ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 1 IN INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C , KOLKATA (Before Shri N. V. Vasudevan,J.M. & Shri M. Balaganesh, A.M.) ITA(SS) No.58/Kol/2013 : Asstt. Year : 2007-08 M/s. Ujjal Transport Agency, Vs CIT , Central-II, G. T. Road(East ) Murgasol, Kolkata. Asansol. PAN: AAAFU6732H (APPELLANT) (RESPONDENT) Assessee by :A. K. Tibrewal, FCA. Revenue by : Shri G. Mallikarjuna, CIT,DR Date of Hearing : 22.09.2016 Date of Pronouncement : 19-10-2016 ORDER Per Shri N. V. Vasudevan, J.M. This is appeal by assessee against order dated 21/03/2013 of CIT Central-II, Kolkata passed u/s.263 of Income-tax Act 1961(Act) relating to assessment year 2007-08. 2. Grounds of appeal read as under: 1. order passed by Ld. CIT u/s. 263 is illegal and bad in law. 2. Ld. CIT failed to appreciate that no incriminating material was found during course of search. As such, it was not open to Assessing Officer in proceeding u/s.153A read with section 143(3) to make any addition in concluded assessment. 3. Ld. CIT is himself unsure of his action in setting aside assessment u/s.153A read with section 143(3) when seen in context that he directs Assessing Officer to examine applicability of Section147. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 2 3. assessee is partnership firm and is engaged in business of excavation, transportation of coal and other allied activities. For assessment year 2007-08 assessee filed return of income on 30.10.2007 declaring total income of Rs.82,47,737/-. said return was accepted u/s.143 (1) of Income Tax Act, 1961 (Act). 4. There was search and seizure operation carried by Revenue u/s.132 of Income Tax Act, 1961 (Act) in EMTA group of cases on 15.02.2009. assessee was also searched. notice u/s.153A of Act dated 29.09.2009 was issued for assessment year 2007-08. assessee by letter dated 25.01.2010 requested AO to treat return of income already filed on 30.10.2007 as return filed in response to notice u/s.153A of Act. AO passed order u/s. 153A read with section 143(3) of Act dated 31.12.2010, wherein, AO determined total income of assessee at Rs.84,35,250/-. While concluding assessment, one of claim made by Assessee that was considered by AO was with regard to grant of additional depreciation in respect of dumpers and tippers etc. AO made following observation while allowing claim of assessee for additional depreciation: Depreciation: question was raised as to allowability of depreciation in respect of dumpers, Tippers etc, wherein depreciation @ 30% was claimed instead o f prescribed depreciation rate of 15% on plant and Machinery. issue was discussed with A/R at length. It is emphasized that dumpers, tippers etc. which are used by assessee firm are to be considered as Heavy Vehicles or Earth Moving Machinery instead of considering it as Plant & Machinery. copy of relevant part of submission is reproduced hereunder:- With regard to your query of claim of higher rate of depreciation on Dumpers, Tippers etc instead of prescribed depreciation rate on plant & Machinery- At very outset reference be drawn to nature of business activities of assessee and nature of transportation used. As matter of fact machinery and vehicles involved are either heavy vehicles or earth moving machinery. case is fully covered by following cases decided by various courts wherein upon similar facts it was held by courts that assessee is eligible for higher rates of depreciation. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 3 Commissioner of Income-tax, Cochin v. Gaylord Construction s(2010) 190 Taxman 406(Ker.) Commissioner of Income-Tax v. Devi Enterprises [2001] 118 Taxman 158 (Mad.) Commissioner of Income-tax v. Popular borewell Service [1992] 194 ITR 12 [Mad.] It is stated that assessee has claimed proper depreciation on Dumper and Tippers and no extra depreciation has been claimed on any vehicle as pointed out by your good self and matter whether such machinery is covered by earth movers have already been examined by courts and held in assesses favour. In this connection reference be drawn in case of CIT v. Sibson Construction and Co. earthmoving machinery for purposes of depreciation. As per Sec 32 of Income-tax Act 1961, depreciation is allowable at prescribed rate. proviso under clause ii of sub-sec 1 of section 32 stated as under: provided also that where asset being commercial vehicle is acquired by assessee on or after 1st day of April, 1999 and in put to use before 1st day of April, 1999 for purpose of business or profession, deduction in respect of such asset shall be allowed on such percentage on written down value thereof as may be prescribed. Explanation- For purposes of this proviso- (a) expression commercial vehicle means heavy goods vehicle , heavy passenger motor vehicle , medium goods vehicle and medium passenger motor vehicle but does not include maxi-cab , tractor and road roller ; (b) expressions heavy goods vehicle , medium passenger motor vehicle , light motor vehicle , medium passenger motor vehicle maxi-cab , motor-cab , and road-roller , shall have meanings respectively as assigned to them in section 2 of Motor Vehicles Act, 1988 (59 of 1988) Further we are to state that we have claimed depreciation of dumpers and tippers which are registered under motor vehicles Act 1988 ( 59 of 1988) as public carrier and for ready reference we are enclosing herewith Xerox copies of some of R. C. Books for ready reference along with sample copies of Road Tax Challan duly paid on such vehicles for your perusal and to substantiate our submission as to proper depreciation claimed by us. assessee firm has also furnished copies of Registration Certificate issued by Motor Vehicles Authorities on which depreciation has been claimed. It is seen from examination of Registration Certificate that such vehicles are described as HGV or HCV. A/ R has stated that HGV stands for Heavy Goods Vehicle and HCV for heavy Commercial Vehicle. At course of assessment proceedings, it is explained by A/R, that Depreciation Schedule for present year furnished along with Form No.3CD, reveals that ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 4 depreciation on Dumpers, Tippers etc which are brought forward from earlier years and are put to use prior to 1st day of April 1999 are claimed @ 30%, by treating them as Commercial Vehicle on ratio as laid down in decisions of Appellate Authorities mentioned in their submission. Depreciation on said assets has been claimed @ 30% in subsequent years also kipping parity of claim as per schedule. However, assessee has itself claimed depreciation on dumpers and trippers @ 15% by considering it as plant & Machinery in respect of additions made on such items during current year. It is seen during year assessee firm has claimed additional depreciation @ 20% and question was put to explain reason for such additional depreciation. A/R has drawn attention to submission given in A.Y 200902010 in this respect, wherein claim of additional depreciation on newly purchased assets has been explained. Therefore, in light of facts as narrated above and considering documents filed by assessee in support of its claim as also settled position of law, no adverse inference is drawn as to claim of depreciation of assessee firm. (emphasis supplied) 5. Commissioner of Income Tax (CIT) in exercise of his powers u/s.263 of Act was of view that action of AO in allowing additional depreciation as stated above was erroneous and prejudicial to interest of Revenue. According to CIT, assessee was only engaged in carrying out job work relating to excavation, transportation, extraction and mining of coal. According to CIT as per decision of Hon ble Supreme Court in case of Lucky Mining Pvt. Ltd. vs. CIT reported in 116 Taxmann. 1(SC), mining activity does not mean manufacture or production and obviously person doing contract of mining activity cannot be said to be engaged in manufacture or production of any article or thing. According to CIT, assessee was, therefore, not entitled to additional depreciation u/s32(1) (iia) of Act, since condition for claiming additional depreciation is that Assessee should be engaged in activity of manufacture of production. Accordingly CIT issued show cause notice u/s.263 of Act calling upon Assessee to show cause as to why order of AO should not be revised u/s.263 of Act. 6. assessee in response to show cause notice u/s. 263 of Act submitted that issue with regard to allowing additional depreciation cannot be subject matter of ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 5 assessment proceedings u/s.153A of Act because no incriminating document whatsoever was found in course of search so as to disallow claim of assessee for additional depreciation. assessee submitted that return of income filed u/s.139(1) of Act was accepted by Revenue and no notice u/s.143(2) of Act was issued within time limit contemplated by law. Therefore, claim for additional depreciation already allowed cannot be disallowed in assessment u/s.153C of Act, without there being incriminating material found in course of search. assessee also submitted that even person doing mining activity can be considered to be engaged in manufacture and additional depreciation can be allowed. 7. CIT however did not agree with submissions of assessee and he held as under: facts of this case are simple. original e-return was filed for A. Y. 2007-08 on 30.10.2007 duly self assessed u/s. 140A by assessee. This was processed u/s.143(1)(a) checking only arithmetical errors and claims in respect of incomes and taxes and 143(1) (a) assessment by AO as he is precluded from any application of mind as per law. This can be done only u/s.143(2) /142(1). Therefore, what was on record was only self assessment of income done by assessee u/s.140A of Act. premises of assessee were searched on 15.01.2009 with seizure of books and documents for various years,including for this A. Y. 2007-08 and notices u/s.153A were issued. For this year, assessee filed letter that original e-return may be treates as return u/s.153A. Therefore, till stage there existed only returns filed u/s.139(1)/153A duly self assessed u/s.140A by assessee himself. Within meaning of section 153A AO had not made any assessment or re-assessment in this case till date of search u/s.132. first assessment proceedings were commenced for this year by issue of notice u/s.143(2)/142(1) r.w.s. 153A, resulting in first and only assessment order u/s.143(3)/ 153A dated 31.12.2010. said assessment order become final as no appeals were filed by assessee. While it is true that books and documents were seized for number of years including,this year, yet it is fact that no separate additions were made to returned income, based on such seizure. only fact that came on record was that assessee is engaged in business of transport contractor to firms/companies which are engaged in business of mining and excavation (the sector that is held to be not in business of manufacture of production). This being so AO erred in allowing extra depreciation in his order dated 31.12.2010, and said order is erroneous in so far as it is prejudicial to interest of Revenue. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 6 It is further evident that contention of A/R that such action could not be taken u/s152A is entirely untenable because it came to notice for first time after search. In only assessment done in this case, as to what is its business( and therefore consequences regarding wrong claim of depreciation). I, therefore, hold that order passed by AO u/s. 153A/143(3) on 31.12.2010 is erroneous is so far as it is prejudicial to interest of Revenue, as he failed to understand settled position of law in this respect and thereby reached wrong conclusion and allowed claim of additional depreciation. For this reason assessment order dated 31.12.2010 is set aside with direction that AO shall pass appropriate order after giving opportunity of hearing to assessee. 8. Aggrieved by order of CIT assessee has preferred present appeal before Tribunal. We have heard rival submissions of Ld. Counsel for assessee and Ld. DR. Ld. Counsel for assessee firstly submitted that return originally filed by assessee u/s.139(1) of Act was accepted u/s.143(1) of Act and no notice u/s 143(2) was issued within time required in law and therefore claim of Assessee is deemed to have been accepted in assessment. Therefore, without any incriminating material found in course of search, disallowance of additional depreciation cannot be made by AO. Since AO does not have power to disallow depreciation, CIT in exercise of his powers u/s. 263 of Act cannot direct AO to disallow depreciation. It was further submitted by him that person engaged in mining activity is entitled to additional depreciation. In this regard our attention was drawn to decision of Hon ble Kolkata High Court in case of CIT vs. G.S Atwal reported at 128 Taxman 520(KOL) in aforesaid decision Hon ble High Court after considering decision of Hon ble Supreme Court in case of Lucky Minmat reported at 245 ITR 830(SC) held that activity of mining coal is activity of production of coal and assessee is entitled to investment allowance. Ld. Counsel also placed reliance on decision of Hon ble Delhi High Court in case of Anil Kr. Bhatia (infra) for proposition that without incriminating material no addition can be made in assessment u/s. 153A of Act. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 7 9. Ld. DR placed reliance on order of CIT and submitted that since return of income originally filed by Assessee u/s.139(1) of Act were accepted in proceedings u/s 143(1) of Act, there was no occasion for AO to investigate question regarding grant of additional depreciation. Therefore, in proceedings u/s.153A of Act, AO could go into question regarding grant of additional depreciation. Since, AO has jurisdiction to decide question, CIT in exercise of his powers u/s.263 of Act has jurisdiction to give directions as contained in impugned order. It was further submitted by him that for making u/s153 of Act, incriminating material is not required and in this regard relied on decision of Hon ble Karnataka High Court in case of Kanara Housing(infra). It was further submitted by him that assessee was not involved in manufacture of article and was only contractor carrying out mining activity. It was submission that assessee s activity does not fall within description of definition of manufacture as given in section 2 (29BA) of Act. 10. We have given careful consideration to rival submissions. It is not in dispute before us that with respect to additions made during course of assessment proceedings u/s.153A of Act, there was no incriminating material found at time of search and that AO while concluding assessment u/s.153A of Act dealt with claim of additional depreciation in course of verification of various claims made in return of income filed in response to notice u/s.153A of Act. It is also not disputed that with reference to original return of income filed under section 139(1) of Act on 30.10.2007, no notice under section 143(2) of Act was issued within time limit prescribed u/s.143(2) of Act and, therefore, such assessment proceedings stood completed and that in any case on date of search i.e. on 15.1.2009, assessment for impugned assessment year of 2007-08 was not pending. Therefore assessment u/s.143(1) of Act, for AY 2007-08 does not abate in terms of Second Proviso to section 153A(1) of Act. It is plea of learned counsel for Assessee that impugned additions made by Assessing Officer could not have been made in impugned assessment proceedings as they are not based on any material ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 8 seized or found during course of search at business premises of assessee. learned DR has however argued where original assessment has not been finalized under section 143(3) of Act, there is no question of abatement and that in present case original assessment has been made under section 143(1) of Act. As per Ld. Departmental Representative provisions of section 153A empower Assessing Officer to assess or reassess total income of six assessment years immediately preceding assessment year relevant to previous year in which search was conducted and, therefore, under these circumstances Assessing Officer was duty bound to assess or reassess total income of such assessment years, and, therefore, impugned additions were justifiably made in assessment made under section 143(3) r.w.s. 153A(1) of Act. 11. We shall first examine scope of proceedings u/s.153A of Act. Hon ble Delhi High Court in case of CIT Vs. ANIL KUMAR BHATIA [2013] 352 ITR 493 (Delhi).The Honourable Delhi High Court in case of Anil Kumar Bhatia (supra) after examining scheme of Sec.153A of Act explained provisions as follows: 18. perusal of Section 153A shows that it starts with non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, introduction of these three Sections, there was Chapter XIV-B of Act which took care of assessment to be made in cases of search and seizure. Such assessment was popularly known as 'block assessment' because Chapter provided for single assessment to be made in respect of period of block of ten assessment years prior to assessment year in which search was made. In addition to these ten assessment years, broken period up to date on which search was conducted was also included in what was known as 'block period'. Though single assessment order was to be passed, undisclosed income was to be assessed in different assessment years to which it related. But all this had to be made in single assessment order. block assessment so made was independent of and in addition to normal assessment proceedings as clarified by Explanation below Section 158BA(2). After introduction of group of Sections namely, 153A to 153C, single block assessment concept was given go-by. Under new Section 153A, in case where search is initiated under Section 132 or requisition of books of account, documents or assets is ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 9 made under Section 132A after 31.5.2003, Assessing Officer is obliged to issue notices calling upon searched person to furnish returns for six assessment years immediately preceding assessment year relevant to previous year in which search was conducted or requisition was made. other difference is that there is no broken period from first day of April of financial year in which search took place or requisition was made and ending with date of search/requisition. Under Section 153A and new scheme provided for, AO is required to exercise normal assessment powers in respect of previous year in which search took place. 19. Under provisions of Section 153A, as we have already noticed, Assessing Officer is bound to issue notice to assessee to furnish returns for each assessment year falling within six assessment years immediately preceding assessment year relevant to previous year in which search or requisition was made. Another significant feature of this Section is that Assessing Officer is empowered to assess or reassess "total income" of aforesaid years. This is significant departure from earlier block assessment scheme in which block assessment roped in only undisclosed income and regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, Assessing Officer has been given power to assess or reassess 'total income' of six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of six assessment years, in which both disclosed and undisclosed income would be brought to tax. 20. question may arise as to how this is sought to be achieved where assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of Act. If such order is already in existence, having obviously been passed prior to initiation of search/requisition, Assessing Officer is empowered to reopen those proceedings and reassess total income, taking note of undisclosed income, if any, unearthed during search. For this purpose, fetters imposed upon Assessing Officer by strict procedure to assume jurisdiction to reopen assessment under Sections 147 and 148, have been removed by non obstante clause with which sub section (1) of Section 153A opens. time-limit within which notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by non obstante clause. Section 151 which requires sanction to be obtained by Assessing Officer by issue of notice to reopen assessment under Section 148 has also been excluded in case covered by Section 153A. time-limit prescribed for completion of assessment or reassessment by Section 153 has also been done away with in case covered by Section 153A. With all stops having been pulled out, Assessing Officer under Section 153A has been entrusted with duty of bringing to tax total income of assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at time when search is initiated or requisition is made, assessment or reassessment proceedings relating to any assessment year falling within period of six assessment years mentioned above, may be pending. In such case, second proviso to sub section (1) of ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 10 Section 153A says that such proceedings "shall abate". reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of six assessment years under consideration. That is because Assessing Officer has to determine not merely undisclosed income of assessee, but also 'total income' of assessee in whose case search or requisition has been initiated. Obviously there cannot be several orders for same assessment year determining total income of assessee. In order to ensure this state of affairs namely, that in respect of six assessment years preceding assessment year relevant to year in which search took place there is only one determination of total income, it has been provided in second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of assessee which are pending on date of initiation of search or making requisition "shall abate". Once those proceedings abate, decks are cleared, for Assessing Officer to pass assessment orders for each of those six years determining total income of assessee which would include both income declared in returns, if any, furnished by assessee as well as undisclosed income, if any, unearthed during search or requisition. position thus emerging is that where assessment or reassessment proceedings are pending completion when search is initiated or requisition is made, they will abate making way for Assessing Officer to determine total income of assessee in which undisclosed income would also be included, but in cases where assessment or reassessment proceedings have already been completed and assessment orders have been passed determining assessee's total income and such orders are subsisting at time when search or requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, Assessing Officer will reopen assessments or reassessments already made (without having need to follow strict provisions or complying with strict conditions of Sections 147, 148 and 151) and determine total income of assessee. Such determination in orders passed under Section 153A would be similar to orders passed in any reassessment, where total income determined in original assessment order and income that escaped assessment are clubbed together and assessed as total income. In such case, to reiterate, there is no question of any abatement of earlier proceedings for simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when search was initiated or requisition was made. (emphasis supplied) 12. In Canara Housing Development Company Vs. DCIT (2014) 114 DTR 162 (Karn) Hon ble Karnataka High Court took following view: Section 153A starts with non obstante clause. fetters imposed upon Assessing Officer by strict procedure to assume jurisdiction to reopen assessment under Sections 147 and 148, have been removed by non obstante clause with which sub section (1) of Section 153A opens. time-limit within which notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by non obstante clause. Section 151 which requires sanction to be obtained by Assessing Officer by issue of notice to reopen assessment under Section 148 has also been ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 11 excluded in case covered by Section 153A. time-limit prescribed for completion of assessment or reassessment by Section 153 has also been done away with in case covered by Section 153A. With all stops having been pulled out, Assessing Officer under Section 153A has been entrusted with duty of bringing to tax total income of assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. Therefore, it is clear even if assessment order is passed under Section 143(1) or 143(3) of Act, Assessing Officer is empowered to reopen those proceedings and reassess total income taking note of undisclosed income, if any, unearthed during search. After such reopening of assessment, Assessing Officer is empowered to assess or reassess total income of aforesaid years. condition precedent for application of Section 153A is there should be search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. proviso to aforesaid section makes it clear assessing officer shall assess or reassess total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within period of six assessment years referred to in aforesaid sub-section on date of initiation of search under Section 132, said proceeding shall abate. If such proceedings are already concluded by assessing officer by initiation of proceedings under Section 153A, legal effect is assessment gets reopened. block assessment roped in only undisclosed income and regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, Assessing Officer has been given power to assess or reassess total income of six assessment years in question in separate assessment orders. Assessing Officer is empowered to reopen those proceedings and reassess total income, taking note of undisclosed income, if any, unearthed during search. He has been entrusted with duty of bringing to tax total income of assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that there can be only one assessment order in respect of each of six assessment years, in which both disclosed and undisclosed income would be brought to tax. When once proceedings are initiated under Section 153A of Act, legal effect is even in case where assessment order is passed it stands reopened. In eye of law there is no order of assessment. Re-opened means to deal with or begin with again. It means Assessing Officer shall assess or reassess total income of six assessment years. Once assessment is reopened, assessing authority can take note of income disclosed in earlier return, any undisclosed income found during search or and also any other income which is not disclosed in earlier return or which is not unearthened during search, in order to find out what is total income of each year and then pass assessment order. Therefore, Commissioner by virtue of power conferred under Section 263 of Act gets no jurisdiction to initiate proceedings under said provision because condition precedent for initiating proceedings under Section 263 is any order passed under Act by Assessing officer is erroneous insofar as it is prejudicial to interest of revenue. Once order passed by Assessing officer gets reopened, there is no order which can be said to be erroneous insofar as it is prejudicial to interest of revenue which confers jurisdiction on Commissioner to exercise power of jurisdiction. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 12 13. Special Bench of ITAT Mumbai in case of All cargo Global Logistics Ltd. (2012) 16 ITR (Trib.) 380 (Mum)(SB) had to consider following question: 1. Whether, on facts and in law, scope of assessment u/s 153A encompasses additions, not based on any incriminating material found, during course of search"? Special Bench answered question by holding that: (a) In so far as pending assessments are concerned, jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on basis of findings of search and any other material existing or brought on record of AO, (b) in respect of non-abated assessments, assessment will be made on basis of books of account or other documents not produced in course of original assessment but found in course of search, and undisclosed income or undisclosed property discovered in course of search 14. In light of above ruling of Special Bench, if assessment is completed prior to initiation of search u/s.132 of Act and therefore does not abate under second proviso to Sec.153(1) of Act and if in course of search of Assessee initiation after completion of Assessment, no incriminating material is found regarding particular item of income, then in assessment to be done u/s.153A of Act, AO cannot make assessment of such income. 15. It is no doubt true that Hon ble Karnataka High Court in case of Canara Housing (supra) has not accepted ruling of Special Bench in case of Alcargo logistics (supra). Hon ble Bombay High Court in case of CIT Vs. Continental Warehousing Corporation ITA No.523/2013 judgment dated 21.4.2015 after referring to decision of Hon ble Delhi High Court in case of Anil Kumar Bhatia (supra) and of Hon ble Karnataka High Court in case of Canara Housing (supra) has taken view that decision rendered by Special Bench is to be followed. There is no decision of Hon ble Calcutta High Court, which is jurisdictional High Court on issue. We are of view that view expressed by Hon ble Bombay High Court which is in tune with decision rendered by Special Bench in case of Alcargo Logistics (supra) has to be followed. ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 13 16. Having held that scope of proceedings u/s.153A in respect of assessment year for which assessment have already been concluded and which do not abate u/s.153A of Act, that assessment will have to be confined to only incriminating material found as result of search, question to be decided is as to whether proceedings u/s.143(1) of Act can be said to be assessment proceedings concluded that have not abated u/s.153A of Act. Section 153A of Act, uses expressing pending assessment or reassessment". When return is filed and acknowledgement or intimation issued u/s.143(1), proceedings initiated by filing return are closed, unless notice u/s 143(2) of Act is issued. In present case, period for issuing notice u/s 143(2) elapsed. Therefore process has attained finality which can only be assailed u/s 148 or 263 of Act. It can thus be concluded that making of addition in assessment under section 153A of Act, without backing of incriminating material, is unsustainable even in case where original assessment on date of search stood completed under section 143(1) of Act, thereby resulting in non-abatement of such assessment in terms of Second Proviso to section 153A(1) of Act. 17. In light of discussion above, our conclusion is that in present case, issue with regard to additional depreciation could not and ought not to have been examined by AO in assessment proceedings u/s.153A of Act as said issue stood concluded with assessee s return of income being accepted u/s.143(1) of Act prior to date of search and no notice having been issued u/s.143(2) of Act within time limit laid down in that section which time limit as per law prevailing on date when Assessee filed return of income i.e., 30.10.2007, would expire on 31.12.2008. Such assessment u/s.143(1) of Act did not abate on date of search which took place on 15.1.2009. In respect of assessments completed prior to date of search that have not abated, scope of proceedings u/s.153A of Act has to be confined only to material found in course of search. Since no material whatsoever was found in course of search, question of allowing additional depreciation or not could not have been subject matter of proceedings u/.s.153A of Act. Consequently, ITSS.No.58/Kol/2013-M/s. Ujjal Transport Agency A.Y.2007-08 14 CIT in exercise of his powers u/s.263 of Act ought not to have or could not have directed examination of said issue afresh by AO. Thus ground No.1 raised by Assessee is allowed. proceedings u/s.263 of Act is accordingly quashed. In view of above conclusion, other ground of appeal raised by Assessee does not require any consideration. 18. In result, appeal of Assessee is allowed. Order Pronounced in Open Court on 19.10.2016 Sd/- Sd/- (M. Balaganesh) (N. V. Vasudevan) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19 /10/2016 S. Sinha(PS) Copy of order forwarded to: 1. M/s. Ujjal Transport Agency, G.T.Road, (East), Murgasol, Asansol. 2 C.I.T. Central-II, Kolkata 3. CIT(DR), Kolkata Benches, Kolkata. True Copy, By order, Asst. Registrar, ITAT, Kolkata Benches M/s. Ujjal Transport Agency v. CIT , Central-II, Kolkata