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Facts
The assessee and the Revenue filed twin appeals against the CIT(A)'s orders concerning assessment years 2013-14 and 2014-15. The core issue was the validity of assessments framed under Section 153A read with Section 143(3) of the Act, following a search operation.
Held
The Tribunal noted that the validity of assessments under Section 153A was questionable as it was not clear if additions were based on incriminating material found during the search, especially in light of the Supreme Court decision in PCIT vs. Abhisar Buildwell Pvt. Ltd. The Tribunal restored the issue to the CIT(A) for fresh adjudication.
Key Issues
Whether assessments framed under Section 153A r.w.s. 143(3) are valid when additions are not clearly based on incriminating material found during a search, particularly in unabated assessment years.
Sections Cited
153A, 143(3)
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
ORDER Per Bench: These assessee’s and the Revenue’s twin appeals each i.e.
& 403/Del/2024 and & 950/Del/2024, for assessment years 2013-14 and 2014-15, arise against CIT(A)-30, New Delhi’s separate orders; both
Heard both the parties at length. Case files perused.
It emerges at the outset during the course of hearing that there arises the first and foremost issue of validity of both these impugned section 153A r.w.s. 143(3) assessments framed in the assessee’s hands by the learned Assessing Officer on 15.07.2021 in furtherance to the search in question carried out on 03.05.2018. This is for the precise reason that despite the fact that hon’ble apex court landmark decision in PCIT vs. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC) has settled the issue that no addition except that based on incriminating/seized material could be made in the concerned taxpayer’s hands in an “unabated” assessment year, we note that there is not even a clear cut adjudication of the corresponding legal grounds raised in the assessee’s lower appeals, adjudicated as under:
Ground No. 4: In this ground the appellant has challenged the addition made b the AO on the ground that these additions are not based on any incriminating material found during the search proceeding. In support of this the appellant has cited various case laws. The citations made by the appellant have been perused. The ratios of all these cases were referred and considered by Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. dated 24.04.2023 (para 14(iii) and para 15.1) and it was held that in case any incriminating material is found/unearthed during the search, in the years of unabated/ completed assessments, the AO would 403, 949 & 950/Del/2024 Seven Seas Hospitality Pvt. Ltd. assume the 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 A0 including the income declared in the returns. In the present case the incriminating material with regard to unaccounted sales has been found which has been referred and discussed in the assessment order, therefore, the AO would lawfully have the jurisdiction to make the addition on the basis of material found during the search or gathered from other sources including from declared income in the ITR. It is further pertinent to mention here that additions made by the AO is based on the findings which are supported by incriminating materials/ evidences collected during the process of search action. These evidences establish the modus operandi of the appellant therefore they are relevant and equally valid and incriminating for the year under consideration. Support is taken from the judgment dated 24th April 2023 of Hon'ble Supreme Court in the CA No 1561/2017, 10267/2017, 10266/2017 in the case of Dayawanti affirming the decision of Hon'ble High Court of Delhi. Thus, this ground of appeal of the appellant is rejected.
4. Learned CIT-DR could hardly rebut the above factual position that there is not even an iota of clarity in the CIT(A)’s above extracted findings as to whether the impugned addition(s) made in the assessee’s hands are based on the corresponding seized material or not. We thus deem it appropriate to restore the assessee’s instant first and foremost legal argument back to the CIT(A) for his afresh appropriate adjudication as per law preferably within three effective opportunities of hearing. Ordered accordingly.
All other issues on legality or on merits; as the case may be, are kept open at this stage.