By Ajay R. Singh, Advocate
CIT vs. SKS Ispat & Power Limited.
[Income tax Appeal no. 1874 of 2014 dated: 12/07/2017 (Bombay High Court)].
[Affirmed SKS Ispat & Power Limited
vs. DCIT . [ITA No. 8746 & 8747/MUM/2010 ; Bench : E ; dated 07/05/2014 ;
A.Y-2002-03 & 2003-04.Mum. ITAT ]
The Assessee raised a legal issue before
ITAT relating to the sustainability of additions which are not supported by the
seized or incriminating material u/s. 153A of the Act.
There was a search and seizure action on the
assessee in the case of SKS Ispat Ltd. Group, which is engaged in the business
of manufacturing and trading of steel products. The assessee filed the return
of income as per the provisions of the section 139(1) of the Act and the
assessments were completed u/s. 143(3) r.w.s. 153A of the Act. Thus, the
assessments for the said AYs have reached finality. In all these four
assessments, AO made a common addition under the heads (i) unexplained sundry
creditors and (ii) share application money. Before the Tribunal, it is the
claim of the assessee that the said additions were made without the assistance
of any incriminating material gathered during the search and seizure operation.
In this regard, the Assessee submitted that
on para 7 of the assessment order and mentioned that the basis for the addition
is the financial statements annexed with the return of income. Otherwise, there
is no seized material in possession of the AO which is incriminating
information that suggests the necessity of making the said additions validly.
Similarly, para 8 of the said order of the AO, Assessee demonstrated that no
seized material is available in support of making the said additions.
The Tribunal observed that, undisputedly,
the impugned quantum additions are made merely based on the entries in the
accounted books and certainly not based on either the unaccounted books of
accounts of the assessee or books not produced to the AO earlier or the
incriminating material gathered by the investigation wing of the revenue.
The Tribunal held that the AO was not justified
in making the addition on account of unaccounted sundry creditors (purchases)
and unexplained share of the money u/s. 153A of the Act, as there was no
incriminating material discovered in the search.
Before the High Court the Revenue contented,
the judgements relied by the Tribunal while limiting the scope of inquiry u/s.
153A of the Act to the extent of discovery of incriminating material during
search only is improper. The said judgements were in respect of assessments
which had taken place u/s. 143(3) of the Act. In the present case, the
assessment has taken place u/s. 143(1) of the Act. The distinguishing feature
in sections 143(1) and 143(3) has not been considered by the Tribunal in an
assessment u/s. 143(3) of the Act a long drawn inquiry is contemplated. It
would also amount to examination of evidence. However, inquiry u/s. 143 (1) of
the Act is limited on the basis of return filed. In view of that, the
judgements relied on would not be
applicable.
The Assessee submits that this Court has time
and again held that assessment u/s. 153A of the Act would be limited to the
extent of any incriminating articles, incriminating evidence found during the
search. Even in case of The Commissioner of Income Tax vs. Gurinder Singh
Bawa decided by this Court, the assessment was u/s. 143(1) of the Act.
The Assessee relied on the judgment of this Court in The Commissioner of
Income Tax vs. Gurinder Singh Bawa reported in [2016] 386 ITR 483
(Bom) and another Judgment of this Court in the case of The
Commissioner of Income Tax vs. Warehousing Corporation & Anr. reported
in [2016] 374 ITR 645 (Bom).
The Hon. High Court observed that on perusal
of Section 153A of the Act, it is manifest that it does not make any
distinction between assessment conducted u/s. 143(1) and 143(3). This Court had
occasion to consider the scope of section 153A of the Act in case of The
Commissioner of Income Tax vs. Gurinder Singh Bawa [2016] 386 ITR 483 (Bom) and
in the case of The Commissioner of Income Tax vs. Continental Warehousing
Corporation & Anr. reported in [2016] 374 ITR 645 (Bom). It
has been observed that section 153A cannot be a tool to have a second inning of
assessment either to the Revenue or the Assessee. Even in case of The
Commissioner of Income Tax vs. Gurinder Singh Bawa (referred to supra)
the assessment was u/s. 143(1) of the Act and the Court held that the scope of
assessment after search u/s. 153A would be limited to the incriminating
evidence found during the search and no further. In the said Judgment, the
Judgement of this Court in The Commissioner of Income Tax vs. Continental
Warehousing Corporation & Anr. (referred to supra) has been
followed. Considering the authoritative pronouncements of this Court in above
referred cases, one of which is also with regard to assessment u/s. 143(1), the
issue is no longer res integral and stands concluded in the above
referred Judgements. In the above view, the Appeals was dismissed.
