Fact that procedure envisaged by section 153C is somewhat cumbersome and tha

 Fact that procedure envisaged by section 153C is somewhat cumbersome and that person other than searched person is put to some inconvenience cannot be an argument to hold that entire proceedings are bad in law

• There can be some inconveniences in a case where income had already been disclosed by other person who has not been searched; however, there is no cause for any apprehension that income tax authorities will exploit situation to harass assessees where there is evidence adduced by them to show and establish that income reflected by valuable article or books of account or document seized during search has already been disclosed by them; even if they tend to act unreasonably or under misplaced enthusiasm, there are adequate safeguards which can be availed of by those persons

• If AO having jurisdiction over searched person reaches satisfaction that document belongs to a person other than searched person, it is not necessary for him to also reach a firm conclusion/ opinion that document shows undisclosed income belonging to such other person; that is a matter for enquiry, which is to be conducted in manner prescribed by section 153C

[2012] 20 taxmann.com 214 (Delhi)
HIGH COURT OF DELHI

SSP Aviation Ltd.

v.

Deputy Commissioner of Income-tax

S. 153A: Assessments pending in appeal do not abate

S. 153A: Assessments pending in appeal do not abate


For AY 2002-03, an addition of Rs. 99 lakhs was made by the AO & confirmed by the CIT (A). During the pendency of the appeal before the Tribunal, a search under s. 132 was conducted and s. 153A proceedings were initiated. The Tribunal held that in view of the s. 153A notice, the assessments of the six preceding assessment years prior to the date of search abated and that assessments pending in appeal would stand merged in the fresh assessment to be made by the AO u/s 153A pursuant of the search. The AO was directed to reconsider the additions in the s. 153A assessment. On appeal by the department, HELD reversing the Tribunal:

The second proviso to s. 153A provides that “assessments relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search u/s 132 shall abate“. The words “pending on the date of initiation of search” has to be assigned simple and plain meaning. If the assessment is finalized, there are no “pending proceedings” to be abated. The pendency of an appeal does not mean that the assessment proceedings are pending. The word ‘abatement‘ refers to something, which is pending or alive and its suspension or termination. Proceedings which are complete are not liable for abatement (Circular No.7 of 2003 dated 5.9.2003 referred)

S. 153A: Assessee can agitate claim which was given up at s. 143(3) stage

 

DCIT vs. Eversmile Construction Co Pvt Ltd (ITAT Mumbai)

S. 153A: Assessee can agitate claim which was given up at s. 143(3) stage

The assessee filed a ROI declaring a loss of Rs. 3.93 crores. The AO passed a s. 143(3) order by which he disallowed interest of Rs. 58 lakhs. The assessee accepted the disallowance and it became final. Subsequently, pursuant to a search u/s 132, the assessee filed a ROI u/s 153A in which it reserved its right to claim deduction for the said interest of Rs. 58 lakhs. The AO rejected the claim though the CIT (A) gave part relief. The department filed an appeal before the Tribunal claiming that in s. 153A proceedings the assessee was not entitled to seek relief on additions which were made in the original assessment as s. 153A did not permit assessment at an income lower than the one assessed in original assessment. HELD dismissing the appeal:

S. 153A requires the AO to make the assessment afresh and compute the "total income" in respect of each of the relevant six assessment years. There is no inhibition on the jurisdiction of the AO on the including of new income and likewise there is no restriction on the assessee to claim any deduction which was not allowed in the original assessment. The determination of total income u/s 153A has to be done afresh without any reference to what was done in the original assessment. The fact that there was an addition in the original assessment does not preclude the assessee from contesting it in the s. 153A proceedings. As it is a fresh exercise of framing assessment of "total income", the assessee is not estopped from arguing about the merits of his case qua the additions made in the original assessment. Debarring the assessee from making a claim about the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income (Sun Engineering Works 198 ITR 297 (SC) & Goetze (India) Ltd 284 ITR 323 (SC) distinguished)

Note: Contrast with Anil Kumar Bhatia 1 ITR 484 (Delhi)(Trib) & the cases referred to therein where it was held that s. 153A does not authorize a "de novo" assessment & completed matters could not be revived

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