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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI RAMA KANTA PANDA & SHRI K. NARASIMHA CHARY
आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD
BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं निर्धारण वर्ा अपीलधर्थी प्रत् यर्थी / ITA No. / A.Y. / Appellant / Respondent 165/Hyd/2023 2014-15 Assistant Sri Govardhan Naidu 166/Hyd/2023 2015-16 Commissioner of Gummalla, Income Tax, Hyderabad Central Circle-2(2), [PAN No. ACTPG9082B] 167/Hyd/2023 2016-17 Hyderabad
168/Hyd/2023 2017-18
निर्धाररती द्वधरध/Assessee by: Shri P. Murali Mohan Rao, AR रधजस् व द्वधरध/Revenue by: Ms. TH Vijaya Lakshmi, CIT-DR सुिवधई की तधरीख/Date of hearing: 26/06/2023 घोर्णध की तधरीख/Pronouncement on: 03/07/2023 आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order(s) passed by the learned Commissioner of Income Tax (Appeals)-12, Hyderabad, (“Ld. CIT(A)”), in the case of Shri Govardhan Naidu Gummalla (“the assessee”) for the assessment years 2014-15, 2015-16, 2016-17 & 2017-18, assessee preferred these appeals.
ITA Nos. 165, 166, 167 & 168/Hyd/2023 For the sake of convenience, we dispose of these appeals by way of this common order.
At the outset, learned AR submitted that in all these four appeals, no notice under section 143(2) of the Income Tax Act, 1961 (for short “the Act”) issued within the time stipulated i.e., within six months from the date of the financial year in which the return was filed and, therefore, the assessments were not pending as on the date of the search, which took place on 12/10/2018 in Rithwik Group of cases covering the assessee; and that since no incriminating material was found during the search, in terms of the decision of the Hon'ble Apex Court in the case of PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC), no addition could be made qua these assessment years.
Per contra, learned DR submits on behalf of the Revenue that section 153A of the Act does not limit the jurisdiction of the learned Assessing Officer to make the addition to the seized material alone and on the other hand, it is the bounding duty of the learned Assessing Officer to initiate proceedings under section 153A of the Act, the moment the search warrant is executed. According to the learned DR, there is no room for interpretation of this aspect and no discretion is left with the learned Assessing Officer to initiate or not initiate proceedings under section 153A of the Act in case of a search or, to limit his power to assess basing on the incriminating material alone. Learned DR placed reliance on several decisions reported in support of his contentions, namely, Gopal Lal Bhadruka vs. DICT (2012) 27 taxmann.com 167 (AP), E.N. Gopakumar vs. CIT (2016) 75 taxmann.com 215 (Ker), CIT vs. Raj Kumar Arora (2014) 52 taxmann.com 172 (All), Suman Poddar vs. ITO, SLP No. 26864/2019, dt. 22/11/2019 (SC), Suman Poddar vs. ITO, ITA No. 841/2019, dt. 17/09/2019 (Del), Suman Poddar vs. ITO, ITA No. 1006/Del/2019, dt. 25/07/2019 (ITAT, New Delhi), Krishna Devi vs. ITO, ITA No. 6356/Del/2019, dt. 04/01/2022, SEBI vs. Rakhi Trading Pvt. Ltd., Civil Appeal No. 1969 of 2011, 08/02/2018
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ITA Nos. 165, 166, 167 & 168/Hyd/2023 (SC), Anandtex International P. Ltd., vs. ACIT, ITA No. 2476/Del/2018, dt. 24/02/2022.
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
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ITA Nos. 165, 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. 6. 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.
Order pronounced in the open court on this the 3rd day of July, 2023.
Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER Hyderabad, Dated: 03/07/2023 TNMM
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ITA Nos. 165, 166, 167 & 168/Hyd/2023 Copy forwarded to: 1. Sri Govardhan Naidu Gummalla, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad. 2. Assistant Commissioner of Income Tax, Central Circle-2(2), Hyderabad. 3. The Pr.CIT(Central)-Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE