ACIT, CIR-39, MIDNAPORE, PASCHIM MEDINIPUR vs. M/S MPS GREENERY DEVELOPERS LTD., PASCHIM MEDINIPUR

All the appeals pertain to the same search action carried in the case of the assessee on 17.03.2010. At the outset, the ld. Counsel for the assessee has submitted that the assessment years involved in the captioned appeals are assessment years 2004-05 to 2009-10. That on the date of search, the original assessments relating to all the aforesaid assessment years stood completed/not abated. However, the ld. Counsel has demonstrated from the record that the impugned additions in all these appeals did not relate to any incriminating material found during the search action. Inviting our attention to each of the captioned appeals, it was demonstrated that in total only three issues were involved in different assessment years. The first issue is relating to the claim of depreciation, the second issue is relating to the disallowance of expenditure on estimation basis and the third issue involved in some of the appeals is relating to the addition on account of negative cash balance. The ld. Counsel has submitted that the additions in respect of the aforesaid three issues have been made on merits after re- appreciation of facts and none of the additions made has been based on any incriminating material found during the search action. 3. The ld. DR has also been fair enough to admit that none of the additions has been made on the basis of any incriminating material found during the search action. 4. We have heard the rival contentions and perused the materials available on record. We note that the issue has been settled by the latest decision of the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. reported in [2023] 149 taxmann.com 399 (SC), wherein, the Hon’ble Supreme Court has held that in case of non- abated/completed assessments, no addition can be made by the Assessing Officer in an assessment carried out u/s 153A of the Act in the absence of any incriminating material found during the search action. The relevant part of the of the said judgment of the Hon’ble Supreme Court is reproduced as under: “Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re- open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.” 4.1 We further note that since no incriminating material was found during the search action carried out in the case of the assessee and the assessments stood competed/unabated on the date of search, therefore, the Assessing Officer was not authorized to make any addition on any other issue in the absence of any incriminating material found during the search action.

In view of the above discussion, the impugned additions made by the Assessing Officer for different assessment years are not sustainable in the eyes of law and the same are ordered to be deleted. 6. In the result, the appeals filed by the assessee are allowed and the cross-appeals filed by the revenue are dismissed.