GOVARDHAN NAIDU GUMMALLA,HYDERABAD vs. ACIT, CENTRAL CIRCLE-2(2), HYDERABAD

Having gone through the material on record, we find that these appeals relate to assessment years 2014-15, 2015-16, 2016-17 & 2017-18 and the assessee filed the returns of income for these years on 31/03/2016 (AY.2014-15), 31/03/2016 (AY.2015-16), 12/09/2017 (AY.2016-17) and 12/09/2017 (AY.2017-18) respectively. Under the proviso to section 143(2) of the Act, time to issue notice under section 143(2) of the Act expires by 30th September, 2016 and 30th September, 2018; respectively. It is not in dispute that no notice under section 143(2) of the Act was issued before such dates nor any proceedings under section 143(3) of the Act were pending at the latest by 30th September, 2018. It is therefore, clear that no proceedings were pending as on the date of search that took place on 12/10/2018 and no assessment is abated for these years. This factual position is clear and goes undisputed.

Though the divergent views taken on this aspect are brought to our notice by both the counsel, the Hon'ble Supreme Court put a quietus to the issue by the decision in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra). While in complete agreement with the view taken by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla, (2015) 61 taxmann.com 412 (Delhi) and the Hon'ble Gujarat High Court in the case of PCIT Vs. Saumya Construction (2016) 387 ITR 529 and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material, Hon’ble Apex Court concluded that- i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the , 166, 167 & 168/Hyd/2023 jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.

This decision applies to the facts of the case on all fours and respectfully following the same, we hold that since no incriminating material found in the case of assessee for all the assessment years, the concluded assessment cannot be disturbed and the addition made by the learned Assessing Officer and sustained by the learned CIT(A) cannot be upheld. In view of this legal position, we do not deem it necessary to delve into the facts of the case. Accordingly we allow the grounds in all the appeals.

To sum-up, all the appeals of assessee are allowed.