Cit v. Kusum Gupta

ORDER %

01.09.2015

¶1In all these appeals one; common questionthat arises is regardingthe justificationfor the additionsmade by the AssessingOfficer('AO') in the course of the assessmentsmade pursuantto notices issued to the Assessee underSection153(A)(1)(a)ofthe IncomeTax Act, 1961.

¶2The search operationwas carried on 7'^ February, 2007 under Section 153Aofthe Act, and the Assesseewas calleduponto file returnsfor the six preceding assessmentyears. It is common ground that as on the date of 'Z o/7 search, there was no pending assessment or re-assessment proceedings qua the Assessee.

¶3The next undisputed fact as noted by the AO in the Office Note of the assessmentorderdated29"^December,2008 is as under: "1.There is no incriminating document pertaining to the assessee for this assessment year in the seized record found from the residence of the assessee."

¶4The third important fact, which is again not in dispute, is that although the statement of the Assessee was recorded during the search, nothing in that statement was found to be incriminating as far as the Assessee was concerned. The AO also considered the reply of the Assessee to a query letterdated 14"^ November,2008 of the AO and stated "no adverseview is taken on this score."

¶5With the above being admitted factual position, the decision of this Court dated 28"^ August, 2015 in ITA Nos. 707, 709 and 713 of 2014 {CIT v. Kabul Chawid) would apply on all fours. The summary of the legal position as set out in the said decision is as under: "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the • person searched requiring him to file returns for six AYs immediately preceding the previous year relevant ITA 634/2015 & Connected matters to the AY in which the search talcesplace, ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercisenormalassessmentpowersin respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." V. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the Page 6 of7 jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessmentshall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completedassessmentscan be interferedwith by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."

¶6In that view of the matter in all these cases the question that arises is answeredin favourofthe Assesseeand againstthe Revenueby holdingthat the additions made in the assessmentsmade pursuant to the search are unsustainablein law. Consequently,the questionof any penaltyproceedings being initiated,pursued or continuedagainstthe Assesseedoes not arise.

¶7The appeals are dismissed. S.MURALIDHAR, J VIBHU BAKHRU, J SEPTEMBER 01,2015 MK Page 7of7

* IN THE HIGH COURT OF DELHI AT NEW DELHI 5. + ITA 634/2015 PR. COMMISSIONER OF INCOME TAX-(CENTRAL-II) Through: Ms Lakshmi Gurung, Junior Standing SMT. KUSUMGUPTA, Through: Mr Salil Aggarwal and Mr Ravi Pratap WITH 7. + ITA 493/2015 PR. COMMISSIONER OF INCOME TAX-(CENTRAL-II) Through: Through: Ms Lakshmi Gurung, Junior Standing Counsel. SMT. KUSUM GUPTA, Through: Mr Salil Aggarwal and Mr Ravi Pratap WITH 22. + ITA 578/2013 THE COMMISSIONER OF INCOME TAX ITA 634/2015 & Connected matters Page I of 7 CENTRAL II Through: Mr P. Roy Chaudhuri, Senior Standing KUSUM GUPTA Through: Mr Salil Aggarwal and Mr Ravi Pratap WITH 23. + ITA 579/2013 THE COMMISSIONER OF INCOME TAX CENTRAL-II Through: Mr P. Roy Chaudhuri, Senior Standing KUSUM GUPTA Through: Mr Salil Aggai-wal and Mr Ravi Pratap WITH 24. + ITA 580/2013 CIT Through: Mr P. Roy Chaudhuri, Senior Standing KUSUM GUPTA Through: Mr Salil Aggarwal and Mr Ravi Pratap ITA 634/2015 & Connected matters WITH 25> + ITA 581/2013 Through: Mr P. Roy Chaudhuri,Senior Standing KUSUMGUPTA Through: Mr Salil Aggarwal and Mr Ravi Pratap WITH 26. + ITA 582/2013 CIT Through: Mr P. Roy Chaudhuri, Senior Standing KUSUMGUPFA Through: Mr Salil Aggai-waland Mi- Ravi Pratap WITH 27. + ITA 583/2013 CIT .....Appellant Through: Mr P. Roy Chaudhuri,Senior Standing Page3of? 28. + KUSUMGUPTA _ Through: Mr Sahl Aggarwaland Mr Ravi Pratap AND ITA 584/2013 Through: Mr P. Roy Chaudhuri,Senior Standing CIT KUSUSMGUPTA Through: Mr Salil Aggarwaland Mr Ravi Pratap CORAM: HON'BLE DR. JUSTICE S.MURALIDHAR HON'BLE MR. JUSTICE VIBHU BAKHRU