DCIT, Bangalore v. M/s IBC Knowledge Park Pvt. Ltd.,, Bangalore

ITA 903/BANG/2013 | 2005-2006
Pronouncement Date: 25-04-2014 | Result: Dismissed

Appeal Details

RSA Number 90321114 RSA 2013
Assessee PAN AABCI0816L
Bench Bangalore
Appeal Number ITA 903/BANG/2013
Duration Of Justice 10 month(s) 17 day(s)
Appellant DCIT, Bangalore
Respondent M/s IBC Knowledge Park Pvt. Ltd.,, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-04-2014
Date Of Final Hearing 21-04-2014
Next Hearing Date 21-04-2014
Assessment Year 2005-2006
Appeal Filed On 07-06-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NOS.903 TO 906/BANG/2013 ASSESSMENT YEARS : 2004-05 TO 2006-07 AND 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(4) BANGALORE. VS. M/S. IBC KNOWLEDGE PARK PVT. LTD. NO.150 DIAMOND DISTRICT TOWER B PENT HOUSE AIRPORT ROAD BANGALORE. PAN : AABCI 0816L APPELLANT RESPONDENT CO NOS.103 TO 105/BANG/2013 (IN ITA NOS.903 TO 905/BANG/2013 ASSESSMENT YEARS : 2004-05 TO 2006-07 M/S. IBC KNOWLEDGE PARK PVT. LTD. NO.150 DIAMOND DISTRICT TOWER B PENT HOUSE AIRPORT ROAD BANGALORE. PAN : AABCI 0816L VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(4) BANGALORE. CROSS OBJECTOR RESPONDENT ASSESSEE BY : SHRI S. RAMASUBRAMANIAN C.A. REVENUE BY : MRS. PRISCILLA SINGSIT CIT-III (DR) DATE OF HEARING : 21.04.2014 DATE OF PRONOUNCEMENT : 25.04.2014 ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 2 OF 34 O R D E R PER N.V. VASUDEVAN JUDICIAL MEMBER ITA NOS.903 TO 906/BANG/13 ARE APPEALS BY THE REVE NUE AGAINST THE COMMON ORDER DATED 21.02.2013 OF THE CIT(APPEALS)-V I BANGALORE RELATING TO ASSESSMENT YEARS 2004-05 2005-06 2006-07 AND 2 009-10. CROSS OBJECTIONS CO NOS. 103 TO 105/BANG/2013 ARE FILED BY THE ASSESSEE AGAINST THE VERY SAME ORDER OF THE CIT(APPEALS) IN RELATION TO ASSESSMENT YEARS 2004-05 2005-06 AND 2006-07. THE APPEALS RE LATING TO AY 2004-05 2005-2006 AND 2006-07 ARISE OUT OF PROCEEDINGS U/S. 153C OF THE ACT. IN THE CROSS OBJECTION FILED BY THE ASSESSEE FOR THESE ASSESSMENT YEARS THE ASSESSEE HAS QUESTIONED THE VALIDITY OF ASSUMPTION OF JURISDICTION BY THE AO U/S.153C OF THE ACT. 2. WE WILL FIRST DEAL WITH THE GROUNDS RAISED BY TH E REVENUE IN ITS APPEALS. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEALS ARE COMMON GROUNDS AND THEREFORE WE DEEM IT PROPER TO PASS A C ONSOLIDATED ORDER. ITA NO.903/BANG/2013 (AY 2004-05) 3. GROUND NO.1 RAISED BY THE REVENUE IS GENERAL IN NATURE AND CALLS FOR NO ADJUDICATION. 4. GROUNDS 3 & 4 DEAL WITH THE ISSUE OF ALLOWING DE PRECIATION ON DG SETS TRANSFORMERS PHOTOCOPIER SYSTEM AND SECURITY CAMERA. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 3 OF 34 5. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF ENGINEERING PROPERTY DEVELOPMENT CONTRACTORS DESIGNERS AND IN CIDENTAL ACTIVITIES IN RELATION TO PROPERTIES. THERE WAS A SEARCH ACTION U/S. 132 OF THE ACT CARRIED OUT IN THE CASE OF MR. YUNUS ZIA MR. ZIAULLA SHERI FF AND M/S. INDIA BUILDERS CORPORATION ON 17.6.2008. IN THE COURSE OF SEARCH CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND. THE DOCUMENT S WERE ACCORDINGLY CONSIDERED BY THE AO FOR INITIATING PROCEEDINGS AND MAKING ASSESSMENT U/S. 153C OF THE ACT. THE ASSESSEE WAS INCORPORATE D IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2004-05 AND THEREFORE PROCEEDINGS U/S. 153C OF THE ACT WAS INITIATED FOR THE A.YS. 2004-05 AND UPTO 2008-0 9. 6. THE ASSESSEE HAD LET OUT PREMISES OWNED BY IT. THE ASSESSEE ALSO PROVIDED SERVICES AND FACILITIES WHICH INCLUDES PRO VIDING LIFTS GENERATORS PRIMARY POWER AND POWER BACK-UP FOR COMMON AREAS S ECURITY SERVICES AND SECRETARIAL SERVICES. THE ASSESSEE CLAIMED DEPRECI ATION ON ELEVATORS DG SETS TRANSFORMERS PHOTOCOPIERS AND CAMERA PROVIDE D FOR SECURITY. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE AFORESAID ASSETS DID NOT HAVE INDEPENDENT EXISTENCE AND ARE P ART OF THE BUILDING LET OUT TO MAKE THE BUILDING USABLE. ACCORDING TO THE AO THE AFORESAID FIXTURES WERE PART OF BUILDING AND INCOME FROM LETT ING OUT OF BUILDING IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. CONSEQUENTLY THE AO DISALLOWED THE CLAIM OF THE AS SESSEE FOR DEDUCTION ON ACCOUNT OF DEPRECIATION ON THE AFORESAID ASSETS AGAINST INCOME RECEIVED IN THE FORM OF MAINTENANCE FEE CHARGED FROM THE TEN ANTS OF THE BUILDING ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 4 OF 34 WHICH WAS OFFERED AND ASSESSED TO TAX UNDER THE HEA D INCOME FROM BUSINESS. 7. ON APPEAL BY THE ASSESSEE THE CIT(APPEALS) FOL LOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-0 5 IN ITA NO.1079/BANG/2008 DATED 27.2.2009 WHICH RELATES TO APPEAL ARISING OUT OF ASSESSMENT UNDER THE NORMAL PROVISIONS OF THE ACT P RIOR TO THE SEARCH ALLOWED THE CLAIM OF THE ASSESSEE. BEFORE US THE REVENUE HAS RAISED THE ISSUE REGARDING ALLOWING DEPRECIATION ON THE AFORES AID ASSETS AND HAS CONTENDED THAT THOUGH THE ORDER OF THE TRIBUNAL REL IED UPON BY THE CIT(A) IS IN FAVOUR OF THE ASSESSEE BUT THE REVENUE HAS GONE IN APPEAL AGAINST THE SAID ORDER BEFORE THE HONBLE HIGH COURT OF KARNATA KA AND THEREFORE THE ISSUE IS BEING AGITATED BEFORE THE TRIBUNAL. 8. WE HAVE CONSIDERED THE GROUNDS RAISED BY THE ASS ESSEE AND SUBMISSION OF THE LD. DR. WE ARE OF THE VIEW THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2004-05 REFERRED TO EARLIER. THE TRIBUNAL ON THE ABOVE ISS UE AFTER ANALYZING THE TERMS OF THE AGREEMENT BY WHICH THE PROPERTY WAS LE T OUT BY THE ASSESSEE HELD AS FOLLOWS:- 6. A CURSORY PERUSAL OF THE AFORESAID AGREEMENT WO ULD INDICATE THAT RENTALS FOR THE BUILDING AND RENT FOR THE FACI LITIES ARE SEPARATELY CHARGED. THIS FACT IS NOT DENIED BY THE REVENUE. WE HAVE HAD THE BENEFIT OF GOING THROUGH THE AGREEMENT FILED BY THE ASSESSEE. FURTHER IT IS TO BE SEEN WHETHER THE ASS ESSEE IS ENTITLED TO CLAIM DEPRECIATION ON ASSETS IN RESPECT OF MAINTENANCE AMENITIES FOR WHICH HE RECEIVED A SEPAR ATE FEE. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 5 OF 34 THE AOS CONTENTION WAS THAT ITEMS LIKE ELEVATORS TRANSFORMERS DG SETS ETC. ARE INTEGRAL TO A MODERN COMMERCIAL B UILDING. THE ASSESSEE HAS POINTED OUT THAT IN THE ASSESSMENT ORD ER THE AO HAS COMPUTED SUCH INCOME UNDER THE HEAD PROFITS AN D GAINS OF BUSINESS AND PROFESSION AND THEREFORE DEPRECIATIO N IS TO BE ALLOWED. THE CLAUSE 3(C) OF THE AGREEMENT MANDATES THE ASSESSEE TO FURNISH VARIOUS FACILITIES AND CLAUSE 3 (F) SPECIFICS THE CONSIDERATION FOR SUCH FACILITIES. IN THIS CASE IT IS NECESSARY TO EXAMINE THE RELEVANT PROVISIONS OF THE AGREEMENT BETWEEN THE OWNER OF THE PROPERTY AND THE USER (TENANT). TH E ASSESSEE WAS SUPPOSED TO PROVIDE SERVICES LIKE LIFT TRANSFO RMER DG SETS WHICH REQUIRE EMPLOYMENT OF PERSONNEL TO DISCHARGE SUCH RESPONSIBILITY. THE VARIOUS ARRANGEMENTS THAT THE A SSESSEE HAS TO MAKE ON A DAY TO DAY BASIS TO ENSURE AVAILABILIT Y OF SERVICES AND AMENITIES TO THE USER (TENANT) IN ACCORDANCE WI TH THE AGREEMENT REFLECTS A CLEAR MANIFESTATION OF ORGANIZ ED ACTIVITY AND THEREFORE THE INCOME APPEARS TO HAVE BEEN CORRE CTLY COMPUTED. IN OUR VIEW DENYING DEPRECIATION ON LIFT IS NOT JUSTIFIED WHILE ALLOWING DEPRECIATION FOR OTHER ASSETS USED B Y THE ASSESSEE FOR SUCH ACTIVITIES. THE LEARNED CIT(A) HA S NOT GIVEN ANY CONVINCING REASONS BUT THE FACT REMAINS THAT LI KE ANY OTHER ITEMS MENTIONED ABOVE LIFT HAS ALSO BEEN USED AND IT REQUIRES DAY-TO-DAY MAINTENANCE AND ATTENDANCE. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SHANKARAN ARAYANA HOTELS (P) LTD. (201 ITR 138) AND THE HONBLE CALCU TTA HIGH COURT IN THE CASE REPORTED IN 175 ITR 374 HELD THAT LETTING OF MACHINERY INCLUDING LIFT CANNOT BE ASSESSED UNDER T HE HEAD INCOME FROM PROPERTY. THEREFORE WHILE DISMISSING THE REVENUES GROUND IN THIS REGARD WE DIRECT THE AO T O GRANT DEPRECIATION ON ELEVATOR ALSO. IT IS ORDERED ACCORD INGLY. 9. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNA L WE ARE OF THE VIEW THAT THERE IS NO MERIT IN GROUNDS 3 & 4 RAISED BY T HE REVENUE IN THIS APPEAL. ACCORDINGLY THE SAME ARE DISMISSED. 10. GROUNDS 5 & 6 RAISED BY THE REVENUE READ AS FOL LOWS:- 5. THE CIT(A) ERRED IN ALLOWING RS.19 56 250 BEING 25% OF GROSS FEE OF RS.78 25 000/- RECEIVED AS EXPENSE WIT HOUT APPRECIATING THE FACT THAT THE PROFESSIONAL CHARGES OF ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 6 OF 34 RS.1 29 08 375/- DEBITED AS CONSTRUCTION EXPENSE IS AN INVESTMENT AND THEREFORE NO PART OF IT COULD BE ALL OWED AS AN EXPENDITURE. 6. THE CIT(A) ERRED IN ALLOWING RS.19 56 250 BEING 25% OF GROSS FEE OF RS.78 25 000/- RECEIVED AS EXPENSE WIT HOUT APPRECIATING THE FACT THAT THE PROFESSIONAL CHARGES OF RS.1 29 08 375/- DEBITED AS CONSTRUCTION EXPENSE IS AN AMOUNT DEDUCTIBLE UNDER THE PROVISIONS OF SECTION 40(A)(IA ) AS THE TDS PROVISIONS HAVE NOT BEEN COMPLIED WITH. 11. THE ASSESSING OFFICER FOLLOWING THE DECISION R ENDERED IN THE CASE OF SIMILAR DISALLOWANCE IN ASSESSEES OWN CASE U/S. 14 3(3) OF THE ACT FOR THE A.Y. 2004-05 DISALLOWED THE CLAIM OF THE ASSESSEE OF A SUM OF RS.1 29 08 375 BEING PROFESSIONAL CHARGES PAID. TH E CIT(APPEALS) DELETED THE ADDITION MADE BY THE AO BY FOLLOWING TH E ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2004-05 IN ITA NO.1079/BANG/2008 DATED 27.2.2009. 12. IT IS NOT IN DISPUTE BEFORE US THAT ON AN IDENT ICAL ISSUE THE TRIBUNAL IN THE AFORESAID CASE HELD AS FOLLOWS:- 13. THE NEXT ISSUE RELATES TO CLAIM OF EXPENSES AG AINST MANAGEMENT FEE. IT IS UNDISPUTED FACT THAT THE ASSE SSEE HAD EARNED INCOME OF RS.78.25 LAKHS TOWARDS CONSTRUCTIO N MANAGEMENT. THE CASE OF THE ASSESSEE IS THAT IT HAS SUPERVISED THE SETTING UP OF THE INTERIORS ON BEHALF OF M/S.AC CENTURE SERVICES PVT. LTD. THIS FACT IS ALSO NOT DENIED BY THE REVENUE. WHEN THIS BEING THE ACTUAL POSITION IT IS IMPOSSIBL E TO CARRY OUT THE SUPERVISION ACTIVITY WITHOUT THE HELP OF THE CO NSULTANTS AND OTHER RECURRING EXPENSES. MERELY BECAUSE THE ASSESS EE COULD NOT DIRECTLY IDENTIFY EXPENSES INCURRED UNDER THE H EAD PROFESSIONAL CHARGES IT CANNOT BE CONCLUDED THAT NO EXPENSES HAVE BEEN INCURRED. AT THE TIME OF HEARING LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW WHERE AS THE ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 7 OF 34 LEARNED COUNSEL FOR THE ASSESSEE POINTING OUT TO SE VERAL DETAILS FILED IN THE PAPER BOOK CONTENDED THAT AT LEAST 25% OF THE GROSS FEE SHOULD BE ALLOWED AS EXPENSES. ACCORDING TO THE REVENUE THE EXPENSES INCURRED UNDER THE HEAD PROFESSIONAL C HARGES OF RS.1 29 08 375/- ARE TO BE DISALLOWED AS IT IS NOT MEANT FOR CONSTRUCTION MANAGEMENT. THESE EXPENSES INCLUDE A S UM OF RS.69 59 621/- BEING THE EXPENSES LIKE ADVERTISEMEN T SALES PROMOTION ETC. THE INCOME FROM CONSTRUCTION MANAGEM ENT HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOU RCES. IT WAS ALSO STATED THAT TAX HAS NOT BEEN DEDUCTED AT S OURCE. 14. ON GOING THROUGH VARIOUS RECORDS IT IS SEEN T HAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH M/S.ACC ENTURE FOR CONSTRUCTION MANAGEMENT SERVICES. THESE SERVICES AR E DEFINITELY IN THE NATURE OF BUSINESS AND IT CANNOT BE CONSIDERED TO BE INCOME FROM OTHER SOURCES. THE RATIO OF THE DECISION IN THE CASE OF GOLF VIEW HOMES CASE WILL APPLY. THE S UM OF RS.69 59 621/- REFERRED TO AS ADMINISTRATIVE EXPENS ES IS NOT THE EXPENSES DEBITED TO PROFESSIONAL FEE ACCOUNT. THE A SSESSEE HAS CREDITED THE PROFESSIONAL CHARGES ACCOUNT WITH THE ABOVE SUM AS SOME OF THESE EXPENSES WERE EARLIER DEBITED TO PROFESSIONAL CHARGES. THE AO HAS COMPLETELY MISCONS TRUED THE CREDIT ENTRY AS DEBIT ENTRY. THE OBSERVATIONS OF TH E AO BEING BASED ON NON-EXISTING FACTS ARE LIABLE TO BE QUASH ED. THE AOS OBSERVATION THAT TAX HAS NOT BEEN DEDUCTED AT SOURC E IS NOT BASED ON ANY EVIDENCE. EVEN ASSUMING THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE IT CANNOT BE A GROUND FOR DISAL LOWANCE AS SECTION 40(A)(IA) WAS INTRODUCED ONLY WITH EFFECT F ROM ASSESSMENT YEAR 2005-06. THE ASSESSEE CANNOT RECEI VE A SUM OF RS 78 25 000/ WITHOUT INCURRING EXPENSES. THE AS SESSEE HAS ENGAGED THE SERVICES OF PROFESSIONALS WHO HAVE BEEN PAID FOR THE SERVICES RENDERED BY THEM. HOWEVER CONSIDERING THE FACTS WE HOLD THAT 25% OF THE GROSS FEE SHOULD BE ALLOWED AS EXPENSES. IT IS ORDERED ACCORDINGLY. 13. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUN AL IN ASSESSEES OWN CASE WE ARE OF THE VIEW THAT THERE IS NO MERIT IN GROUNDS 5 & 6 RAISED BY THE REVENUE. ACCORDINGLY THE SAME ARE DISMISSED. 14. GROUNDS NO.7 & 8 RAISED BY THE REVENUE READS AS FOLLOWS:- ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 8 OF 34 7. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ALLOWIN G THE INTEREST OF RS.72 LAKHS INCURRED TOWARDS THE PROJEC T DEVELOPMENT PROPERTY ACQUISITION AND ALSO ADVANCES MADE TO SUPPLIERS WITHOUT APPRECIATING THAT THERE WAS NO IN COME FROM BUSINESS. 8. THE LEARNED CIT(A) ERRED IN ALLOWING THE INTERES T OF RS.72 LAKHS WITHOUT APPRECIATING THAT THE INCOME EARNED W AS ASSESSABLE UNDER THE HEAD HOUSE PROPERTY AND THE INTEREST WAS NOT AN ALLOWABLE DEDUCTION UNDER SECTION 24 OF THE INCOME- TAX ACT 1961. 15. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF A SUM OF RS.72 LAKHS BEING INTEREST ON FUNDS BORROWED. T HE MAIN REASON GIVEN BY THE AO WAS THAT INCOME OF THE ASSESSEE WAS BEING ASSESSED U/S. 22 OF THE ACT AND THEREFORE DEDUCTION U/S. 24 OF THE ACT ON ACCOUNT OF INTEREST CAN ALONE BE ALLOWED. SINCE HE WAS OF THE VIEW THA T LOANS ON WHICH INTEREST WAS PAID WAS NOT USED FOR THE PURPOSE OF C ONSTRUCTING OR ACQUIRING THE PROPERTY THE CLAIM FOR DEDUCTION ON ACCOUNT OF INTEREST WAS DISALLOWED BY THE AO. 16. ON APPEAL BY THE ASSESSEE THE CIT(APPEALS) REL YING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 20 04-05 IN ITA NO.1079/BANG/2008 DATED 27.2.2009 DELETED THE ADDI TION MADE BY THE AO. 17. BEFORE US IT IS NOT IN DISPUTE THAT IDENTICAL ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE RELIED UPON BY THE CIT(A). THE RELEVANT OBSERVATIONS OF THE TRIBUNAL WERE AS FOLLO WS:- ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 9 OF 34 7. THE NEXT ISSUE IN THE REVENUES APPEAL RELATES TO DISALLOWANCE OF INTEREST OF RS. 72 LAKHS. THE LEARN ED DR CONTENDED THAT AS THERE WAS NO INCOME FROM BUSINESS IN RESPECT OF SALE OF BUILDING INTEREST CANNOT BE ALLOWED. HE FURTHER SUBMITTED THAT PERUSAL OF THE INVESTMENT FUNDS AS M ADE OUT BY THE AO AS ALSO REPLIED BY THE ASSESSEE REVEALED TH AT THE ENTIRE TRANSACTION CARRIED OUT ONLY FOR ACQUIRING LAND AND CONSTRUCTING PROPERTY AND LEASING OUT. THE ASSESSEE HAD NOT ESTA BLISHED THAT ANY BUSINESS HAS BEEN CARRIED OUT. UNDER SEC.24 ON LY INTEREST ON AMOUNT BORROWED FOR PURPOSES OF ACQUISITION OR C ONSTRUCTION OF PROPERTY IS ELIGIBLE FOR DEDUCTION. THEREFORE T HE AO IS JUSTIFIED IN HOLDING THAT INTEREST ON WHATEVER FUNDS WHICH WE RE NOT UTILIZED FOR THE PURPOSE OF ACQUISITION/CONSTRUCTION OF PROP ERTY FROM WHICH HE HAS DECLARED AS ASSESSABLE DO NOT QUALITY FOR DEDUCTION U/S 24. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE REVENUE DID NOT DISPUTE THAT THE ASSESSEE HAD COMMENCED BUSINESS AND CONSTRUCTED BUILDINGS. M ERELY BECAUSE THE ASSESSEE DID NOT SELL AND BOOKED BUSINE SS INCOME IT CANNOT BE SAID THAT THE ASSESSEE DID NOT COMMENC E BUSINESS. THE ASSESSEE HAD PURCHASED THE LAND OBTAINED PLAN SANCTION STARTED CONSTRUCTION AND HAD COMPLETED FEW TOWERS B Y MARCH 31 2004. HENCE FOR ALL PRACTICAL AND LEGAL PURPOS ES THE ASSESSEES BUSINESS HAS BEEN COMMENCED. THEREFORE DISALLOWANCE OF INTEREST IS BAD IN LAW AND THE SAME HAS TO BE ALLOWED AS CLAIMED BY THE ASSESSEE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORDS. AFTER CONSIDERING THE FACTS THE FOLLOWING FACTS EMERGE: THE ASSESSEE IS IN THE BUSINESS OF DEVELOPING IMMOV ABLE PROPERTY AND SELLING THEM. DURING THE FINANCIAL YEA R ENDING 2003-04 IT CONSTRUCTED A PROJECT KNOWN AS KNOWLEDG E PARK ON BANNERGHATTA ROAD BANGALORE. THE ASSESSEE DID NOT ENTER INTO ANY SALE AGREEMENT WITH ANY PERSON EXCEPT WITH M/S. SUCHARITHA ESTATES PVT. LTD. DISPUTE AROSE BETWEEN THE ASSESSE E AND BANGALORE HOUSING DEVELOPMENT AND INVESTMENTS WITH WHOM THE ASSESSEE HAD ENTERED INTO JOINT DEVELOPMENT AGR EEMENT. BECAUSE OF THE DISPUTE THE ASSESSEE COULD NOT PROC EED WITH THE SALE OF THE PROPERTIES. THE ASSESSEE BEING A DEVEL OPER ACCOUNTING STANDARD 7 CONSTRUCTION CONTRACTS ISS UED BY ICAI IS NOT APPLICABLE. THE ICAI GUIDANCE NOTE VERY CLEA RLY STATES THAT AS 7 IS NOT APPLICABLE TO THE REAL ESTATE DEVE LOPERS BUT AS- 9 REVENUE RECOGNITION IS APPLICABLE. ONCE AS-9 IS APPLICABLE AS-2 REGARDING THE VALUATION OF INVENTORIES ALSO AU TOMATICALLY ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 10 OF 34 BECOMES APPLICABLE. PARA.12 OF THE ACCOUNTING STAND ARD 2 STATES THAT: INTEREST AND OTHER BORROWING COSTS ARE NORMALLY CONSIDERED AS NOT RELATING TO BRINGING THE INVENTOR IES TO THEIR PRESENT LOCATION AND CONDITION AND ARE THERE FORE USUALLY NOT INCLUDED IN THE COST OF INVENTORIES . THEREFORE INTEREST PAID BY THE ASSESSEE CANNOT BE ADDED TO WORK-IN-PROQRESS. IT HAS TO BE TREATED AS A PERIOD COST. FURTHER IT IS SEEN THAT THE SUM OF RS. 72 LAKHS IS NOT WITH RE FERENCE TO ANY PARTICULAR PROJECT. THIS IS APPARENT FROM THE FINDI NG OF THE AO IN PARA 4 AND 5 OF THE ASSESSMENT ORDER. THE AO HAD N OTED THE FOLLOWING IN HIS ORDER: PARTICULARS AMOUNT (IN CRORES) INVESTMENT IN FIXED ASSETS 52.56 ADVANCE FOR ACQUIRING THE PROPERTY 10.05 FIXED DEPOSIT TOWARDS BANK GUARANTEE 1.00 ADVANCE TO SUPPLIERS AND CONTRACTORS 4.36 DEPOSIT WITH GOVERNMENT AUTHORITIES 0.68 PREPAID EXPENSES 0.04 ADVANCE FOR ACQUISITION OF PROPERTY 45.19 TOTAL 114.45 THE AO HAD STATED THAT OUT OF THE ABOVE A SUM OF R S. 52.56 CRORES RELATES TO THE TOWERS WHICH HAVE BEEN LET OU T AND PROPORTIONATE INTEREST IS ALLOWED U/S 24. THE BALAN CE OF RS. 72 LAKHS WAS DISALLOWED ON THE GROUND THAT THE BUILDIN G IN RESPECT OF WHICH THE LOAN IS TAKEN HAS NOT BEEN LET OUT. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MAJOR P ORTION OF OTHER ADVANCE IS TOWARDS ACQUIRING PROPERTIES. THE PROJECTS IN THESE PROPERTIES HAVE NOT YET COMMENCED. LEARNED CO UNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THIS TRIBUNAL I N THE CASE OF K.RAHEJA DEVELOPMENT CORPORATION IN ITA NO.240/1997 WHEREIN IT HAS BEEN HELD THAT WHERE INTEREST ON BOR ROWED FUNDS ARE UTILIZED TOWARDS OTHER CURRENT ASSETS AND THERE IS NO FINDING THAT THE LOAN HAS BEEN TAKEN FOR THE SPECIFIC CONST RUCTION ACTIVITY INTEREST HAS TO BE ALLOWED AS A PERIOD CO ST AND CANNOT HE ADDED TO THE COST OF WORK IN PROGRESS. IT WAS SU BMITTED THAT THE HONBLE HIGH COURT OF KARNATAKA DID NOT ADMIT R EFERENCE AGAINST THE ORDER OF THE TRIBUNAL (SUPRA) AS OBSERV ED IN PARA.18 OF THE TRIBUNAL DECISION IN THE CASE OF K.RAHEJA DE VELOPMENT ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 11 OF 34 REPORTED IN 102 ITD 414. THEREFORE THE DECISION IN THE CASE OF RAHEJA DEVELOPMENT CORPORATION HAS BEEN HELD TO BE CORRECT BY THE HONBLE HIGH COURT. ON THE SAME GROUNDS THE DE CISION OF THE SPECIAL BENCH IN THE CASE OF WALL STREET CORPOR ATION LTD. VS. JCIT (10 ITR 156)(SB) IS NOT APPLICABLE AS IN T HAT CASE THERE IS A CLEAR FINDING THAT THE BORROWINGS ARE SPECIFIC ALLY FOR THE PROJECTS AND INTEREST CAN BE ALLOCATED TO EACH PROJ ECT. 18. IN VIEW OF THE AFORESAID DECISION WE FIND NO M ERIT IN GROUNDS 7 & 8 RAISED BY THE REVENUE AND DISMISS THE SAME. 19. GROUND NO.9 READS AS FOLLOWS:- 9. THE LEARNED CIT(A) ERRED IN ALLOWING A SUM OF RS.1 91 14 354/- BEING THE CAPITALIZED AMOUNT OF IN TEREST WHICH WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT WITHOUT APPRECIATING THAT THE SAME WAS NOT AN ALLOWABLE DED UCTION UNDER SECTION 24 OF THE INCOME-TAX ACT 1961. 20. THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF IN TEREST OF A SUM OF RS.1 91 14 354. FOR THE SAME REASONS GIVEN FOR DIS ALLOWING THE INTEREST CHALLENGED IN GROUNDS 7 & 8 OF THIS APPEAL THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF INTEREST. THE CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 20 04-05 IN ITA NO.1079/BANG/2008 DATED 27.2.2009 ALLOWED THE CLAI M OF THE ASSESSEE. 21. IT IS NOT IN DISPUTE BEFORE US THAT THIS TRIBUN AL IN ASSESSEES OWN CASE FOR THE A.Y. 2004-05 CONSIDERED SIMILAR GROUND S AND HELD AS FOLLOWS:- 9. THE NEXT ISSUE IN THE REVENUES APPEAL RELATES TO DISALLOWANCE OF INTEREST OF RS.1 91 14 354/-. ACCOR DING TO THE AO AS THE BALANCE-SHEET DOES NOT REFLECT ANY ACCRU ED INTEREST ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 12 OF 34 INTEREST WOULD NOT BE ALLOWED. HE FURTHER CONCLUDED THAT IT CANNOT BE TAKEN THAT INTEREST HAS BEEN PAID THROUGH THE BOOKS OF ACCOUNT AND THAT THERE ARE NO DETAILS OF ANY SUCH I NTEREST HAVING ACCUMULATED OR PAID. LEARNED DR FULLY SUPPORTED THE ORDER OF THE AO AND CONTENDED THAT THE LEARNED CIT(A) WENT W RONG IN DIRECTING THE AO TO ALLOW THE INTEREST. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E RECORDS. THE ASSESSEE HAD FILED LETTER DATED 30-9 2 006 BEFORE THE AO WHICH WAS FURNISHED TO THE LEARNED CIT(A) AS WELL. IT WAS SPECIFICALLY POINTED OUT TO PARA 21 OF THE LETTER W HEREIN IT IS STATED THAT THE DETAILED WORKING OF INTEREST ON BOR ROWINGS FOR TOWER A ARE FURNISHED. IT WAS FURTHER SUBMITTED THA T TOWER A HAD BEEN LET OUT AND THE INTEREST PERTAINING TO THI S AMOUNTING TO RS. 1 91 14 354/- WAS PAID DURING THE PREVIOUS YEAR . CONSIDERING THIS FACTUAL POSITION THE LEARNED CIT( A) HELD AS UNDER: HE FURTHER CITED TWO SUPREME COURT DECISIONS VIZ . (I) CIT VS SHOORJI VALLAHHDAS & CO. (46 ITR 144) AND (I I) KEDARNATH JUTE MANUFACTURING CO. LTD. V. CIT (82 IT R 363) TO CLAIM THAT TREATMENT OF EXPENDITURE IN THE BOOKS OF ACCOUNT DOES NOT DETERMINE THE ALLOWABILITY OR OTHERWISE OF AN EXPENDITURE. I HAVE CONSIDERED THE SUBMISSIONS AND THE FACTS. IT IS BY NOW SETTLED THA T TAXABILITY OF AN INCOME IS NOT DETERMINED BY THE NOMENCLATURE GIVEN TO IT BY THE ASSESSEE BUT BY ITS TRUE NATURE. BY THE SAME LOGIC IT APPEARS TO REASON THAT TREATMENT OF EXPENDITURE IN THE BOOKS OF ACCOUNT BY AN ASSESSEE DOES NOT DETERMINE ITS ALLOWABILITY OR OTH ERWISE. IN THIS CASE THE APPELLANT HAD INDEED FURNISHED TH E DETAILS TO THE AO. FROM THE DETAILS SUBMITTED IT I S CLEAR THAT THE SUM OF RS.1 19 14 354/- PERTAINS TO TOWER A WHICH WAS LET OUT. THE DETAILS ALSO SHOW THAT THE I NTEREST IN RESPECT OF TOWER B HAS NOT BEEN CLAIMED AS A DEDUCTION. AR OF THE APPELLANT POINTED OUT AND EXPL AINED THE RECONCILIATION BETWEEN THE AMOUNT DEBITED TO IN TEREST PAID ACCOUNT THE AMOUNT DEBITED TO PROFIT AND LOSS ACCOUNT AND THE AMOUNT WHICH WAS CAPITALIZED. CONSIDERING THE ABOVE POSITION THE APPELLANT GETS THE RELIEF ON THIS POINT. AO IS CONSEQUENTLY DIRECTED T O ALLOW THE SUM OF RS. 1 91 14 354/- BEING THE AMOUNT OF IN TEREST PERTAINING TO TOWER A AND PAID DURING THE PREVIOUS YEAR. 11. AFTER GOING THROUGH THE FACTS AND ALSO THE LET TER DATED 30- 9-2006 WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 13 OF 34 CIT(A) GRANTING RELIEF TO THE ASSESSEE. THE ORDER O F THE LEARNED CIT(A) ON THIS ISSUE IS THEREFORE CONFIRMED. IT IS ORDERED ACCORDINGLY. 22. FOLLOWING THE DECISION OF THE TRIBUNAL WE ARE OF THE VIEW THAT THERE IS NO MERIT IN GROUND NO.9 RAISED BY THE ASSESSEE A ND ACCORDINGLY THE SAME IS DISMISSED. 23. GROUND NOS.10 & 11 RAISED BY THE REVENUE IS GEN ERAL IN NATURE AND CALLS FOR NO SPECIFIC ADJUDICATION. 24. GROUND NO.2 RELATING TO THE ORDER OF THE TRIBUN AL IN ITA NO.1079/BANG/2008 DATED 27.2.2009 HAVING NOT BEEN CARRIED IN APPEAL TO THE HONBLE HIGH COURT OF KARNATAKA HAS NO RELEVANC E AS THE ORDER FOLLOWED BY THE CIT(A) CONTINUES TO SUBSIST AS ON T ODAY. 25. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. ITA NO.904/BANG/2013 (AY 05-06) 26. GROUND NOS.1 & 2 ARE IDENTICAL TO GROUND NOS.1 & 2 RAISED BY THE REVENUE FOR THE A.Y. 2004-05. GROUND NOS. 3 & 4 R ELATE TO DEPRECIATION ON DG SETS TRANSFORMERS ETC. THESE GROUNDS ARE IDENT ICAL TO GROUNDS NO.3 & 4 DECIDED FOR THE A.Y. 2004-05. FOR THE REASONS ST ATED THEREIN THESE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 27. GROUNDS NO.5 & 6 ARE GENERAL IN NATURE AND CALL FOR NO SPECIFIC ADJUDICATION. CONSEQUENTLY THE SAME ARE DISMISSED. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 14 OF 34 28. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. ITA NO.905/BANG/2013 (AY 06-07) 29. GROUND NOS.1 & 2 ARE IDENTICAL TO GROUND NOS.1 & 2 RAISED BY THE REVENUE FOR THE A.Y. 2004-05. GROUND NOS. 3 & 4 R ELATE TO DEPRECIATION ON DG SETS TRANSFORMERS ETC. THESE GROUNDS ARE IDENT ICAL TO GROUNDS NO.3 & 4 DECIDED FOR THE A.Y. 2004-05. FOR THE REASONS ST ATED THEREIN THESE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 30. GROUND NO.5 READS AS FOLLOWS:- 5. THE LEARNED CIT(A) ERRED IN ALLOWING A SUM OF RS.1 17 39 685/- BEING THE CAPITALIZED AMOUNT OF IN TEREST WHICH WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT WITHOUT APPRECIATING THAT THE SAME WAS NOT AN ALLOWABLE DED UCTION UNDER SECTION 24 OF THE INCOME-TAX ACT 1961. 31. THIS GROUND IS IDENTICAL TO GROUND NO.9 RAISED BY THE REVENUE IN A.Y. 2004-05. FOR THE REASONS STATED WHILE DECIDING SIM ILAR GROUND IN A.Y. 2004-05 THIS GROUND OF APPEAL RAISED BY THE REVENU E IS DISMISSED. 32. GROUNDS 6 & 7 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND CALL FOR NO SPECIFIC ADJUDICATION. 33. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 15 OF 34 ITA NO.906/BANG/2013 (AY 09-10) 34. GROUND NOS.1 & 2 ARE IDENTICAL TO GROUND NOS.1 & 2 RAISED BY THE REVENUE FOR THE A.Y. 2004-05. GROUND NOS. 3 & 4 R ELATE TO DEPRECIATION ON DG SETS TRANSFORMERS ETC. THESE GROUNDS ARE IDENT ICAL TO GROUNDS NO.3 & 4 DECIDED FOR THE A.Y. 2004-05. FOR THE REASONS ST ATED THEREIN THESE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 35. GROUNDS NO. 5 & 6 RAISED BY THE REVENUE ARE GE NERAL IN NATURE AND CALL FOR NO SPECIFIC ADJUDICATION. 36. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. CROSS OBJECTIONS BY THE ASSESSEE FOR AY 04-05 TO 06 -07) 37. WE WILL NOW TAKE UP CROSS OBJECTIONS FILED BY T HE ASSESSEE FOR ADJUDICATION. 38. AS WE HAVE ALREADY SEEN THERE WAS A SEARCH CON DUCTED IN THE CASE OF MR. YUNUS ZIA MR. ZIAULLA SHERIFF AND M/S. INDI A BUILDERS CORPORATION ON 17.6.2008. IN THE COURSE OF SEARCH IN THE CASE OF M/S. INDIA BUILDERS CORPORATION THE FOLLOWING DOCUMENTS PERTAINING TO THE ASSESSEE WERE FOUND:- A/IBC/9 PAGE 34 TO 50 1. THE ORIGINAL AGREEMENT TO SELL ENTERED BETWEEN M/S PROPSPERITY DEVELOPERS AND IBC KNOWLEDGE PARK PVT.LTD AND MR YUNUS ZIA ENTERED ON 1.08.2006. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 16 OF 34 2. THE ORIGINAL DEED OF ASSIGNMENT OF LEASE ENTERED BETWEEN M/S PROPSPERITY DEVELOPERS AND IBC KNOWLEDGE PARK PVT.LTD AND MR YUNUS ZIA ENTERED ON 1.08.2006. A4/IBC/1 PAGE 17 TO 21 THE SUPPLEMENTAL AGREEMENT ENTERED ON 16.06.2006 BETWEEN M/S BANGALORE HOUSING DEVELOPMENT & INVESTMENTS AND M/S IBC KNOWLEDGE PARK PVT.LTD AND M/S SUCHARITA ESTATES PVT LTD FOR CONSTRUCTING THE PROPERTY. A2/IBC/3 PAGE 141 TO 175 PAGE 114 TO 128 PAGE 104 TO 113 1. THE DEVELOPMENT AGREEMENT ENTERED BETWEEN M/S BANGALORE HOUSING DEVELOPMENT & INVESTMENT AND IBC KNOWLEDGE PARK PRIVATE LTD ON 26.12.2003. 2. THE SALE DEED ENTERED BETWEEN M/S BANGALORE HOUSING DEVELOPMENT & INVESTMENT AND IBC KNOWLEDGE PARK PRIVATE LTD ON 23.09.2005. 3. POWER OF ATTORNEY ENTERED BETWEEN M/S BANGALORE HOUSING DEVELOPMENT & INVESTMENT AND IBC KNOWLEDGE PARK ON 2.07.2002. 39. SINCE THE AFORESAID DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AT THE TIME OF SEARCH IN THE CASE OF AFORESAI D THREE ASSESSEES THE SEIZED DOCUMENTS WERE TAKEN POSSESSION BY THE AO FR OM THE AO OF THE SEARCHED PERSON AND PROCEEDINGS U/S. 153C OF THE AC T WERE INITIATED BY THE AO OF THE ASSESSEE. IT WAS THE PLEA OF THE ASSESSE E BEFORE THE CIT(A) THAT PROCEEDINGS U/S. 153C INITIATED AGAINST THE ASSESSE E WERE INVALID. THE AFORESAID ARGUMENT OF THE ASSESSEE DID NOT FIND FAV OUR WITH THE CIT(A) WHO DISMISSED THE AFORESAID GROUNDS. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 17 OF 34 40. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT UNDER SECTION 153C OF THE ACT THE AO CAN ASSUME JURISDIC TION ONLY IF THE VALUABLE ASSETS BOOKS OF ACCOUNT OR OTHER DOCUMENTS SEIZED BELONG TO A PERSON OTHER THAN THE PERSON WHO HAS BEEN SEARCHED. IF THE SEARCHED PREMISES ALSO HAPPEN TO BE THE PREMISES FROM WHERE ANOTHER P ERSON IS CARRYING ON BUSINESS OBVIOUSLY DOCUMENTS BELONGING TO SUCH PER SON WOULD ALSO BE FOUND THERE. IN THIS REGARD THE LEARNED COUNSEL POI NTED OUT THAT THE PERSONS SEARCHED AND THE PREMISES WHICH WERE SEARCHED WAS A LSO OCCUPIED BY THE ASSESSEE AS ITS CORPORATE OFFICE. IN OTHER WORDS THE PREMISES SEARCHED WAS USED IN COMMON BY THE PERSONS WHO WERE SUBJECTE D TO A SEARCH U/S.132 OF THE ACT AS WELL AS BY THE ASSESSEE. IT WAS HIS CONTENTION THAT IN ORDER TO ASSUME JURISDICTION UNDER SECTION 153C OF THE ACT IT IS NECESSARY TO PROVE THAT THE DOCUMENTS FOUND IN THE PREMISES O F THE SEARCHED PERSON OUGHT NOT TO HAVE BEEN THERE BECAUSE THEY BELONG TO SOMEBODY ELSE. IN ORDER TO ENSURE THAT SUCH OTHER PERSON HAS DISCLOSE D THE INCOME SECTION 153C OF THE ACT PROVIDES FOR A SPECIAL PROCEDURE WH EREIN SUCH OTHER PERSON SHOULD ALSO BE SUBJECT TO THE RIGORS OF A SE ARCH ASSESSMENT. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN SSP AVIATION LIMITED VS DCIT 346 ITR 177 AT PAGE 189 P ARA 17 WHEREIN THE HONBLE COURT EXPLAINING THE RATIONALE OF SECTION 1 53C OF THE ACT OBSERVED THAT THE SECTION MERELY ENABLES THE REVENUE AUTHORI TIES TO INVESTIGATE INTO THE CONTENTS OF THE DOCUMENTS SEIZED WHICH BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED SO THAT IT CAN BE ASCERTAI NED WHETHER THE ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 18 OF 34 TRANSACTION OR THE INCOME EMBEDDED IN THE DOCUMENT HAS BEEN ACCOUNTED FOR IN THE CASE OF THE APPROPRIATE PERSON. 41. IT WAS SUBMITTED THAT SINCE THE BUSINESS OF THE ASSESSEE IS ALSO BEING CARRIED ON FROM THE SAME PLACE FROM WHICH THE DOCUMENTS HAVE BEEN SEIZED SECTION 153C OF THE ACT CANNOT BE INVOKED A ND THE ASSESSMENT UNDER SECTION 153C IS LIABLE TO BE QUASHED. 42. IT WAS FURTHER SUBMITTED THAT THE AO IN HIS REM AND REPORT FILED BEFORE THE CIT(A) HAS MADE REFERENCE TO DOCUMENTS OF THE A SSESSEE FOUND IN THE COURSE OF SEARCH WHICH ARE LISTED OUT IN THE EARLIE R PART OF THIS ORDER. HE POINTED OUT IN THOSE DOCUMENTS THERE IS REFERENCE T O CERTAIN SALE AGREEMENTS. MERE FACT THAT SALE AGREEMENTS PERTAINI NG TO THE ASSESSEE ARE FOUND IN THE COURSE OF SOME OTHER PERSON THAT WOULD NOT BE SUFFICIENT TO ASSUME JURISDICTION U/S.153C OF THE ACT AGAINST THE ASSESSEE BUT THOSE DOCUMENTS SHOULD DISCLOSE UNDISCLOSED INCOME OF THE ASSESSEE OR THEY INCRIMINATING IN NATURE. THE ABOVE FACTS SHOULD BE RECORDED BY THE AO OF THE PERSON WHO WAS SEARCHED AND THEREAFTER THE DOCU MENTS SHOULD BE HANDED OVER TO THE AO OF THE PERSON TO WHOM THE SEI ZED DOCUMENTS BELONG. IT IS ONLY THEREAFTER THAT THE PROCEEDINGS SHOULD BE INITIATED AGAINST THE ASSESSEE. IN THIS REGARD EMPHASIS WAS LAID BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE FACT THAT PROCEEDINGS U/S.153A OF THE ACT AS WELL AS SEC.153C OF THE ACT DERIVE THEIR SOURCE FROM A SEAR CH CONDUCTED U/S.132 OF THE ACT. IT WAS HIS SUBMISSION THAT ONE OF THE REA SONS WHY PROCEEDINGS FOR ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 19 OF 34 SEARCH U/S.132 OF THE ACT ARE INITIATED ARE ON ARRI VING AT A SATISFACTION BY THE AUTHORIZED OFFICER THAT DOCUMENTS OR BOOKS OF ACCOU NTS WHICH WILL BE USEFUL FOR THE PURPOSE OF PROCEEDINGS UNDER THE ACT WILL N OT BE PRODUCED EVEN IF A SUMMONS TO PRODUCE WERE TO BE ISSUED. WHEN SUCH IS THE RIGOR FOR ISSUE OF WARRANT OF SEARCH U/S.132 OF THE ACT THE PERSON WH O IS NOT BEING SEARCHED SHOULD NOT BE PUT ON THE SAME FOOTING AS A PERSON S EARCHED AND PROCEEDINGS U/S.153C OF THE ACT SHOULD BE RESORTED TO AS A MATTER OF COURSE. THE FUNDAMENTAL PURPOSE OF SEARCH IS TO U NEARTH UNDISCLOSED INCOME. THEREFORE SECTION 153A AND SECTION 153C OF THE ACT HAVE TO HE INTERPRETED KEEPING THE PURPOSE OF SEARCH IN THE FO REFRONT. THEREFORE IT WAS SUBMITTED THAT UNLESS THE DOCUMENTS SEIZED PRIMA FA CIE SHOWS UNDISCLOSED INCOME SECTION 153C OF THE ACT CANNOT HE INVOKED . IT WAS FURTHER SUBMITTED THAT IN ANY CASE BEFORE THE SATISFACTION UNDER SECTION 153C OF THE ACT THE AO MUST MAKE ENQUIRIES AND FIND OUT PR IMA FACIE THE DOCUMENTS REPRESENTS UNDISCLOSED INCOME. 43. WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE SU BMITTED THAT IT IS NOT NECESSARY THAT AN ASSESSMENT UNDER SECTION 153A REA D WITH SECTION 153C SHOULD NECESSARILY BE MADE IN RESPECT OF EACH OF TH E SIX ASSESSMENT YEARS REFERRED TO IN SECTION 153C. EVEN IF IT IS ASSUMED THAT SECTION 153C APPLIES IF MERELY THE DOCUMENTS ARE FOUND WITHOUT THEM BEIN G INCRIMINATING IN NATURE THE ASSESSMENT UNDER SECTION 153A READ WITH SECTION 153C CAN BE MADE ONLY IN RESPECT OF THOSE ASSESSMENT YEARS COVE RED BY THE DOCUMENTS. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE REMAND REPORT ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 20 OF 34 DATED 30/10/20I2 OF THE AO FILED BEFORE CIT(A) IN W HICH THE DOCUMENTS PERTAIN TO PREVIOUS YEAR ENDED 31/03/2007 WERE ALON E FOUND AND THE RELEVANT ASSESSMENT YEAR IS 2007-08. SIMILARLY THE OTHER DOCUMENTS PERTAINING TO ASSESSMENT YEAR 2004-05 2006-07 AND 2003-04 WERE ALSO FOUND. HENCE FOR THE OTHER ASSESSMENT YEARS. THE PR OVISIONS OF SECTION 153C OF THE ACT CANNOT HE INVOKED. IT WAS EMPHASIZ ED THAT SECTION 153C OF THE ACT APPLIES TO A CASE WHERE INITIALLY THE DE PARTMENT HAS NO INFORMATION OR REASONS TO BELIEVE THAT ANY OF THE C ONDITIONS MENTIONED IN CLAUSE (A) TO (C) OF SECTION 132(1) ARE SATISFIED. MERELY BECAUSE BY A COINCIDENCE THAT THE DOCUMENTS BELONG TO A PERSON O THER THAN THE SEARCHED PERSON IS FOUND IT CANNOT BE SAID THAT SU CH PERSON SHOULD BE SUBJECTED TO SEARCH ASSESSMENT FOR ALL THE SIX YEAR S. IT WAS SUBMITTED THAT IT IS A REASONABLE INTERPRETATION TO SAY THAT THE ASSE SSMENT UNDER SECTION L53A READ WITH SECTION 153C SHOULD BE CONFINED TO T HE SPECIFIC ASSESSMENT YEARS TO WHICH THE DOCUMENTS PERTAIN. 44. IT WAS FURTHER SUBMITTED THAT IT IS NO DOUBT TR UE THAT SECTION 153C USES THE EXPRESSION THAT: ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSE SS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISI ONS OF SECTION L53A. IT WAS SUBMITTED THAT IT IS A WELL SETTLED PRINCIPL E THAT THE EXPRESSION USED IN A STATUTE IS TO BE READ IN THE CONTEXT IN WHICH IT APPEARS. THE EXPRESSION IN ACCORDANCE WITH PROVISIONS OF SECTION 153A HAS TO BE NECESSARILY GIVEN A ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 21 OF 34 RESTRICTED MEANING. IT IS NOT AS IF THAT EXPRESSION WOULD ENCOMPASS THE ENTIRE SECTION 153A. IT HAS TO BE NECESSARILY RESTR ICTED TO THE RELEVANT ASSESSMENT YEARS ONLY. 45. WE HAVE CONSIDERED THE AFORESAID SUBMISSIONS O F THE LD. COUNSEL FOR THE ASSESSEE. FOR PROPER APPRECIATION OF THE CO NTENTIONS PUT FORTH BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US IT IS N ECESSARY TO SET OUT THE PROVISIONS OF SEC.153A AND 153C OF THE ACT. THESE PROVISIONS READ AS FOLLOWS:- 153A. ASSESSMENT IN CASE OF SEARCH OR REQUISITION. - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 1 39 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 1 53 IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003 THE A SSESSING OFFICER SHALL- (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APP LY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT 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: ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 22 OF 34 PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT I F ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PE NDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MA KING OF REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE . (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN AN NULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING THEN NOTWITH STANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR SECTION 153 THE AS SESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1) SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUC H ANNULMENT BY THE COMMISSIONER : PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION : FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT - (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION SEC TION 153B AND SECTION 153C ALL OTHER PROVISIONS OF THIS ACT SHAL L APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPE CT OF AN ASSESSMENT YEAR UNDER THIS SECTION THE TAX SHALL B E CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. 153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON. - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 1 39 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 1 53 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY BULL ION JEWELLERY OR VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A THEN THE BOOKS OF ACCO UNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED O VER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSE SS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A.'. PROVIDED THAT IN CASE OF SUCH OTHER PERSON THE REF ERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 23 OF 34 REQUISITION UNDER SECTION 132A IN THE SECOND PROVIS O TO SUB-SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSE TS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS S EIZED OR REQUISITIONED AS REFERRED TO IN SUB-SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTI ON OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR- (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142 HAS BEEN ISSUED TO HIM OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH O THER PERSON BUT NO NOTICE UNDER SUB-SECTION (2) OF SECTI ON 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UN DER SUB- SECTION (2) OF SECTION 143 HAS EXPIRED OR (C) ASSESSMENT OR REASSESSMENT IF ANY HAS BEEN MA DE BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT O R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFF ICER HAVING JURISDICTION OVER SUCH OTHER PERSON SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOM E OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVID ED IN SECTION 153A. 46. A PLAIN READING OF THE AFORESAID PROVISIONS SHO W THAT THE PROVISIONS OF SECTION 147 148 149 151 & 153 STAND OVER-RIDD EN WHEN THE PROVISIONS OF SEC.153A AND 153C OF THE ACT ARE APPLICABLE. SE C.153C OF THE ACT WILL APPLY IN A CASE WHERE THE AO OF THE PERSON WHO IS S UBJECTED TO SEARCH U/S. 132 OF THE ACT FINDS THAT THE DOCUMENTS FOUND IN T HE COURSE OF SUCH SEARCH BELONG TO A PERSON OTHER THAN THE PERSON WHO WAS SE ARCHED; IN SUCH ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 24 OF 34 CASES THE AO OF THE PERSON WHO WAS SEARCHED HAS TO HANDOVER THE DOCUMENTS OR ASSETS SEIZED TO THE AO HAVING JURISDI CTION OVER THE OTHER PERSON TO WHOM SUCH DOCUMENTS OR ARTICLES BELONG. THEREAFTER THE AO OF THE OTHER PERSON HAS TO ASSESS OR REASSESS INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF T HE ACT. 47. IN THE PRESENT CASE THE ASSESSEE AS WELL AS TH E PERSONS WHO WERE SEARCHED SHARED COMMON BUSINESS PREMISES AND THEREF ORE IT CANNOT BE SAID THAT THE DOCUMENTS FOUND WERE IN THE COURSE OF SEARCH OF THE ASSESSEE. THE DOCUMENTS WERE HOWEVER FOUND FROM THE PREMISES IN WHICH SUCH OTHER PERSON ALSO CARRIES ON BUSINESS. IT IS TRUE THAT BY THE MERE FACT THAT THE ASSESSEE SHARES A COMMON PREMISE S WITH THE PERSON SEARCHED HE HAS TO FACE PROCEEDINGS U/S. 153C OF T HE ACT WITHOUT THE AO HAVING TO RESORT TO COMPLY WITH THE RIGOURS MENTION ED IN SECTION 147 148 149 151 & 153 OF THE ACT. THE LEGISLATURE IN ITS WISDOM HAS NOT THOUGHT IT FIT TO MAKE A PROVISION FOR SUCH A CONTINGENCY AND BY A PROCESS OF INTERPRETATION; IT IS NOT POSSIBLE TO EXCLUDE THE A SSESSEE FROM THE APPLICABILITY OF THE PROVISIONS OF SECTION 153C OF THE ACT ON THE GROUND THAT THE ASSESSEE WOULD BE PUT TO HARDSHIP. IF SUCH RIG ORS AS IS SOUGHT TO BE CANVASSED BY THE LEARNED COUNSEL FOR THE ASSESSEE FOR INITIATING PROCEEDINGS U/S.153C OF THE ACT ARE IMPOSED THAN TH AT WOULD MAKE THE PROVISIONS UNWORKABLE. IN ALL SUCH CASES THE AO O F THE PERSON SEARCHED HAS TO LAUNCH AN ENQUIRY BEFORE HANDING OVER THE DO CUMENTS BOOKS OF ACCOUNTS SEIZED TO THE AO OF THE PERSON WHO WAS NOT SEARCHED REGARDING ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 25 OF 34 THE NATURE OF THE DOCUMENT AND WHY THE SAME WAS FOU ND IN THE PREMISES OF SUCH OTHER PERSON. IT IS NOT DISPUTED BY THE LEARN ED COUNSEL FOR THE ASSESSEE THAT SUCH DOCUMENTS CAN BE USED FOR INITIA TING PROCEEDINGS U/S.147 OF THE ACT BUT AFTER FOLLOWING THE RIGORS L AID DOWN FOR INITIATING SUCH PROCEEDINGS AS PROVIDED IN THE INCOME TAX ACT 1961 . WE ARE OF THE VIEW THAT ULTIMATELY THE TEST IN SUCH CASES WILL BE HAS THE PERSON WHO WAS NOT SUBJECTED TO A SEARCH HAS SOMETHING TO HIDE. IF NO T WHETHER IT IS PROCEEDINGS U/S.147 OF THE ACT OR SEC.153C OF THE A CT WILL NOT MAKE ANY DIFFERENCE. IN ANY EVENT THE LEGISLATURE IN ITS WI SDOM HAS NOT THOUGHT IT FIT TO IMPOSE ANY SUCH CONDITION FOR PROCEEDING AGAINST A PERSON WHO WAS NOT SEARCHED IN THE PROVISIONS OF SEC.153C OF THE ACT. WE THEREFORE DO NOT THINK THAT THE PROPOSITION CANVASSED BY THE LEARNED COUNSEL FOR THE ASSESSEE CAN BE ACCEPTED. 48. WITH REGARD TO THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DOCUMENTS SEIZED SHOULD PRIMA FACIE SHOW UNDISCLOSED INCOME TO INVOKE THE PROVISIONS OF SECTION 153C OF THE ACT W E ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. IN THIS REGARD THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. V. DCIT 346 ITR 177 (DEL) CLEARLY LAYS DOWN THAT AT THE TIME OF ARRIVING AT A SATISFACTION FOR PROCEEDING AGAINST THE OTHER PERSON U/S. 153C OF THE ACT IT I S NOT NECESSARY THAT SATISFACTION SHOULD BE RECORDED THAT SUCH ARTICLE O R DOCUMENTS FOUND IN THE COURSE OF SEARCH SHOWED UNDISCLOSED INCOME. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 26 OF 34 49. THE NEXT ARGUMENT OF THE LD. COUNSEL FOR THE AS SESSEE WAS THAT PROCEEDINGS U/S. 153A R.W.S. 153C SHOULD NOT BE INI TIATED FOR ALL THE SIX ASSESSMENT YEARS AND IT SHOULD BE RESTRICTED ONLY T O THE ASSESSMENT YEARS RELATING TO THE INCRIMINATING DOCUMENTS FOUND AT TH E TIME OF SEARCH. WE ARE UNABLE TO APPRECIATE THIS ARGUMENT FOR THE SIMPLE R EASON THAT ONCE THE CONDITION FOR INVOKING THE PROVISIONS OF SECTION 15 3C ARE SATISFIED THEN THE AO HAS TO PROCEED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT WHICH MANDATES THE AO TO PASS AN ORDER OF ASSE SSMENT FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUI SITION IS MADE. THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT IN THE CONTEXT OF SECTION 153C OF THE ACT PROVISIONS OF SECTION 153A SHOULD RECEIVE THE RESTRICTED MEANING. IN OUR VIEW SUCH A COURSE IS NOT POSSIBL E. IF AFTER ANALYSIS OF SEIZED DOCUMENT THE AO FINDS NO INCOME CHARGEABLE TO TAX FOR THE SIX ASSESSMENT YEARS REFERRED TO IN SECTION 153A OF THE ACT THEN HE HAS TO PASS NIL ASSESSMENT. HENCE IN OUR VIEW THE ASSES SEE CANNOT HAVE ANY GRIEVANCE WHATSOEVER. 50. THE OTHER ARGUMENTS WHICH CHALLENGE TO THE VAL IDITY OF INITIATION OF PROCEEDINGS U/S.153C OF THE ACT IN RELATION TO ASSE SSMENT YEARS 2004-05 AND 2005-06 ARE AS FOLLOWS. THESE ARGUMENTS PROCEE D ON THE BASIS OF THE DECISION OF THE HONBLE SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LTD VS. CIT 18 ITR (TRIBUNAL) 106 WHEREIN IT WAS HELD THAT IN RESPECT OF ASSESSMENTS THAT ARE COMPLETED PRIOR TO THE DATE OF SEARCH THAN THE ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 27 OF 34 ASSESSMENT TO BE MADE U/S.153A/153C OF THE ACT IN R ESPECT OF THE 6 ASSESSMENT YEARS COVERED U/S.153A/153C OF THE ACT S HOULD BE RESTRICTED TO ONLY ASSESSING INCOME THAT ARE NOT DISCLOSED EAR LIER AND WHICH ARE DETECTED CONSEQUENT TO THE MATERIAL FOUND IN THE CO URSE OF SEARCH. IN OTHER WORDS IN RESPECT OF ASSESSMENT THAT ARE ABATED THE AO RETAINS THE ORIGINAL JURISDICTION AS FAR AS JURISDICTION CONFERRED ON HI M UNDER SECTION 153A/153C OF THE ACT OF WHICH THE ASSESSMENT SHALL BE MADE FO R EACH OF THE SIX ASSESSMENT YEARS SEPARATELY. A.Y. 2004-05 51. AS FAR AS A.Y. 04-05 IS CONCERNED IT IS NOT IN DISPUTE THAT AN ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WA S PASSED ON 27/12/2006 AND THE ABOVE ASSESSMENT ORDER WAS SUBJE CT MATTER OF APPEAL BEFORE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER IN ITA NO. L079(BANG)/2008 DATED 27/02/2009 DISPOSED OF THE APPEAL. THE SEARCH PROCEEDINGS U/S.132 OF THE ACT WAS CONDUCTED ON 17.6.2008. NO ASSESSME NT PROCEEDINGS FOR AY 04-05 WAS PENDING ON THE DATE OF SEARCH. HENCE THE ASSESSMENT IS NOT PENDING ON THE DATE OF SEARCH OR THE DATE ON WH ICH THE SEIZED BOOKS OF ACCOUNT OR OTHER DOCUMENTS WERE RECEIVED BY THE AO. THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN ALL CARGO GLOBAL LOGISTICS LIMITED CASE SQUARELY APPLIES. AS CAN BE SEEN FROM THE APPELLATE ORDERS THE ADDITIONS MADE IN THE ASSESSMENT ORDER UNDER SECTION 153A REA D WITH SECTION 153C ARE IDENTICAL TO THE ONES MADE IN ASSESSMENT ORDER MADE ON 27/12/2006. ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 28 OF 34 SINCE NO UNDISCLOSED INCOME HAS BEEN FOUND IN RESPE CT OF ASSESSMENT YEAR 2004-05 THE ASSESSMENT MADE UNDER SECTION 153 A R.W. SEC.153C OF THE ACT IS LIABLE TO BE QUASHED. WE ARE OF THE VI EW THAT THE RATIO LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED CASE WILL SQUARELY APPLY TO THE ASSESSMENT MADE U/S.153C OF THE ACT FOR AY 04- 05. SINCE ALREADY AN ASSESSMENT WAS MADE U/S.143(3 ) OF THE ACT FOR THIS AY 04-05 PRIOR TO THE SEARCH THE ASSESSMENT U/S.15 3C OF THE ACT FOR AY 04-05 CAN BE ONLY IN RELATION TO UNDISCLOSED INCOME DETECTED AS A RESULT OF SEARCH AND NO OTHER INCOME. THE CIT(A) OUGHT TO HA VE QUASHED THE ASSESSMENT ON THIS GROUND AS THE ADDITIONS MADE IN THE ORDER U/S.153C OF THE ACT FOR THIS ASSESSMENT YEAR DO NOT EMANATE FRO M THE SEARCHED DOCUMENTS NOR ARE THEY UNDISCLOSED INCOME BY NATURE . A.Y. 2005-06 52. IN THIS YEAR THE ORIGINAL RETURN WAS FILED IN OCTOBER 2006. THOUGH ORDER UNDER SECTION 143(3) WAS NOT PASSED AN INTIM ATION UNDER SECTION 143(1) WAS ISSUED ON 28/03/2007. THIS FACT IS ACKN OWLEDGED IN THE ORDER UNDER SECTION 153A READ WITH SECTION 153C PASSED ON 31/12/2010. 53. THE CONTENTION ON BEHALF OF THE ASSESSEE WAS TH AT THE HONBLE SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LIMITED CASE HELD THAT IF AN ASSESSMENT IS NOT PENDING IT SHALL NOT ABATE. THE HONBLE TRIBUNAL DID NOT LAY DOWN THE LAW AS TO WHEN AN ASSESSMENT IS PENDIN G. IT LEFT OPEN THIS QUESTION. IT ONLY HELD THAT IF AN ASSESSMENT IS NOT PENDING THEY SHALL NOT ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 29 OF 34 ABATE. IT IS THE PLEA OF THE LEARNED COUNSEL FOR TH E ASSESSEE THAT IF A NOTICE U/S 143(2) OF THE ACT HAD NOT BEEN ISSUED ASSESSME NT SHALL NOT BE TREATED AS PENDING ON THE DATE OF SEARCH RESULTING IN ABATE MENT OF SUCH ASSESSMENT PROCEEDINGS CONSEQUENT TO A SEARCH U/S.1 32 OF THE ACT. IN THIS REGARD IT WAS POINTED OUT THAT THE LAST DATE BY WHI CH THE NOTICE U/S 143(2) OF THE ACT FOR THE ASSESSMENT YEAR 2005-06 AS PER THE PROVISO TO SECTION 143(2) OF THE ACT AS IT STOOD AT THE RELEVANT TIME WAS ONE YEAR FROM THE DATE OF FILING THE RETURN FOR THE A.Y. 2005-06. IT IS AN ADMITTED FACT THAT NO NOTICE U/S 143(2) WAS ISSUED. SINCE THE SEARCH TOOK PLACE IN JUNE. 2008 THE TIME LIMIT FOR ISSUING NOTICE UNDER SECTION 143(2) HAD A LREADY EXPIRED. IN SUCH CASE IT WAS CONTENDED THAT THE ASSESSMENT IS NOT P ENDING. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE KARNATAKA HI GH COURT IN CIT VS. INDRAMMA [ITA NO. 2785/2005] WHEREIN IT WAS HELD THAT INTIMATION UNDER SECTION 143(1) IS ALSO AN ASSESSMENT. IT WAS SUBMIT TED THAT THE HONBLE SUPREME COURT IN ABRAHAM VS. ITO 41 ITR 425 HAS HELD THAT ASSESSMENT WOULD INCLUDE ANY PROCESS OF DETERMINING TOTAL INCO ME TAX PAYABLE / REFUNDABLE. THERE IS NO DOUBT THAT IN THE INTIMATI ON TOTAL INCOME TAX THEREON AND THE BALANCES TAX PAYABLE/REFUNDABLE IS DETERMINED. HENCE INTIMATION IS ALSO AN ASSESSMENT. RELIANCE WAS ALSO PLACED ON THE DECISION OF BOMBAY HIGH COURT IN CIT VS ANDERSON MARINE & SONS PVT LTD 266 ITR 694 WHEREIN IT WAS HELD THAT INTIMATION IS AN ASSESSM ENT ORDER. SINCE THE INTIMATION HAS BEEN ISSUED BEFORE SEARCH THE ASSES SMENT WAS NOT PENDING. AS HELD BY THE SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LTD .S ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 30 OF 34 CASE IF THE ASSESSMENT IS NOT PENDING THE ASSESSME NT UNDER SECTION 153A OF THE ACT CAN BE MADE ONLY ON THE BASIS OF INCRIMI NATING MATERIALS. SINCE NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE SEARCH THE ASSESSMENT UNDER SECTION 153A OF THE ACT IS BAD IN LAW. 54. REFERENCE WAS ALSO MADE TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA 352 ITR 493 (DEL) TO PARA 19 TO 21 WHEREIN THE HONBLE COURT BY IMPLICATION EQUATED A N INTIMATION U/S.143(1) AND ORDER OR ASSESSMENT U/S.143(3) OF TH E ACT AS FOLLOWS: 19. UNDER THE PROVISIONS OF SECTION 153A AS WE HA VE ALREADY NOTICED THE ASSESSING OFFICER IS BOUND TO ISSUE NO TICE TO THE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEA R FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEA RCH OR REQUISITION WAS MADE. ANOTHER SIGNIFICANT FEATURE OF THIS SECTI ON IS THAT THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSES S THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICA NT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BL OCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULA R ASSESSMENT PROCEEDINGS WERE PRESERVED RESULTING IN MULTIPLE A SSESSMENTS. 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 I N 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 YE ARS EITHER UNDER SECTION 143(1)(A) OR SECTION 143(3) OF THE AC T. IF SUCH AN ORDER IS ALREADY IN EXISTENCE HAVING OBVIOUSLY BEE N PASSED PRIOR TO THE INITIATION OF THE SEARCH/REQUISITION THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AN D REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDIS CLOSED INCOME IF ANY UNEARTHED DURING THE SEARCH. FOR THIS PURPOSE THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY T HE STRICT ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 31 OF 34 PROCEDURE TO ASSUME JURISDICTION TO REOPEN THE ASSE SSMENT UNDER SECTIONS 147 AND 148 HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB SECTION (1) OF SECTION 153A O PENS. THE TIME- LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED AS PROVIDED IN SECTION 149 HAS ALSO BEEN MADE INAPPLIC ABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTIO N TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTICE TO REOP EN 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 AL SO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH A LL 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 153 A BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS IF NEED B E. (EMPHASIS SUPPLIED). 55. IT WAS ALSO SUBMITTED THAT THE DECISION IN ANIL KUMAR BHATIA S CASE IS NOT AN AUTHORITY FOR THE PROPOSITION THAT INCRIMINA TING MATERIALS ARE NOT NEEDED FOR MAKING AN ASSESSMENT U/S 153A OF THE ACT . ATTENTION WAS DRAWN TO THE OBSERVATIONS IN PARAGRAPH 23 OF THE JU DGEMENT WHEREIN THE COURT HAS STATED THAT IT EXPRESSES NO OPINION AS TO WHETHER S. 153A CAN BE IGNORED EVEN IN THE ABSENCE OF INCRIMINATING MATERI ALS AND THAT QUESTION IS LEFT OPEN. IT WAS HOWEVER SUBMITTED THAT THE AFORES AID DECISION WOULD BE RELEVANT AS LAYING DOWN THE LAW THAT INTIMATION U/S .143(1) OF THE ACT IS ALSO AN ASSESSMENT. THEREFORE IT WAS SUBMITTED THAT IF ANY INTIMATION HAS BEEN ISSUED UNDER SECTION L43(1)(A) THE ASSESSMENT IS N OT PENDING. IF THE ASSESSMENT IS NOT PENDING IT IS NOT ABATED. S.153 A IS APPLICABLE TO ABATED ASSESSMENTS ONLY TO THE EXTENT OF ASSESSING UNDISCL OSED INCOME BASED ON SEIZED INCRIMINATING DOCUMENTS. IT IS ALSO CLEAR FR OM THE FACTS THAT NO NOTICE ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 32 OF 34 UNDER SECTION 143(2) WAS ISSUED BEFORE THE DATE OF SEARCH. THEREFORE IT WAS PLEADED THAT ASSESSMENT MADE U/S. 153A R.W.S. 1 53C IS LIABLE TO BE QUASHED. 56. TO APPRECIATE THE CONTENTION RAISED BY THE LEA RNED COUNSEL FOR THE ASSESSEE WE NEED TO LOOK INTO THE QUESTION OF LAW AND THE FACTUAL BACKGROUND IN WHICH THE AFORESAID OBSERVATIONS WERE MADE BY THE HONBLE DELHI HIGH COURT IN PARA 20 IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) ON WHICH STRONG RELIANCE WAS PLACED. ONE OF THE QUEST IONS OF LAW CONSIDERED BY THE COURT WAS WHETHER THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD WRONGLY INVO KED SECTION 153A OF THE INCOME TAX ACT 1961?. THE FACTUAL BACKGROUND IN W HICH THE AFORESAID QUESTION AROSE WAS THE TRIBUNAL FOUND THAT IN RESPE CT OF ADDITIONS NO MATERIAL WAS FOUND DURING THE SEARCH CARRIED OUT UN DER SECTION 132 AND ALSO ON THE GROUND THAT FOR ALL THE YEARS UNDER CON SIDERATION THE RETURNS FILED BY THE ASSESSEE BEFORE THE SEARCH HAD BEEN PR OCESSED UNDER SECTION 143(1)(A) OF THE ACT. WHILE DECIDING THE QUESTION O F LAW ON THE AFORESAID FACTUAL BACKGROUND THE HONBLE DELHI HIGH COURT IN PARA-22 OF ITS JUDGMENT HELD: 22. IN THE LIGHT OF OUR DISCUSSION WE FIND IT DIFFICULT TO UPHOLD THE VIEW OF THE TRIBUNAL EXPRESSED IN PARA 9.6 OF I TS ORDER THAT SINCE THE RETURNS OF INCOME FILED BY THE ASSES SEE FOR ALL THE SIX YEARS UNDER CONSIDERATION BEFORE THE SEARCH TOOK PLACE WERE PROCESSED UNDER SECTION 143(1)(A) OF THE ACT THE PROVISIONS OF SECTION 153A CANNOT BE INVOKED. T HE ASSESSING OFFICER HAS THE POWER UNDER SECTION 153A TO MAKE ASSESSMENT FOR ALL THE SIX YEARS AND COMPUTE T HE ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 33 OF 34 TOTAL INCOME OF THE ASSESSEE INCLUDING THE UNDISCL OSED INCOME NOTWITHSTANDING THAT THE ASSESSEE FILED RET URNS BEFORE THE DATE OF SEARCH WHICH STOOD PROCESSED UND ER SECTION 143(1)(A). THE OTHER REASON GIVEN BY THE TRIBUNAL IN THE SAME PARAGRAPH OF ITS ORDER THAT NO MATERIAL WAS FO UND DURING THE SEARCH IS FACTUALLY UNSUSTAINABLE SINCE THE ENT IRE CASE AND ARGUMENTS BEFORE THE DEPARTMENTAL AUTHORITIES AS WE LL AS THE TRIBUNAL HAD PROCEEDED ON THE BASIS THAT THE DOCUME NT EMBODYING THE TRANSACTION WITH MOHINI SHARMA WAS RE COVERED FROM THE ASSESSEE. WHILE SUMMARIZING THE CONTENTION S OF THE ASSESSEE IN PARAGRAPH 5 OF ITS ORDER THE TRIBUNAL ITSELF HAS REFERRED TO THE CONTENTION THAT NO DOCUMENT MUCH LE SS INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH OF THE ASSESSEE'S PREMISES EXCEPT ONE UNSIGNED UNDERTAKIN G FOR LOAN. AGAIN IN PARAGRAPH 10 OF ITS ORDER WHILE DEALING W ITH THE ASSESSEE'S CONTENTION AGAINST THE ADDITION OF RS 1 50 000/- BEING UNEXPLAINED LOAN GIVEN TO MOHINI SHARMA THE TRIBUNAL HAS STATED THAT IT HAS ANALYZED 'THE SUBJECT DOCUME NT CAREFULLY RECOVERED FROM SEARCH' SUGGESTING THAT THE DOCUMENT WAS RECOVERED DURING THE SEARCH FROM THE ASSESSEE. THE TRIBUNAL HAS EVEN PROCEEDED TO DELETE THE ADDITION OF RS 1 5 0 000/- AS WELL AS THE NOTIONAL INTEREST ON MERITS HOLDING TH AT THE DOCUMENT WAS UNSIGNED THAT MOHINI SHARMA WAS NOT E XAMINED BY THE INCOME TAX AUTHORITIES AND THERE WAS NO CORR OBORATION OF THE UNSIGNED DOCUMENT. IF IT IS NOT IN DISPUTE THAT THE DOCUMENT WAS FOUND IN THE COURSE OF THE SEARCH OF THE ASSESS EE THEN SECTION 153A IS TRIGGERED. ONCE THE SECTION IS TRIG GERED IT APPEARS MANDATORY FOR THE ASSESSING OFFICER TO ISSU E NOTICES UNDER SECTION 153A CALLING UPON THE ASSESSEE TO FIL E RETURNS FOR THE SIX ASSESSMENT YEARS PRIOR TO THE YEAR IN WHICH THE SEARCH TOOK PLACE. THERE ARE CONTRADICTIONS IN THE ORDER O F THE TRIBUNAL. WE ARE UNABLE TO APPRECIATE HOW THE TRIBUNAL CAN SA Y IN PARA 9.6 THAT NO MATERIAL WAS FOUND DURING THE SEARCH AN D AT THE SAME TIME IN PARAGRAPH 10 DEAL WITH THE MERITS OF T HE ADDITIONS BASED ON THE DOCUMENT RECOVERED DURING THE SEARCH W HICH ALLEGEDLY CONTAIN THE LOAN TRANSACTION WITH MOHINI SHARMA. THEREFORE BOTH THE REASONS GIVEN BY THE TRIBUNAL F OR HOLDING THAT THE ASSESSMENTS MADE UNDER SECTION 153A WERE B AD IN LAW DO NOT COMMEND THEMSELVES TO US. THE RESULT IS THAT THE FIRST SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN TH E NEGATIVE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. (EMPHASIS SUPPLIED) ITA NOS.903 TO 966/BANG/13 & CO NOS.103 TO 105/BANG/13 PAGE 34 OF 34 57. IN THE LIGHT OF THE ABOVE REASONING OF THE HON BLE DELHI HIGH COURT GIVEN IN PARA-22 OF ITS JUDGMENT IT CANNOT BE SAID THAT THE HONBLE DELHI HIGH COURT HAS HELD THAT FOR THE PURPOSE OF SEC.153 A/153C OF THE ACT AN INTIMATION U/S.143(1) IS ALSO AN ORDER OF ASSESSMEN T. WE ARE THEREFORE UNABLE TO ACCEPT THE ARGUMENT PUT FORTH BY THE LEAR NED COUNSEL FOR THE ASSESSEE WITH REFERENCE TO AY 05-06. 58. IN THE RESULT THE APPEALS BY THE REVENUE ARE DISMISSED WHILE THE CROSS OBJECTION OF THE ASSESSEE FOR AY 2004-05 IS PARTLY ALLOWED AND THAT FOR AYS 2005-06 AND 2006-07 ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF APRIL 2014. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE DATED THE 25 TH APRIL 2014. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT BANGALORE.