Jai Steel (India) v. Asstt. CIT

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The Tax Publishers2013 TaxPub(DT) 1647 (Raj-HC) : (2013) 053 (I) ITCL 0078 : (2013) 259 CTR 0281 : (2013) 219 TAXMAN 0223 : (2013) 088 DTR 0001 INCOME TAX ACT, 1961 --Search and seizure--Assessment under section 153A Scope of section 153A vis-a-vis claim for allowance or deduction--Contention of assessee that assessing officer is free to disturb income, expenditure or deduction de hors any income, expenditure or deduction de hors any incriminating material while making assessment under section 153A is not borne out from the scheme of said section. Provisions of sections 153A to 152C cannot be interpreted to be further innings for assessing officer and/or assessee beyond provisions of sections 139, 147 and 263, as such no fresh claim or deduction could be claimed or allowed by assessing officer. As section 153A cannot be read in isolation, in as much as, the same is triggered only on account of any search/requisition under section 132 or 132A. If any books of accounts 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 accounts or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of section 153A. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of section 132 or 132A, inasmuch as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. [Para 21] The underlying purpose of making assessment of total income under section 153A is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, in as much as once an assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of section 153A, a return is filed and the assessing officer is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under section 153A that would be the assessment for the said year. [Para 22] The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been 'completed' and assessment orders have been passed determining the assessee's total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessment already stands completed, the assessing officer can reopen the assessments or reassessments already made without following the provisions of sections 147, 148 and 151 and determine the total income of the assessee. [Para 23] The argument raised by the counsel for the appellant to the effect that once a notice under section 153A is issued, the assessments for six years are at large both for the assessing officer and assessee has no warrant in law. [Para 24</iPara 25] Though such a claim by the assessee for the first time under section 153A is not contemplated, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though section 153A would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. [Para 26] The argument of the counsel that the assessing officer is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under section 153A is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of sections 153A to 153C cannot be interpreted to be a further innings for the assessing officer and/or assessee beyond provisions of section 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders). [Para 29] The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of abated proceedings and 'reassess' has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. [Para 30] The argument of the counsel for the appellant if taken to the logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the Commissioner (Appeals) or Tribunal and the High Court, on a notice issued under section 153A, the assessing officer would have power to undo what has been concluded by the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Supreme Court in the case of K.P. Varghese. [Para 34] Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because an assessment under section 153A in pursuance of search or requisition is required to be made. [Para 35] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1647 (Raj-HC) : (2013) 053 (I) ITCL 0078 : (2013) 259 CTR 0281 : (2013) 219 TAXMAN 0223 : (2013) 088 DTR 0001

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153A Scope of section 153A vis-a-vis claim for allowance or deduction--Contention of assessee that assessing officer is free to disturb income, expenditure or deduction de hors any income, expenditure or deduction de hors any incriminating material while making assessment under section 153A is not borne out from the scheme of said section. Provisions of sections 153A to 152C cannot be interpreted to be further innings for assessing officer and/or assessee beyond provisions of sections 139, 147 and 263, as such no fresh claim or deduction could be claimed or allowed by assessing officer.

As section 153A cannot be read in isolation, in as much as, the same is triggered only on account of any search/requisition under section 132 or 132A. If any books of accounts 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 accounts or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of section 153A. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of section 132 or 132A, inasmuch as in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. [Para 21] The underlying purpose of making assessment of total income under section 153A is, therefore, to assess income which was not disclosed or would not have been disclosed. The purpose of second proviso is also very clear, in as much as once an assessment or reassessment is 'pending' on the date of initiation of search or requisition and in terms of section 153A, a return is filed and the assessing officer is required to assess the same, there cannot be two assessment orders determining the total income of the assessee for the said assessment year and, therefore, the proviso provides for abatement of such pending assessment and reassessment proceedings and it is only the assessment made under section 153A that would be the assessment for the said year. [Para 22] The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been 'completed' and assessment orders have been passed determining the assessee's total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessment already stands completed, the assessing officer can reopen the assessments or reassessments already made without following the provisions of sections 147, 148 and 151 and determine the total income of the assessee. [Para 23] The argument raised by the counsel for the appellant to the effect that once a notice under section 153A is issued, the assessments for six years are at large both for the assessing officer and assessee has no warrant in law. [Para 24</iPara 25] Though such a claim by the assessee for the first time under section 153A is not contemplated, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though section 153A would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. [Para 26] The argument of the counsel that the assessing officer is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under section 153A is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of sections 153A to 153C cannot be interpreted to be a further innings for the assessing officer and/or assessee beyond provisions of section 139 (return of income), 139(5) (revised return of income), 147 (income escaping assessment) and 263 (revision of orders). [Para 29] The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word 'assess' has been used in the context of abated proceedings and 'reassess' has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. [Para 30] The argument of the counsel for the appellant if taken to the logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the Commissioner (Appeals) or Tribunal and the High Court, on a notice issued under section 153A, the assessing officer would have power to undo what has been concluded by the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Supreme Court in the case of K.P. Varghese. [Para 34] Consequently, it is held that it is not open for the assessee to seek deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed, only because an assessment under section 153A in pursuance of search or requisition is required to be made. [Para 35]