In course of block assessment proceedings, additions could not be made in re

 

IT: In course of block assessment proceedings, additions could not be made in respect of amount received by assessee in respect of which tax had been deducted at source

[2012] 20 taxmann.com 184 (Karnataka)
HIGH COURT OF KARNATAKA

Commissioner of Income-tax

v.

R. Sridhar

Scope of s. 153A assessment & 80IA(4) deduction Explained

All Cargo Global Logistics Ltd vs. DCIT (ITAT Mumbai Special Bench)
The Special bench had to consider two issues (i) whether an assessment u/s 153A encompassed additions not based on any incriminating material found during the search and (ii) whether a “Container Freight Station” was an “Inland Port/ Infrastructure facility” for purposes of deduction u/s 80IA(4). HELD by the Special Bench:

(i) In assessments that are abated, the AO retains the original jurisdiction as well as the jurisdiction conferred on him by s. 153A for which assessments shall be made for each of the 6 assessment years separately;

(ii) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material i.e. (a) the books of accounts and other documents found in the course of the search but not produced in the course of original assessment and (b) undisclosed income or property disclosed in the course of search;

(iii) A Container Freight Station, like an Inland Container Depot, is an “Inland Port” having regard to the fact that it is referred to as such in the statutory provisions and in the understanding of the CBEC, which administers the Customs Act. It has also been treated as part of the customs port for purpose of customs formalities and clearances. Accordingly, it is an “infrastructure facility” for purposes of s. 80IA(4)

Compilations of case law: IT Act related Topics : SEARCHES UNDER I.T. ACT

SEARCHES UNDER I.T. ACT

Assessee merely contended that Director of Investigation has no valid information on the basis of which he could issue warrant of search – Assessee not supporting contention with cogent material – Department cannot be asked to produce records to show information having been received – 132(3) order not seizure – No order u/s 132(3) can be passed when Assessing Officer is in doubt whether asset is disclosed or not.
Sriram Jaiswal Vs Union of India & Ors.(All) 176 ITR 261

"Reason to believe" need not be disclosed when a mere allegation made by petitioner – Illegality of search does not vitiate evidence collected during search.
Dr. Pratap Singh & another Vs Director of Enforcement & Ors.(SC) 155 ITR 166

Preliminary statement recorded before start of actual search and in which questions put to assessee were of general nature – was not at all a statement u/s 132(4) – Revenue cannot rely on such an unauthorized statement.
Rishab Kumar Jain Vs ACIT (ITAT,Del) 63 TTJ 236

Evidence collected during an illegal search can be used against the searched party.
State of Punjab Vs Baldev Singh etc (SC) 157 CTR 3
Vimalchand Jain Vs ACIT (ITAT, Jp) 64 ITD 394
Pooran Mal Vs Director of Inspection (Investigation) & Ors. ( SC ) 93 ITR 505

Amount seized and retained u/s 132(5) cannot be adjusted against advance-tax.
Kanhaiya Lal Doshi Vs ACIT (ITAT, Jaipur) 56 ITD 486
ACIT Vs Topsel (P) Ltd.(ITAT, Cal) 56 ITD 186
DCIT Vs Muni Lal & Ors. (ITAT, Chd) 57 TTJ 596

When the search continues over a period, it is not necessary that the same witness should be present on all occasions.
T.S. Chandrasekhar Vs ACIT (ITAT, Bang) 66 TTJ 360

Assessing Officer includes ADIT also
Dr. N.S.D. Raju Vs DGIT(Inv.) & Anr. ( Ker ) 282 ITR 154

Initiation of search – when authorities issue authorization and not when it is executed
Suraj Prakash Soni Vs ACIT (ITAT, Jodh) 106 ITD 321

S. 147: Despite specific & pointed queries in s. 143(3) assessment, AO cannot be said to have formed any opinion if explicit opinion not recorded

In the balance sheet enclosed with the ROI, the assessee disclosed sundry creditors of Rs. 1.66 crores. In the course of the s. 143 (3) assessment, the AO asked the assessee to submit the entire list of sundry creditors with their names and addresses etc. The assessee submitted confirmations to the extent of Rs. 1.13 crores and though it could not explain Rs. 33 lakhs, the AO assessed only Rs. 19.86 lakhs u/s 41(1) in respect of 7 creditors. The assessee filed an appeal on the issue. After the expiry of 4 years and pursuant to an audit objection, the AO issued a notice u/s 148 seeking to assess the balance of the creditors as well u/s 41(1). The assessee filed a Writ Petition challenging the reopening on the ground that (i) as the AO had consciously assessed only Rs. 19.86 lakhs though he was aware of the creditors' figure being Rs. 1.66 crores, it was a case of "change of opinion" and (ii) as 4 years from the end of the assessment year had elapsed, reopening was not permissible as there was no failure on the part of the assessee to make a full and true disclosure of the material facts. HELD dismissing the Petition:

(i) The argument that as the AO had called for the details of Rs. 1.66 crores and confined the addition only to Rs. 19.66 lakhs, the reopening is on a "change of opinion" is not acceptable. The question of change of opinion arises when the AO forms an opinion and decides not to make an addition and holds that the assessee is correct. Here, though the AO had asked specific and pointed queries with regard to the sundry creditors of Rs. 1.66 crores, he had made an addition of only Rs.19.86 lakhs and there was no discussion, ground or reason why addition of Rs. 32.97 lakhs was not made in-spite of the assessee's failure to furnish conformation and details to that extent. The argument that when the assessment order does not record any explicit opinion on the aspects now sought to be examined, it must be presumed that those aspects were present to the mind of the AO and had been held in favour of the assessee is too far-fetched a proposition to merit acceptance (Consolidated Photo vs. ACIT 281 ITR 394 (Del) followed);

(ii) The argument that there was a full and true disclosure of material facts is not acceptable because though in the regular assessment proceedings, the assessee was asked to furnish details with regard to all creditors, this was not done. The term "failure" on the part of the assessee is not restricted only to the income-tax return but extends also to the assessment proceedings. If the assessee does not disclose or furnish to the AO complete and correct information and details it is required and under an obligation to disclose, there is a failure on its part (Honda Siel Power Products vs. DCIT followed).