Income Tax Appellate Tribunal - Mumbai
State Bank Of India, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "E", MUMBAI
BEFORE SHRI DINESH KUMAR AGARWAL (J.M.)
AND SHRI N.K. BILLAIYA (A.M.)
ITA Nos. 5420 & 5421/Mum/2011
Assessment Years : 2001-02 & 2002-03
State Bank of India, The Dy. Commissioner of
Financial Reporting, Income Tax - Circle 2(2),
Compliance & Taxation Deptt., Mumbai.
3rd Floor, Corporate Centre, Vs.
Madam Cama Road,
Nariman Point,
Mumbai - 400 021.
PAN AAACS8577K
(Appellant) (Respondent)
Shri Girish Dave &
Assessee by: Shri Hiten Sutar
Department by : Shri Girija Dayal
Date of hearing 27-09-2012
Date of pronouncement 10-10-2012
ORDER
PER DINESH KUMAR AGARWAL, J.M.
These two appeals preferred by the assessee are directed against the separate orders dtd. 11-5-2011 passed by the ld. CIT(A) - 5, Mumbai for the assessment years 2001-02 and 2002-03. Since facts are identical and common issue is involved, both these appeals are disposed of by this common order for the sake of convenience.
2 ITA No. 5420/MUM/2011 &ITA No. 5421/MUM/2011
2. Briefly stated facts of the case extracted from ITA No. 5420/Mum/2011 for A.Y. 2001-02 are that the assessee is a banking company. The return was filed declaring total income of Rs. 14669781957/- on 31-10-2001. The assessment u/s 143(3) of the Income Tax Act, 1961 (the Act) was completed on 13-2-2004 determining the total income at Rs. 26354942360/-. The A.O. observed that while computing tax, the taxable income was wrongly taken as Rs. 26345942364/-, hence, the mistake was rectified u/s 154 of the Act on 31-12-2004 revising the total income at Rs. 26354942360/-. The A.O. further observed that the assessee, in a note to its annual report for the financial year 2004-05 relevant to A.Y. 2005-06 has mentioned that the excess depreciation claimed by the assessee in the past years amounting to Rs. 2950 crores has been offered to tax in the financial year 2004-05. However, in the note to the computation of income, the assesse has claimed refund on account of these payments as according to the assessee as per the consistent method followed by the assessee the valuation of securities done by the assessee in the past years are in order. The method adopted by the assessee was not found to be in conformity with the CBDT and the R.B.I. guidelines. Accordingly notice for reopening the assessment u/s 148 dtd. 28-8-2006 was issued and served on the assessee. The assessee filed reply vide their letter dtd. 29- 9-2006 objecting to the reopening of the assessment, however, filed a copy of the return of income in response to the notice u/s 148 of the Act 3 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 without prejudice. Statutory notice dtd. 3-10-2006 u/s 142(2) was issued. The A.O. after reproducing the reasons recorded for reopening of the assessment and the assessee's objection appearing at page 2 to 5 of the assessment order asked the assessee to show cause as to why the amount of excess depreciation of Rs. 418.04 crores should not be added to the income of the assessee. The assessee was also asked to clarify the incorrect method of valuation of securities. In response, the assessee submitted its reply which has also been reproduced by the A.O. at page 6 to 11 of the assessment order. The A.O. after considering the same observed that the assessee has taken into consideration the loss for computing the taxable income, but has completely ignored the profit, therefore, he held that it is not possible to deduce the correct taxable income. On the issue of excess depreciation the A.O. after referring to the provisions of section 36(1)(a) of the Banking Regulation Act, 1949 relied on the decision of the Hon'ble Supreme Court in B.O.I. Finance Ltd. & Others vs. Custodian & others 89 ITR 74 (SC) (sic) and has held that the assessee has claimed excess depreciation of Rs. 4180375075/- and accordingly he invoked the provisions of section 145(3) of the Act and disallowed the aforesaid excess depreciation and thereby completed the assessment at an income of Rs. 30535317430/- vide assessment order dtd. 31-10-2006 passed u/s 143(3) r.w.s. 147 of the Act. On appeal, the ld. CIT(A) while upholding the action of the A.O., dismissed the appeal.
4 ITA No. 5420/MUM/2011 &ITA No. 5421/MUM/2011
3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us challenging in all the grounds of appeal the reopening of the assessment u/s 147 of the Act and sustenance of valuation of securities and addition of depreciation.
4. The assessee vide letter dtd. 24-9-2012 has also raised the following additional ground of appeal:-
"Validity of re-assessment proceedings:
1.1 The Assessing Officer has erred in making multiple assessment orders for the same assessment year.
1.2 The Appellant submits that the considering the facts and circumstances of its case and in law prevailing on the subject the reassessment proceedings were not in accordance with the law and the provisions of the Income Tax Act, 1961.
1.3 The appellant submits that the reassessment proceedings be held to be bad in law and struck down".
5. At the time of hearing the ld. counsel for the assessee submits that in this case a search action u/s 132 of the Act was conducted at the premises of one of the branches at Tiruchengode in Tamil Nadu on 2-7-2005 wherein some of the documents pertaining to deposits were seized. The A.O. issued notice u/s 153 A of the Act on 4-5-2007 and in response the assessee vide letter dtd. 17-5-2007 requested to treat the return of income filed originally as having been filed in response to said notice. The A.O. after issuing statutory notices u/s 143(2) and 142(1) of the Act, however, completed the assessment for the same A.Y. 2001-02 at the same very income i.e. Rs. 30535317430/- vide assessment order dtd. 5 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 26-12-2007 passed u/s 143(3) r.w.s. 153-A of the Act. In support, he also placed on record the copy of the said assessment order. The l.d. counsel for the assessee has also placed on record a chart showing the following relevant dates:-
Particulars A.Y. 2001-02 A.Y. 2002-03
Regular assessment u/s 143(3) 13-02-2004 30-12-2004
Search under section 132 02-07-2005 02-07-2005
Issuance of notice u/s 148 28-08-2006 25-07-2006
Assessment order u/s 143(3) 31-10-2006 31-10-2006
r.w.s. 147
Issuance of notice u/s 153A 04-05-2007 04-05-2007
Assessment order u/s 153A r.w.s. 26-12-2007 26-12-2007
143(3)
In the light of the above, he submits that according to section 153A after the date of search i.e. 2-7-2005 the A.O. has no jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted. Since the assessment years 2001- 02 and 2002-03 fall with the jurisdiction of section 153A of the Act, the A.O. has erred in issuing notice u/s 148 on 28-8-2006 for A.Y. 2001-02 and on 25-7-2006 for A.Y. 2002-03 and in completing the assessments u/s 143(3) r.w.s. 147 of the Act for the said assessment years on 31-10- 2006. He further submits that the additional ground raised by the assessee is on the pure question of law arising from the facts which are 6 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 on record in the assessment proceeding, therefore, the additional ground may be admitted and for this proposition the reliance was also placed on the decision of Hon'ble Supreme Court in National Thermal Power Co. vs. CIT (1998) 229 ITR 383 (SC). The reliance was also placed on the decision of the Special Bench of the Tribunal in All Cargo Global Logistics Ltd. & Ors. vs. DCIT (2012) 137 ITD 26 (Mum)[SB].
6. On the other hand, the ld. D.R. while strongly opposing the additional ground taken by the assessee submits that since the additional ground does not arise from the impugned assessment order or the order of the ld. CIT(A), the same may not be admitted. He further submits that the assessee is advised by the battery of Advocates and Chartered Accountants, therefore, the additional ground taken by the assessee, at this stage, is not permissible. He further submits that other appeals of the assessee on the similar issues are pending, therefore, it is better to decide the impugned appeals along with the other pending appeals.
7. We have carefully considered the submission of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that in this case a search and seizure action u/s 132(1) of the Act was taken place on the assessee on 2-7-2005 and on the date of search proceeding u/s 148 of the Act were not initiated which initiated on 28-8-2006 for A.Y. 2001-02 7 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 and on 25-7-2006 for A.Y. 2002-03 and the assessments were completed on 31-10-2006.
8. The assessee in the additional ground has challenged the validity of the impugned assessment order on the ground that as on the date of search i.e. on 2-7-2005, the assessment has to be made under the provisions of section 153A of the Act. In other words, the A.O. may not have jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A of the Act.
9. A larger bench of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) observed that the question of law which arose from the fact as found by the income-tax authority any legal issue can be raised at any stage. The Hon'ble Supreme Court observed that (page 387) :
"where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee".
10. In All Cargo Global Logistics Ltd. (supra) it has been held vide para 7.4 at page 51-52 of ITD as under:-
"............Further the Hon'ble Apex Court in very clear terms has held that the Tribunal will have discretion to allow or not to allow a new ground to be raised, but where the Tribunal is only required to consider a question of law arising from the facts which are on record in the 8 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 assessment proceedings, it fails to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assessee the tax liability of an assessee. The position of the assessee in the case at hand is similar to the position of NTPC, as both of them are appellants. Therefore, on the basis of the decision, it abundantly clear that if the pure question of law arises for which facts are on record of the authorities below, such a question should be allowed to be raised, if it is necessary to do so to assess the correct tax liability".
11. Recently in CIT vs. St. Mary's Malankara Seminay (2012) 348 ITR 69 (Ker) it has been held (page 71 placitum 5) as under:-
"5. The Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. Commissioner of Income Tax. 229 ITR 383 held that a pure question of law can be raised at any stage of the proceedings under the I.T. Act. The ground raised in appeal by the assessee based on 10 (23C)(iiiad) is certainly a pure question of law and on the same facts the issue was found in favour of the respondent. So much so, we feel respondent was rightly found to be eligible to raise the additional and alternate ground of exemption which was found in their favour........."
12. In the absence of any distinguishing feature brought on record by the Revenue, keeping in view that all the material facts are available on record and the legal ground taken by the assessee goes to the root of the matter, we respectfully following the ratio of the above decisions, admit the additional ground raised by the assessee and reject the plea taken by the ld. D.R.
13. On merit, the ld. counsel for the assessee submits that since in this case, after the date of search i.e. on 2-7-2005, the assessment had to be made under the provisions of section 153 A notwithstanding anything contained in section 139, section 147, section 148, section 149 and section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or 9 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 any assets are requisitioned under section 132A after the 31st day of May, 2003 and for this proposition the reliance was also placed on the decision in the case of Ramballabh Gupta vs. ACIT (2005) 149 Taxman 451 (MP) : (2007) 288 ITR 347 (MP) wherein it has been held at page 351, placitum 11 of 288 ITR as under:-
"In other words, the Assessing Officer may not have jurisdiction to issue notice under section 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A ibid..........".
14. The ld. Counsel for the assessee has also placed reliance on the recent decision of the Special Bench of the Tribunal in All Cargo Global Logistics Ltd. vs. Dy. CIT (2012) 137 ITD 287 (Mum) [SB] wherein the Special Bench of the Tribunal in para 48 to 53 of the order has held that "The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is obligatory on the part of the AO 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 of the search or requisition shall abate.........". He further submits that since in this case multiple assessments u/s 148 and as 10 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 well as u/s 153A of the Act were made, therefore, in view of the scheme of section 153 A the impugned assessment completed u/s 148 is liable to be quashed.
15. On the other hand, the ld. D.R. submits that the provisions of section 147/148 are independent provisions and there is no bar under the provisions of section 153A not to issue notice u/s 148, therefore, the A.O. was justified in issuing notice u/s 148 and in completing the assessment u/s 143(3)/148 of the Act.
16. We have carefully considered the submission of the rival parties and perused the material available on record.
17. Recently, Their Lordships of Hon'ble Delhi High Court in CIT vs. Anil Kumar Bhatia (2012) 24 taxman.com 98 (Del) after considering the relevant provisions section of 153A of the Act and CBDT Circular No. 7 of 2003 dtd. 5-9-2003 have observed and held as under :-
"16. We now proceed to discuss the correctness of the conclusion of the Tribunal that the Assessing Officer had wrongly invoked Section 153A of the Act. This Section was introduced into the Act by the Finance Act, 2003 w.e.f. 1.6.2003 along with Sections 153B and 153C. Section 153A provides for 'assessment in case of search or requisition'. It runs as follows:
"153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall 11 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011
(a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made:
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years.
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section(1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revised with effect from the date of receipt of the order of such annulment by the Commissioner.
Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.- For the removal of doubts, it is hereby declared that-
(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section;
(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year."
17. The three sections introduced w.e.f. 1.6.2003 replaced the "Post Search Block Assessment Scheme" in respect of any search under Section 132 or requisition under Section 132A made after 31.5.2003. In Circular No.7 of 2003 dated 5.9.2003 reported in (2003) 263 ITR (St)62, the new Scheme was explained by the CBDT in the following manner: 12 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011
"65. The special procedure for assessment of search cases under Chapter XIV-B be abolished :
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 assessment 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 search, and lay down the manner in which such income is to be computed.
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 May 31, 2003, by inserting a new section 158BI in the Income-tax Act.
65.3 Further three new sections 153A, 153B and 153C 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 for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after May 31, 2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect 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 reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 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 applicable to such assessment year.13 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011
65.6 The new section 153B provides for the time limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations 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 search is conducted under section 132 or requisition is made under section 132A shall be completed within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed."
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 injunction of any court ; or the period commencing from the day on which the Assessing 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 an opportunity to the assessee of being re-heard under the proviso to section 129, or in a case where an application made before the Settlement Commission under section 245C is rejected by it or is not allowed to be proceeded 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) of 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 making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the period of limitation shall be deemed to be extended accordingly. 65.9 The new section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A.
14 ITA No. 5420/MUM/2011 &ITA No. 5421/MUM/2011
65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals).
65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections.
65.12 These amendments will take effect from June 1, 2003.
18. A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV- B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as „block assessment‟ because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as „block period‟. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place.
19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature 15 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the „total income‟ of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax.
20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be.
21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the „total income‟ of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs 16 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings 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 this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made".
18. In Ramballabh Gupta (supra) it has been held (page 348-349, headnote) as under:-
" Held, dismissing the petition, (i) that while deciding the legality of notice issued under section 148, it was not necessary to look into the provisions of section 153A because both sections operate in different fields and spheres. Admittedly, the assessment year 1997-98 in question did not fall within the six years as per the requirement of section 153A and hence no action could be taken for making reassessment under section 153A in respect of the assessment year 1997-98.17 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011
(ii) That the case of the assessee was not that the notice did not satisfy the requirements of section 148. On the other hand, it clearly showed that, firstly, the notice under section 148 could be issued for the assessment year 1997-98 being well within time. Secondly, the Assessing Officer was empowered and had an authority to issue such notice.
Thirdly, the notice contained reasons as required under section 148 which were supplied to the assessee and, lastly, on the strength of the material collected in the raid conducted on October 8, 2003, in the premises of the assessee, the belief of escape of income could validly be formed for reopening the assessment made for the assessment year 1997-98. The assessee did not challenge the notice on any of these grounds which alone could be made the basis to challenge the notice and, hence, the notice was rightly issued in conformity with the requirement of section 148".
19. Similar issue came up before the Special Bench of this Tribunal (in which, one of us was a party) and the Special Bench had an occasion to deal with the scope of interpretation of section 153A of the Act in the case of in All Cargo Global Logistics Ltd. (supra). The Special Bench of the Tribunal after considering the various decisions and CBDT circulars has held as under:-
"52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring 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 income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to asses or reassess the total income of these six years. The pending proceedings shall abate. This means 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 pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merged into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means 18 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B.
53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso ? We are of the view that 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 in our humble opinion 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 in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :-
a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O.
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 course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search."
...... ........ ......
58. Thus, question No.1 before us is answered a) as under :
(a) In assessments that are abated, the A.O. retains the original jurisdiction as well as jurisdiction conferred on him under s. 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 has already been assesed, the asesment u/s 153A wil be made on the basis of incriminating material, which in the context of relevant provisions means
- (i) books of account, other documents, found in the course of search but not produced in the course of original asessment, and (i) undisclosed income or property discovered in the course of search.
59. Having come to this conclusion we need not go into various orders of the `Tribunal cited by the rival parties. The decisions inconsistent with the aforesaid view/conclusion stand disapproved and the decisions consistent with this view/conclusion are approved". 19 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011
20. Applying the ratio of the above decisions to the facts of the present case, we find that there is no dispute that the original assessment for the A.Y. 2001-02 was completed u/s 143(3) on 13-2-2004 determining the total income at Rs. 26354942360/-. Thereafter, a search and seizure action was initiated in assessee's case by the Department on 2-7-2005 on which date the assessment for the A.Y. 2001-02 was not pending. Therefore, in view of the non-obstinate clause with which sub section (1) of section 153A opens, the A.O. has no jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A of the Act and accordingly the A.O. was not justified in issuing notice u/s 148 on 28-8-2006 and in completing the impugned assessment u/s 143(3) r.w.s. 147 of the Act on 31-10-2006. The A.O. instead of complying with the requirement of section 153A proceeded with the provisions of section 147/148 which are not applicable in the assessment u/s 153 A of the Act, therefore, the impugned assessment completed u/s 143(3) r.w.s. 147 of the Act is a nullity and as such the assessment order dtd. 31-10-2006 passed u/s 143(3) r.w.s. 147 of the Act is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed.
21. Since we have decided the issue on the legal ground raised by the assessee, therefore, we do not consider it necessary to discuss the other 20 ITA No. 5420/MUM/2011 & ITA No. 5421/MUM/2011 grounds raised by the assessee on merits of the additions sustained. Accordingly the other grounds taken by the assessee are rejected. ITA 5421/Mum/2011 (for A.Y. 2002-03)
22. The additional ground raised by the assessee is as under:-
"Validity of re-assessment proceedings:
1.1 The Assessing Officer has erred in making multiple assessment orders for the same assessment year.
1.2 The Appellant submits that the considering the facts and circumstances of its case and in law prevailing on the subject the reassessment proceedings were not in accordance with the law and the provisions of the Income Tax Act, 1961.
1.3 The appellant submits that the reassessment proceedings be held to be bad in law and struck down".
23. At the time of hearing both the parties have agreed that the facts of the above legal ground are same as in the A.Y. 2001-02, therefore, the plea taken by them in that appeal may be considered while deciding the appeal for A.Y. 2002-03.
24. After hearing the rival parties and perusing the material available on record and in view of our findings recorded in assessee's appeal for A.Y. 2001-02, we after admitting the additional ground raised by the assessee hold that the assessment order dtd. 31-10-2006 passed by the A.O. u/s 143(3) r.w.s. 147 is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed.
21 ITA No. 5420/MUM/2011 &ITA No. 5421/MUM/2011
25. Since we have quashed the impugned assessment order on the legal ground raised by the assessee, therefore, we do not consider it necessary to discuss the other grounds raised by the assessee on merits of the additions sustained. Accordingly the other grounds taken by the assessee are rejected.
26. In the result, assessee's appeals stand allowed Order pronounced on 10-10-2012.
Sd/- Sd/-
(N.K. BILLAIYA) (DINESH KUMAR AGARWAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated : 10-10-2012.
RK
Copy to:
1. The Appellant
2. The Respondent
3. Commissioner of Income Tax (Appeals)- 30, Mumbai
4. Commissioner of Income Tax - Central - City 19 Mumbai
5. Departmental Representative, Bench 'E', Mumbai //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI