Itxa/1934/2017 Of Pr. Commissioner Of Income Tax, Central-2 v. Jsw Steel Ltd

Sonali Kilaje 41-ITXA-1934-17(Judgment).doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL 1934 OF 2017 Pr. Commissioner of Income Tax, Central-2,R. No. 1920, Air India BuildingNariman Point, Mumbai- 400 021...Appellant v/s.M/s. JSW Steel Ltd. (Sucessor onamalgamation of JSW Ispat Steel Ltd.)JSW Centre, Bandra Kurla Complex,Bandra (East), Mumbai – 400 051 ..Respondent Mr. A.R. Malhotra for Appellant. CORAM: UJJAL BHUYAN, & MILIND N. JADHAV, JJ. RESERVED ON : 20 JANUARY, 2020 PRONOUNCED ON : 05 FEBRUARY, 2020 JUDGMENT (PER MILIND N. JADHAV, J.) :- 1.The present appeal under Section 260A of the Income Tax Act, 1961 takes exception to the order dated 28.09.2016 passed by theIncome Tax Appellate Tribunal, ‘J’ Bench, Mumbai (hereinafter referred Sonali Kilaje 41-ITXA-1934-17(Judgment).doc to as “ITAT/Tribunal”), interalia, allowing the assessee’s appeal i.e. ITANo.33/Mum/2015. The order has arisen out of the orders of CIT(Appeals)-39, Mumbai, in Appeal Nos. CIT-39/IT-14-15 and 16/2013-14 both of even date 02.10.2014. Assessments were finalised by DCIT,Central Circle 18 & 19, Mumbai for Assessment Years 2008-09, 2009-10and 2010-11 under the provisions of Section 153A read with Section143(3) of the Income Tax Act, 1961(hereinafter referred to as “the saidAct”) by order dated 25.03.2013. The impugned order is for theAssessment Year 2008-09. 2.The assessee is a widely held public limited companyengaged in various activities including production of sponge iron,galvanized sheets and cold-rolled coils through its steel plants locatedat Dolve and Kalmeshwar in Maharashtra. The assessee filed originalreturn of income on 30.09.2008 for Assessment Year 2008-09 declaringloss at Rs.104,17,70,752/- under the provisions of Section 139(1) ofthe said Act. The assessee’s case was selected for scrutiny underSection 143(2) of the said Act on 03.09.2009. 3. During pendency of the assessment proceedings, a search was conducted under Section 132 of the said Act on the ISPAT Group ofcompanies on 30.11.2010. 3.1.Following the search, notice under Section 153A of the Actwas issued. In response, assessee filed return of income declaring totalloss at Rs.419,48,90,102/- on 29.03.2012. In this return of incomeassessee made a new claim for treating gain on pre-payment ofdeferred VAT/sales tax on Net Present Value (NPV) basis for anamount of Rs.318,10,93,993/- as “capital receipt”. 4.This new/fresh claim of assessee was disallowed by theAssessing Officer (hereinafter referred to as “AO) while finalisingassessment under Section 143(3) read with Section 153A of the saidAct vide the order dated 25.03.2013 by considering the same as“revenue receipt” instead of “capital receipt”. The reasoning given bythe AO was that the assessee had availed of sales tax deferral schemeand the State Government had permitted premature re-payment ofdeferred sales tax liability at the NPV basis. Therefore, according to theAO, assessee treated this as capital receipt even though the same was credited to the assessee’s profit and loss account being differencebetween the deferred sales tax and its NPV. 5.However, the primary question that arose before the AOwas whether the claim which was not made in the earlier originalreturn of income filed under Section 139(1) of the said Act, could befiled and considered in the subsequent return filed by the assessee inpursuance to notice under Section 153A of the said Act (which wasconsequent to search action conducted under Section 132 of the saidAct). AO held that the assessee could not raise a new claim in thereturn filed under Section 153A which was not raised in the originalreturn of income filed under Section 139(1). Thereafter, the claim wasdisallowed and was treated as “revenue receipt”. credited to the assessee’s profit and loss account being differencebetween the deferred sales tax and its NPV. 5.However, the primary question that arose before the AOwas whether the claim which was not made in the earlier originalreturn of income filed under Section 139(1) of the said Act, could befiled and considered in the subsequent return filed by the assessee inpursuance to notice under Section 153A of the said Act (which wasconsequent to search action conducted under Section 132 of the saidAct). AO held that the assessee could not raise a new claim in thereturn filed under Section 153A which was not raised in the originalreturn of income filed under Section 139(1). Thereafter, the claim wasdisallowed and was treated as “revenue receipt”. 5.1By order dated 15.04.2013, the first appellate authority i.e.the Commissioner of Income Tax (Appeals) (hereinafter referred to as“CIT(A)”) upheld the order passed by the A.O. In further appeal, theI.T.A.T., however, by the impugned order dated 28.09.2016, allowedthe assessee’s appeal and set aside both the orders passed by the A.O.and C.I.T.(A). 41-ITXA-1934-17(Judgment).doc 5.2Hence the appeal by the revenue. 6.Shri A.R. Malhotra, learned counsel appearing on behalf ofthe appellant opened his submissions by placing the admitted positionon record. He submitted that in the original return dated 30.09.2008filed under Section 139(1) of the said Act, no claim regarding gain onpre-payment of deferred VAT/sales tax on NPV basis was made byassessee. The assessee had in fact claimed the said as “revenuereceipt”. He submitted that now the assessee claimed this as “capitalreceipt” in the subsequent return which was filed by the assesseepursuant to compliance of statutory notice received under Section 153Aon 29.03.2012, which was in consequence to search action initiatedunder Section 132 of the said Act on 30.11.2010. He, therefore,submitted that the impugned order dated 28.09.2016 needs to beexamined closely in the realm of the aforesaid admitted facts. 6.1.Mr. A.R.Malhotra drew our attention to the proposedquestion of law in the present appeal which reads thus : “Whether on the facts and in the circumstances of the case 41-ITXA-1934-17(Judgment).doc and in Law, the Hon’ble Tribunal was justified in holdingthat in the return of Income filed u/s. 153 A of the I.T. Act,1961 or even during the course of assessment proceedingsundertaken u/s. 153A of the I.T.Act, 1961 the assessee canlodge new claims, deduction or exemption or relief whichremained to be claimed in regular return of income?” 6.2.Shri A.R.Malhotra submitted that the Tribunal failed tointerpret the language and applicability of the provisions of Section153A in the facts and circumstances of the present case in its rightperspective and true meaning. He submitted that it was incorrect onthe part of the Tribunal to hold and conclude that the assessee couldlodge new claims, deductions, exemption or relief (which the assesseehad failed to claim in his regular return of income) which came to befiled by the assessee under the provisions of Section 153A of the saidAct. He submitted that the conclusion arried at by the Tribunal that theassessee could make fresh claim in the return of income filed underSection 153A of the said Act was incorrect in law in as much as oncethe assessment got abated under the second proviso to Section153A(1)of the said Act, the assessee was precluded from making any 41-ITXA-1934-17(Judgment).doc 41-ITXA-1934-17(Judgment).doc new claim, deduction or exemption or relief which had remained to beclaimed by the assessee in the original regular return of income whichwas filed earlier. He submitted that the assessee had treated the saidreceipts in the original return of income as “revenue receipt” andcredited the same to his profit and loss account. Subsequently theassessee had however made a fresh claim in the return of income whichcame to be filed on 29.03.2012 under the provisions of Section 153A ofthe said Act in consequence of the search action, in which the assesseehad treated the same receipts as “capital receipt”. He submitted thatthis change of stand on the part of the assessee in the subsequentreturn should not have been allowed as it was contrary to the standtaken by the assessee in his original return of income. He fairlysubmitted that the original return of income filed under Section 139(1)of the said Act was processed under Section 143(1) of the Act, butnotice under Section 143(2) of the said Act for scrutinizing the saidreturn of income was pending as on the date of search conducted onthe assessee. 6.3.Shri A.R.Malhotran also drew our attention to the orderpassed by the CIT(A) and more specifically to para Nos. 6 to 6.3 of the 41-ITXA-1934-17(Judgment).doc said order. He submits that CIT(A) has correctly analyzed theprovisions of Section 153A and come to the conclusion that theassessment or reassessment made pursuant to the notice under Section153 A of the said Act “are not de novo assessments.” He submitted thatCIT(A) has correctly held that the assessee could lodge new claim,deduction, exemption or relief which had remained to be claimed inthe earlier regular return of income in the course of assessmentproceedings undertaken under Section 153A of the said Act. Hesubmitted that primary objection of the revenue was that the claim wasnot made by the assessee in the original return of income nor revisedreturn of income was filed under Section 139(5) of the said Act.Therefore, it was not open to the assessee to use the proceedingsinitiated under Section 153A of the said act to lodge a fresh claim. 6.4.Shri A.R.Malhotra has clarified that the assessee hadcontended : (i) that there was no specific inhibition or restriction onthe assessee to make a new claim, deduction, exemption and/or reliefwhich was not claimed in the original assessment; (ii) that underSection 153A of the said Act, a return filed is deemed to be a return filedunder Section 139(1) of the Act; (iii) that the provisions of the said Act Shri A.R.Malhotra has clarified that the assessee had 41-ITXA-1934-17(Judgment).doc would apply to the same accordingly; (iv) that once assessment gotabated, the assessee was at liberty to make such claim/ addition as pernormal assessment proceedings because the assessment got abated andtherefore the AO retained original jurisdiction as well as jurisdictionconferred on him under Section 153A of the said Act which was inconsequence to search under Section 132 of the said Act. 6.5.He, however, fairly referred to the following two casesdelivered by this Hon’ble Court, viz; CIT Vs Continental WarehousingCorporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) and DCIT VsEversmile Construction Co. Pvt. Ltd. 65 DTR 39in support of theproposition that the assessee was entitled to make a fresh claim in thereturn filed in pursuance to initiation of proceedings under Section 153Aof the Act which were referred to by the Tribunal in the impugned order.This stand of Mr. Malhotra is appreciated. 7.Submissions made by learned standing counsel have beenconsidered. 8.At the outset, we may advert to Section 153-A of the Act. Itdeals with assessment in case of search or requisition. Sub-section (1)is relevant. It says that notwithstanding anything contained in Sections Sonali Kilaje 41-ITXA-1934-17(Judgment).doc 7.Submissions made by learned standing counsel have beenconsidered. 8.At the outset, we may advert to Section 153-A of the Act. Itdeals with assessment in case of search or requisition. Sub-section (1)is relevant. It says that notwithstanding anything contained in Sections Sonali Kilaje 41-ITXA-1934-17(Judgment).doc 139, 147, 148, 149, 151 and 153, in the case of a person where asearch is initiated under Section 132 or books of account, etc. arerequisitioned under Section 132-A, after 31.05.2003, the assessingofficer shall - (a) issue notice to such person for furnishing return ofincome in respect of each assessment year falling within six assessmentyears, within such time as may be specified and upon such return ofincome being filed, the provisions of the Act shall apply as if suchreturn were a return required to be furnished under Section 139; and(b) assess or re-assess the total income of six assessment yearsimmediately preceding the assessment year relevant to the previousyear in which such search is conducted or requisition is made. 8.1.In other words, Section 153-A(1) provides that where aperson is subjected to a search under Section 132 or his books ofaccounts, etc. are requisitioned under Section 132-A after 31.05.2003,the assessing officer is mandated to issue notice to such person tofurnish return of income in respect of each assessment year fallingwithin six assessment years immediately preceding the assessment yearrelevant to the previous year in which search is conducted orrequisition is made. Such returns of income shall be treated to be returns of income furnished under Section 139. Once returns arefurnished, income is to be assessed or re-assessed for the six assessmentyears immediately preceding the assessment year relevant to theprevious year in which such search is conducted or requisition is made.Thus, once Section 153-A(1) is invoked, assessment for 6 assessmentyears immediately preceding the assessment year in which search isconducted or requisition is made becomes open to assessment or re-assessment. Two aspects are crucial here. One is use of the expression“notwithstanding” in sub-section (1); and secondly, that returns ofincome filed pursuant to notice under Section 153-A (1)(a) would beconstrued to be returns under Section 139. The use of non obstanteclause in sub-section (1) of Section 153-A i.e., use of the expression“notwithstanding” is indicative of the legislative intent that provisionsof Section 153-A(1) would have overriding effect over the provisionscontained in Sections 139, 147, 148, 149, 151 and 153. 8.2.Having noticed the above, we may also refer to the secondand the third proviso to Section 153-A(1). For the sake of convenience,the second and third proviso to Section 153A(1) of the said Act whichis relevant is reproduced below and reads thus : 41-ITXA-1934-17(Judgment).doc Provided furtherthat assessment or reassessment, if any, relating toanyassessment year falling within the period of six assessmentyears referred to in this [sub-section] pending on the date ofinitiation of the search under section 132 or making of requisitionunder section 132A, as the case may be, shall abate: [Provided also that the Central Government may by rules made byit and published in the Official Gazette (except in cases where anyassessment or reassessment has abated under the second proviso),specify the class or classes of cases in which the Assessing Officershall not be required to issue notice for assessing or reassessing thetotal income for six assessment years immediately preceding theassessment year relevant to the previous year in which search isconducted or requisition is made. Provided furtherthat assessment or reassessment, if any, relating toanyassessment year falling within the period of six assessmentyears referred to in this [sub-section] pending on the date ofinitiation of the search under section 132 or making of requisitionunder section 132A, as the case may be, shall abate: [Provided also that the Central Government may by rules made byit and published in the Official Gazette (except in cases where anyassessment or reassessment has abated under the second proviso),specify the class or classes of cases in which the Assessing Officershall not be required to issue notice for assessing or reassessing thetotal income for six assessment years immediately preceding theassessment year relevant to the previous year in which search isconducted or requisition is made. 8.3.The second proviso says that any assessment or re-assessment proceedings falling within the said period of six assessmentyears pending on the date of initiation of search under Section 132 ormaking of requisition under Section 132-A shall abate. The thirdproviso mentions that the Central Government may frame rules tospecify such class or classes of cases in which the assessing officer shallnot be required to issue notice for assessing or re-assessing the totalincome for the said six assessment years. 8.4.Reverting back to the second proviso what is to be noticedis that as per this proviso, any assessment or re-assessment in respect ofany assessment year falling within the said period of six assessmentyears is pending on the date of initiation of search or making of 41-ITXA-1934-17(Judgment).doc requisition, those assessment or re-assessment proceedings shall abate.In other words, pending assessment or re-assessment proceedings onthe date of initiation of search or making of requisition shall abate. 8.5.That brings us to the crucial expression, which is ‘abate’.The ordinary dictionary meaning of the word ‘abate’, as per ConciseOxford English Dictionary, Indian Edition, is to reduce or remove (anuisance). Derivative of abate is abatement. In Black’s Law Dictionary,Eighth Edition, ‘abatement’ has been defined to mean an act ofeliminating or nullifying; the suspension or defeat of a pending actionfor a reason unrelated to the merits of the claim. In Supreme Court onWords and Phrases (1950-2008), “abating” has been defined to mean“an extinguishment of the very right of action itself”; to “abate”, asapplied to an action, is to cease, terminate, or come to an endprematurely. 9.Therefore, from a critical analysis of the provisionscontained in Section 153-A(1) of the Act more particularly the keyexpressions as referred to above, it is evident that assessments or re-assessments pending on the date of initiation of search would stand abated. Return of income filed by the person concerned for the sixassessment years in terms of Section 153-A(1)(a) would be construedto be a return of income under Section 139 of the Act. 10.It will be trite to also refer to the judicial decisions referredto and relied upon by the assessee before the Tribunal, viz; in the caseof Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra)and which finds mention in the Tribunal’s order and more specificallyin paragraph 17 & 18 of the order which reads thus : 9.Therefore, from a critical analysis of the provisionscontained in Section 153-A(1) of the Act more particularly the keyexpressions as referred to above, it is evident that assessments or re-assessments pending on the date of initiation of search would stand abated. Return of income filed by the person concerned for the sixassessment years in terms of Section 153-A(1)(a) would be construedto be a return of income under Section 139 of the Act. 10.It will be trite to also refer to the judicial decisions referredto and relied upon by the assessee before the Tribunal, viz; in the caseof Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra)and which finds mention in the Tribunal’s order and more specificallyin paragraph 17 & 18 of the order which reads thus : “17. On the other hand, while canvassing the lead arguments,Mr. Dastur, learned senior counsel appearing for the assessee - AllCargo Global Logistics Ltd. would submit that the power undersection of the IT Act and its ambit and scope has rightly beeninterpreted in the impugned judgment. Mr. Dastur submits thatthe title of the section itself is indicative of the object and namelyassessment in case of search or requisition. This section containsa non-obstante clause so as to not to restrict the powers whichare conferred by virtue of section 153A in the Assessing Officer.However, the exercise of power under that provision is wheresearch is initiated under section 132 or books of account or otherdocuments or assets are requisitioned under section 132A of theAct after 31st May, 2003. Then the Assessing Officer shall issuenotice to such person requiring him to furnish within such periodas may be specified in the notice, the return of income in respectof each assessment year falling within six assessment yearsreferred to in clause (b) of sub-section (1) of section 153Aandclause (b) postulates assessment or reassessment of the totalincome of six years immediately preceding the assessment yearrelevant to the previous year in which such search is conductedor requisition is made. The first proviso mandates that theAssessing Officer shall assess or reassess the total income inrespect of each assessment year falling within such six assessmentyears. The second proviso, according to Mr. Dastur, is importantbecause the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment yearsreferred to in sub-section (1) pending on the date of initiation ofthe search under section 132 or making of requisition undersection 132A,as the case may be, shall abate. Equally, sub-section(2) of section 153Adeals with a situation where any proceedinginitiated or any order of assessment or reassessment is madeunder sub-section (1) but that has been annulled in appeal or anyother legal proceeding, then, notwithstanding anything containedin sub-section or section 153, the assessment or reassessmentrelating to any assessment year which has abated under thesecond proviso to sub-section (1), shall stand revived with effectfrom the date of receipt of the order of such annulment by theCommissioner. Further, proviso to this sub-section says that suchrevival shall cease to have effect if the order of annulment is setaside.10 18.Mr. Dastur would submit that the Revenue is protectedcompletely in this case. The power is of drastic nature and has tobe exercised within constitutional parameters. However, thoughthe second proviso to sub-section (1) of section 153A would notapply in the first three years of this case, yet, as far as the secondthree year period is concerned, the assessments were pending.The proceedings in relation thereto abate. Now the entireassessment in relation to the second phase of three years can bemade but the foundation for all this and the action under section153A is a search under section 132 or requisition of books ofaccount and other assets under section 132A. 18.Mr. Dastur would submit that the Revenue is protectedcompletely in this case. The power is of drastic nature and has tobe exercised within constitutional parameters. However, thoughthe second proviso to sub-section (1) of section 153A would notapply in the first three years of this case, yet, as far as the secondthree year period is concerned, the assessments were pending.The proceedings in relation thereto abate. Now the entireassessment in relation to the second phase of three years can bemade but the foundation for all this and the action under section153A is a search under section 132 or requisition of books ofaccount and other assets under section 132A. In the present case, the notice under section 153A is founded on search. If there is no incriminating material found during the search, then, the Special Bench was right in holding that the power under section 153A being not expected to be exercised routinely, should be exercised if the search reveals anyincriminating material. If that is not found, then, in relation to thesecond phase of three years, there is no warrant for making anorder within the meaning of this provision. In any event, the issue stands concluded by a Division Benchjudgment of this Court rendered in the case of Commissioner ofIncome Tax (Central) Nagpur vs. M/s. Murli Agro ProductsLimited in Income Tax Appeal No.36 of 2009 decided on 29thOctober, 2010. It is, therefore, apparent that the law laid down bythis Court is binding on the Revenue. If that is binding then thequestions of law and with regard to applicability of section 153Aneed to be answered against the Revenue and in favour of the 41-ITXA-1934-17(Judgment).doc assessee”. 11.It will also be fruitful to extract the relevant findings ofthe Division Bench of this Court in the case of ContinentalWarehousing Corporation (Nhava Sheva) Ltd. (Bom.) (supra), paraNos.27, 28, 31 & 36 which read thus : “27.However, the Revenue's argument was that onceproceedings under section 153A of the Act are initiated, then, theoriginal assessment / reassessment order already passed in theassessment years covered under section 153A stand abated andthe Assessing Officer is obliged to pass fresh assessment /reassessment orders and determine the total income afresh forthose assessment years. Thus, earlier assessment orders abate asthe proceedings in which they are passed have no legalconsequence was the argument. Once the notice under section153A was issued and an assessment order passed pursuantthereto, it is that order which was erroneous and prejudicial tothe interest of the Revenue. 28.In dealing with those arguments, the Division Benchoutlined the ambit and scope of the powers conferred by section153A and observed thus : 41-ITXA-1934-17(Judgment).doc “8)We find it difficult to accept the above contentionraised on behalf of the revenue. The object of insertingSections 153A, 153B and 153C by Finance Act, 2003 bydiscarding the existing provisions relating to search casescontained in Chapter XIV B of the Income-tax Act, as statedin the Memorandum explaining the provisions in theFinance Bill 2003 (see 260 ITR (St) 191 at 219) was thatunder the existing provisions relating to search cases, oftendisputes were raised on the question, as to whether aparticular income could be treated as `undisclosed income'or whether a particular income could be said to be relatableto the material found during the course of search, etc. whichled to prolonged litigation. To overcome that difficulty, thelegislature by Finance Act 2003, decided to discard ChapterXIV B provisions and introduce Sections 153A, 153B and153C in the IT Act.9)What Section 153A contemplates is that,notwithstandingtheregularprovisionsforassessment/reassessment contained in the IT Act, wheresearch is conducted under Section 132 or requisition ismade under Section 132A on or after 31/5/2003 in the caseof any person, the Assessing Officer shall issue notice to 41-ITXA-1934-17(Judgment).doc such person requiring him to furnish return of incomewithin the time stipulated therein, in respect of sixassessment years immediately preceding the assessmentyear relevant to the previous year in which the search isconducted or requisition is made and thereafter assess orreassess the total income for those assessment years. Thesecond proviso to Section 153A provides for abatement ofassessment/reassessment proceedings which are pending onthe date of search/requisition. Section 153A (2) providesthat when the assessment made under Section 153(A)(1)isannulled, the assessment or reassessment that stood abatedshall stand revived. 10)Thus on a plain reading of Section 153A of theIncome-tax Act, it becomes clear that on initiation of theproceedings under Section 153A, it is only the assessment /reassessment proceedings that are pending on the date ofconducting search under Section 132 or making requisitionunder Section 132A of the Act stand abated and not theassessments/reassessments already finalised for thoseassessment years covered under Section 153A of the Act. Bya circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 41-ITXA-1934-17(Judgment).doc 61 at 107) the CBDT has clarified that on initiation ofproceedings under Section 153A, the proceedings pendingin appeal, revision or rectification proceedings againstfinalised assessment/reassessment shall not abate. It is onlybecause, the finalised assessments /reassessments do notabate, the appeal revision or rectification pending againstfinalised assessment/reassessments would not abate.Therefore, the argument of the revenue, that on initiation ofproceedings under Section 153A, the assessments/reassessments finalised for the assessment years coveredunder Section 153A of the Income-tax Act stand abatedcannot be accepted. Similarly on annulment of assessmentmade under Section 153A (1) what stands revived is thepending assessment / reassessment proceedings whichstood abated as persection 153A(1). 11)In the present case, as contended by Shri Mani,learned counsel for the assessee, the assessment forassessment year 1998-99 was finalised on the 29-12-2000and search was conducted thereafter on 3-12-2003.Therefore, in the facts of the present case, initiation ofproceedings under Section 153A would not affect the 41-ITXA-1934-17(Judgment).doc assessment finalised on 29-12-2000. 12)Once it is held that the assessment finalised on29.12.2000 has attained finality, then the deduction allowedunder section 80 HHC of the Income-tax Act as well as theloss computed under the assessment dated 29-12-2000would attain finality. In such a case, the A.O. while passingthe independent assessment order under Section 153A readwith Section 143 (3) of the I.T. Act could not have disturbedthe assessment / reassessment order which has attainedfinality, unless the materials gathered in the course of theproceedings under Section 153A of the Income-tax Actestablish that the reliefs granted under the finalisedassessment/ reassessment were contrary to the factsunearthed during the course of 153 A proceedings. 13)In the present case, there is nothing on record tosuggest that any material was unearthed during the searchor during the 153A proceedings which would show that therelief under Section 80 HHC was erroneous. In such a case,the A.O. while passing order under Section 153A read withSection 143(3) could not have disturbed the assessment 41-ITXA-1934-17(Judgment).doc order finalised on 29.12.2000 relating to Section 80 HHCdeduction and consequently the C.I.T. could not haveinvoked jurisdiction under Section 263 of the Act.” 31.We, therefore, hold that the Special Bench's understandingof the legal provision is not perverse nor does it suffer from anyerror of law apparent on the face of the record. The Special Benchin that regard held as under : 13)In the present case, there is nothing on record tosuggest that any material was unearthed during the searchor during the 153A proceedings which would show that therelief under Section 80 HHC was erroneous. In such a case,the A.O. while passing order under Section 153A read withSection 143(3) could not have disturbed the assessment 41-ITXA-1934-17(Judgment).doc order finalised on 29.12.2000 relating to Section 80 HHCdeduction and consequently the C.I.T. could not haveinvoked jurisdiction under Section 263 of the Act.” 31.We, therefore, hold that the Special Bench's understandingof the legal provision is not perverse nor does it suffer from anyerror of law apparent on the face of the record. The Special Benchin that regard held as under : “48.The provision under section 153A is applicablewhere a search or requisition is initiated after 31.5.2003. Insuch a case the AO is obliged to issue notice u/s 153A inrespect of 6 preceding years, preceding the year in whichsearch etc. has been initiated. Thereafter he has to assess orreassess the total income of these six years. It is obligatoryon the part of the AO to assess or reassess total income ofthe six years as provided in section 153A(1)(b) andreiterated in the 1 st proviso to this section. The secondproviso states that the assessment or reassessment pendingon the date of initiation of the search or requisition shallabate. We find that there is no divergence of views in so faras the provision contained in section 153A till the 1 st 41-ITXA-1934-17(Judgment).doc proviso. The divergence starts from the second provisowhich states that pending assessment or reassessment onthe date of initiation of search shall abate. This means thatan assessment or reassessment pending on the date ofinitiation of search shall cease to exist and no further actionshall be taken thereon. The assessment shall now be madeu/s 153A. The case of Ld. Counsel for the assessee is thatnecessary corollary to this provision is that completedassessment shall not abate. These assessments become finalexcept in so far and to the extent as undisclosed income isfound in the course of search. On the other hand, it hasbeen argued by the Ld. Standing Counsel that abatement ofpending assessment is only for the purpose of avoiding twoassessments for the same year, one being regular assessmentand the other being assessment u/s 153A. In other wordsthese two assessments coalesce into one assessment. Thesecond proviso does not contain any word or words to theeffect that no reassessment shall be made in respect of acompleted assessment. The language is clear in this behalfand therefore literal interpretation should be followed. Suchinterpretation does not produce manifestly absurd or unjustresults as section 153A (i)(b) and the first proviso clearly provide for assessment or reassessment of all six years. Itmay cause hardship to some assesses where one or more ofsuch assessments has or have been completed before thedate of initiation of search. This is hardly of any relevancein view of clear and unambiguous words used by thelegislature. This interpretation does not cause any absurdetc. results. There is no casus omissus and supplying anywould be against the legislative intent and against the veryrule in this behalf that it should be supplied for the purposeof achieving legislative intent. The submissions of the Ld.Counsels are manifold, the foremost being that theprovision u/s 153A should be read in conjunction with theprovision contained in section 132(1), the reason being thatthe latter deals with search and seizure and the former dealswith assessment in case of search etc, thus, the two areinextricably linked with each other.may cause hardship to some assesses where one or more ofsuch assessments has or have been completed before thedate of initiation of search. This is hardly of any relevancein view of clear and unambiguous words used by thelegislature. This interpretation does not cause any absurdetc. results. There is no casus omissus and supplying anywould be against the legislative intent and against the veryrule in this behalf that it should be supplied for the purposeof achieving legislative intent. The submissions of the Ld.Counsels are manifold, the foremost being that theprovision u/s 153A should be read in conjunction with theprovision contained in section 132(1), the reason being thatthe latter deals with search and seizure and the former dealswith assessment in case of search etc, thus, the two areinextricably linked with each other. 49. Before proceeding further, we may now examinethe provision contained in sub-section (2) of section 153,which has been dealt with by Ld. Counsel. It provides that ifany assessment made under sub- section (1) is annulled inappeal etc., then the abated assessment revives. However, ifsuch annulment is further nullified, the assessment again 41-ITXA-1934-17(Judgment).doc abates. The case of the Ld. Counsel is that this provisionfurther shows that completed assessments stand on adifferent footing from the pending assessments becauseappeals etc. proceedings continue to remain in force in caseof completed assessments and their fate depends uponsubsequent orders in appeal. On consideration of theprovision and the submissions, we find that this provisionalso makes it clear that the abatement of pendingproceedings is not of such permanent nature that they ceaseto exist for all times to come. The interpretation of the Ld.Counsel, though not specifically stated, would be that onannulment of the assessment made u/s 153(1), the AO getsthe jurisdiction to assess the total income which was vestedin him earlier independent of the search and which came toan end due to initiation of the search. 50.The provision contained in section 132 (1)empowers the officer to issue a warrant of search of thepremises of a person where any one or more of conditionsmentioned therein is or are satisfied, i.e. - a) summons ornotice has been issued to produce books of account or otherdocuments but such books of account or documents have 41-ITXA-1934-17(Judgment).doc 50.The provision contained in section 132 (1)empowers the officer to issue a warrant of search of thepremises of a person where any one or more of conditionsmentioned therein is or are satisfied, i.e. - a) summons ornotice has been issued to produce books of account or otherdocuments but such books of account or documents have 41-ITXA-1934-17(Judgment).doc not been produced, b) summons or notice has been or mightbe issued, he will not produce the books of account or otherdocuments mentioned therein, or c) he is in possession ofany money or bullion etc. which represents wholly or partlythe income or property which has not been and whichwould not be disclosed for the purpose of assessment, calledas undisclosed income or property. We find that theprovision in section 132 (1) does not use the word"incriminating document". Clauses (a) and (b) of section132(1) employ the words "books of account or otherdocuments". For harmonious interpretation of this provisionwith provision contained in section 153A, all the threeconditions on satisfaction of which a warrant of search canbe issued will have to be taken into account.be issued, he will not produce the books of account or otherdocuments mentioned therein, or c) he is in possession ofany money or bullion etc. which represents wholly or partlythe income or property which has not been and whichwould not be disclosed for the purpose of assessment, calledas undisclosed income or property. We find that theprovision in section 132 (1) does not use the word"incriminating document". Clauses (a) and (b) of section132(1) employ the words "books of account or otherdocuments". For harmonious interpretation of this provisionwith provision contained in section 153A, all the threeconditions on satisfaction of which a warrant of search canbe issued will have to be taken into account. 51.Having held so, an assessment or reassessment u/s153A arises only when a search has been initiated andconducted. Therefore, such an assessment has a vital linkwith the initiation and conduct of the search. We havementioned that a search can be authorised on satisfaction ofone of the three conditions enumerated earlier. Therefore,while interpreting the provision contained in section 153A,153A arises only when a search has been initiated andconducted. Therefore, such an assessment has a vital linkwith the initiation and conduct of the search. We havementioned that a search can be authorised on satisfaction ofone of the three conditions enumerated earlier. Therefore,while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. Withthis, we proceed to literally interpret to provision in 153A asit exists and read it alongside the provision contained insection 132(1). 52.The provision comes into operation if a search orrequisition is initiated after 31.5.2003. On satisfaction ofthis condition, the AO is under obligation to issue notice tothe person requiring him to furnish the return of income ofsix years immediately preceding the year of search. Theword used is "shall" and, thus, there is no option but to issuesuch a notice. Thereafter he has to assess or reassess totalincome of these six years. In this respect also, the word usedis "shall" and, therefore, the AO has no option but to assessor reassess the total income of these six years. The pendingproceedings shall abate. This means that out of six years, ifany assessment or reassessment is pending on the date ofinitiation of the search, it shall abate. In other wordspending proceedings will not be proceeded with thereafter.The assessment has now to be made u/s 153A(1)(b) andthe first proviso. It also means that only one assessment willbe made under the aforesaid provisions as the two 41-ITXA-1934-17(Judgment).doc 41-ITXA-1934-17(Judgment).doc proceedings i.e. assessment or reassessment proceedingsand proceedings under this provision merge into one. Ifassessment made under sub-section (1) is annulled inappeal or other legal proceedings, then the abatedassessment or reassessment shall revive. This means that theassessment or reassessment, which had abated, shall be made, for which extension of time has beenprovided under section 153B. 53.The question now is - what is the scope ofassessment or reassessment of total income u/s 153A (1)(b)and the first proviso ? We are of the view that for answeringthis question, guidance will have to be sought from section132(1). If any books of account or other documents relevantto the assessment had not been produced in the course oforiginal assessment and found in the course of search in ourhumble opinion such books of account or other documentshave to be taken into account while making assessment orreassessment of total income under the aforesaid provision.Similar position will obtain in a case where undisclosedincome or undisclosed property has been found as aconsequence of search. In other words, harmonious 41-ITXA-1934-17(Judgment).doc interpretation will produce the following results :- a) In so far as pending assessments are concerned, thejurisdiction to make original assessment and assessment u/s153A merge into one and only one assessment for eachassessment year shall be made separately on the basis of thefindings of the search and any other material existing orbrought on the record of the AO, (b) in respect of non-abated assessments, the assessmentwill be made on the basis of books of account or otherdocuments not produced in the course of originalassessment but found in the course of search, andundisclosed income or undisclosed property discovered inthe course of search. 54.It may be mentioned here that Ld. Counsel for AllCargo Global Logistics Ltd. was questioned about the scopeof pending assessments as it was his contention that all sixassessments are to be made, if necessary, on the basis ofundisclosed income discovered in the course of search. Hewas specifically questioned about the jurisdiction of the AO 41-ITXA-1934-17(Judgment).doc to make original assessment along with assessment u/s153A, merging into one. However he took an evasive viewsubmitting that this question need not be decided in hiscase although the question of jurisdiction u/s 153A wasvehemently pressed on account of which ground No.1 inthe appeal for assessment year 2004-05 was admitted asadditional ground. He also wanted the additional ground tobe retained in case of any future contingency. ” 36.Similar is the case with the Division Bench judgment of theHigh Court of Karnataka at Bangalore. There as well a real estatefirm was the assessee. A return of income was filed and when anorder under section 143(3) of the Act came to be passed on 31[st]December, 2010, for assessment year 2008-09 that a search tookplace in the premises of the assessee on 12 th April, 2011. In thecourse of search, incriminating material leading to undisclosedincome was seized. Therefore, the proceedings under section 153Aof the Act calling upon the assessee to file return of income undersection 153A(1)(a) came to be initiated by a notice dated 13 thJanuary, 2012. Return of income was filed pursuant to receipt ofsuch notice and for six years as required by the provision. When thisreturn was under consideration on 14th March, 2013, the Sonali Kilaje 41-ITXA-1934-17(Judgment).doc Sonali Kilaje 41-ITXA-1934-17(Judgment).doc Commissioner of Income Tax initiated proceedings under section263 of the Act on the ground that the order dated 31 st December,2010 in relation to the return of income for assessment year 2008-09 and holding that the same is erroneous and prejudicial to theinterest of the Revenue came to be passed. The assessee filed hisobjection but the Commissioner maintained his action under section263. That is how the aggrieved assessee carried the matter in appealto the Tribunal and before the Tribunal it was contended that oncesection 263 of the Act has been invoked during the pendency ofproceedings under section 153A of the Act, then, that wasimpermissible. That was impermissible for the assessments includingfor the assessment year 2008-09 stand reopened. Once they arereopened, then, there is no order of assessment in force and inregard to which any action under section 263 of the IT Act can beinitiated. It is in dealing with this argument and which wasnegatived by the Tribunal that all the observations of the High Courtof Karnataka have been made. In paragraphs 5 and 6, thearguments have been noted and thereafter the provision has beenreproduced. In paragraph 9, extensive reference has been made tothe judgment in Anil Kumar Bhatia of the High Court of Delhi(supra) and then the following observations in paragraphs 10 and11 are made : 41-ITXA-1934-17(Judgment).doc “10.Section 153A of the Acts start with a non obstanteclause. The fetters imposed upon the Assessing Officer bythe strict procedure to assume jurisdiction to reopen theassessment under Sections 147 and 148, have beenremoved by the