation of proceedings under section 153A is that there was no incriminating material found during the course of search and seizure action; therefore, the initiation of proceedings under section 153A is unwarranted. It is pertinent to note that the assessee has not challenged the validity of reassessment under section 153A for the other five years and the order passed by the Commissioner (Appeals) whereby the disallowance made under section 14A for the assessment years 2001-02, 2003-04, 2004-05, 2006-07 and 2007-08 was set aside by the Commissioner (Appeals) to the record of the assessing officer for re-computation of the amount to be disallowed under section 14A. Thus, it is clear that the assessee has not challenged the validity of the assessment under section 153A for the other years. The initiation of proceedings under section 153A is mandatory for all the assessment years falling within the six years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made.[Para 5.2] Even otherwise; the returns filed for the assessment years 2006-07 and 2007-08 were pending assessment on the date of search consequently, by virtue of the proviso to section 153A, the assessment for the assessment years 2006-07 and 2007-08 stand abated on the date of initiation of search. Therefore, even if there is no incriminating material to indicate any undisclosed income or income escaped assessment during the original assessment completed under section 143(3), the assessing officer is bound to proceed under section 153A for all the six years. [Para 5.3] The legislature though has clearly identified two types of situation; first when the assessment of any assessment year falling within six assessment years is pending on the date of initiation of search under section 132 or making of requisition under section 132(A) as the case may be, shall abate. Therefore, the assessment under section 153A in respect of those assessment years which stand abated because of the reason of pending on the date of initiation of search or requisition shall be the original/first assessment. In the second category, where the assessment or reassessment has already been completed on the date of initiation of search or making of requisition as the case may be the assessment under section 153A would be in the nature of reassessment. Thus, the legislature has carved out the nature of assessment under section 153A as assessment or reassessment in the respective situation. [Para 5.4] Since the assessment was completed vide assessment order dated 7-11-2007 prior to the date of initiation of search on 15-11-2007. Therefore, this case falls under the category of reassessment under section 153A. [Para 5.5] Once the assessing officer has issued notice under section 153A inviting the return of income, the assessing officer is duty bound to proceed with the reassessment proceedings and apart from the income already assessed in the original assessment completed under section 143(3), the assessing officer can assess the total income of the assessee by making the addition on account of undisclosed income or the income escaped assessment. Since there is no incriminating material found during the course of search relating to the assessee for the assessment year under consideration; therefore, the question arises whether the assessing officer can make any addition in the reassessment proceedings under section 153A depend on the nature of addition and the facts and circumstances of each case. [Para 5.8] Having held that initiation of proceedings under section 153A is valid, the assessing officer, cannot resort to a roving and fishing enquiry to find out whether any income has escaped assessment during the reassessment proceedings when there is no incriminating material found or seized during the course of search action under section 132. [Para 13] In the present case the income, which is otherwise assessable to tax was escaped assessment and there was no investigation or enquiry either required or made by the assessing officer during the reassessment proceedings under section 153A for the purpose of assessing the income received by the assessee from IVF. Therefore, assessment of the income in question falls under the ambit of income, which was escaped assessment and accordingly, can be assessed during the proceedings under section 153A. The issue of assessment of income in question is purely a legal issue and does not require any investigation or adjudication of any disputed fact. Therefore, the said income has been rightly assessed to tax in the proceedings under section 153A. [Para 13.1] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1547 (Mum-Trib) : (2013) 052 (II) ITCL 0504 : (2013) 142 ITD 0515

Income Tax Act, 1961

--Search and seizure--Applicability of provisions of section 153ANo undisclosed income--A survey and search action was carried out in assessees case. Assessing officer issued notice under section 153A and initiated proceedings thereafter. Assessee filed return declaring certain income. Assessing officer made assessment under section 143(3) read with section 153A making certain additions. Assessee contended that assessment under section 143(3), for relevant assessment year, was already passed, prior to date of search and additions made by passing order under section 153A read with section 143(2) were not based on any seized material and as such, assessing officer had no jurisdiction to reopen completed assessment under section 143(3) by invoking provisions of section 153A. Held: Not acceptable. Once a search action was carried out under section 132, assessing officer was bound to proceed under section 153A for all preceding six assessment years preceding to assessment year in which search was carried out, even if there was no incriminating material to indicate any undisclosed income during original assessment completed under section 143(3) for any particular assessment year.

Once a search/requisition is made under section 132 of the Income Tax Act, the assessing officer is bound to issue notice under section 153A to the assessee to furnish the return for each assessment years falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search conducted or requisition was made. Consequently, the assessing officer is empowered to assess or reassess the total income of all these six assessment years. [Para 5.1] The assessee's main contention against the validity of initiation of proceedings under section 153A is that there was no incriminating material found during the course of search and seizure action; therefore, the initiation of proceedings under section 153A is unwarranted. It is pertinent to note that the assessee has not challenged the validity of reassessment under section 153A for the other five years and the order passed by the Commissioner (Appeals) whereby the disallowance made under section 14A for the assessment years 2001-02, 2003-04, 2004-05, 2006-07 and 2007-08 was set aside by the Commissioner (Appeals) to the record of the assessing officer for re-computation of the amount to be disallowed under section 14A. Thus, it is clear that the assessee has not challenged the validity of the assessment under section 153A for the other years. The initiation of proceedings under section 153A is mandatory for all the assessment years falling within the six years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made.[Para 5.2] Even otherwise; the returns filed for the assessment years 2006-07 and 2007-08 were pending assessment on the date of search consequently, by virtue of the proviso to section 153A, the assessment for the assessment years 2006-07 and 2007-08 stand abated on the date of initiation of search. Therefore, even if there is no incriminating material to indicate any undisclosed income or income escaped assessment during the original assessment completed under section 143(3), the assessing officer is bound to proceed under section 153A for all the six years. [Para 5.3] The legislature though has clearly identified two types of situation; first when the assessment of any assessment year falling within six assessment years is pending on the date of initiation of search under section 132 or making of requisition under section 132(A) as the case may be, shall abate. Therefore, the assessment under section 153A in respect of those assessment years which stand abated because of the reason of pending on the date of initiation of search or requisition shall be the original/first assessment. In the second category, where the assessment or reassessment has already been completed on the date of initiation of search or making of requisition as the case may be the assessment under section 153A would be in the nature of reassessment. Thus, the legislature has carved out the nature of assessment under section 153A as assessment or reassessment in the respective situation. [Para 5.4] Since the assessment was completed vide assessment order dated 7-11-2007 prior to the date of initiation of search on 15-11-2007. Therefore, this case falls under the category of reassessment under section 153A. [Para 5.5] Once the assessing officer has issued notice under section 153A inviting the return of income, the assessing officer is duty bound to proceed with the reassessment proceedings and apart from the income already assessed in the original assessment completed under section 143(3), the assessing officer can assess the total income of the assessee by making the addition on account of undisclosed income or the income escaped assessment. Since there is no incriminating material found during the course of search relating to the assessee for the assessment year under consideration; therefore, the question arises whether the assessing officer can make any addition in the reassessment proceedings under section 153A depend on the nature of addition and the facts and circumstances of each case. [Para 5.8] Having held that initiation of proceedings under section 153A is valid, the assessing officer, cannot resort to a roving and fishing enquiry to find out whether any income has escaped assessment during the reassessment proceedings when there is no incriminating material found or seized during the course of search action under section 132. [Para 13] In the present case the income, which is otherwise assessable to tax was escaped assessment and there was no investigation or enquiry either required or made by the assessing officer during the reassessment proceedings under section 153A for the purpose of assessing the income received by the assessee from IVF. Therefore, assessment of the income in question falls under the ambit of income, which was escaped assessment and accordingly, can be assessed during the proceedings under section 153A. The issue of assessment of income in question is purely a legal issue and does not require any investigation or adjudication of any disputed fact. Therefore, the said income has been rightly assessed to tax in the proceedings under section 153A. [Para 13.1]