THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. RAMESHBHAI JIVRAJ DESAI

TAXAP/216/2020HC GujaratGJHC24038027202018 September 2020Author: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH,HONOURABLE MR. JUSTICE J.B.PARDIWALA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right in its reasoning. The Court agreed that once an assessment has attained finality, the Assessing Officer cannot disturb it under Section 153A read with Section 143(3) of the Act, unless materials gathered during the Section 153A proceedings establish that the reliefs granted in the final assessment were contrary to the facts emerging during the Section 153A proceedings. The Tribunal had noted that there was no record to indicate that any material was unearthed during the Section 153A proceedings. Therefore, in such circumstances, the AO could not have disturbed the concluded assessment order. The Court concluded that the question proposed by the Revenue could not be termed as a substantial question of law. The appeal was dismissed.

What were the facts?

The Revenue has filed this Tax Appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated 17.01.2020 passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench. The appeal pertains to Assessment Year 2008-09. The ITAT had decided the issue in favour of the assessee, Shri Rameshbhai Jivraj Desai, by following its earlier decision in the case of Shri Rajnibhai Jivraj Desai. The core of the dispute revolves around the validity of an assessment made under Section 153A of the Act for an assessment year where the original assessment had already concluded and was not abated at the time of search, and in the absence of any incriminating material found during the search related to that year.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in holding that in the absence of any incriminating material related to the given assessment year found during search, assessment under Section 153A of the Act cannot be made for that assessment year for which assessment has been concluded on the date of search and not abated? Assessee's Contention (as inferred from Tribunal's order): The assessment under Section 153A cannot be made for a concluded assessment year in the absence of any incriminating material found during the search. The Tribunal relied on its own decision in the case of Shri Rajnibhai Jivraj Desai, where it was held that for unabated assessments, the Assessing Officer (AO) can only follow the concluded assessments unless incriminating materials are found during the search. The Tribunal noted that the addition made by the AO was based on items disclosed in the income tax return, and if no incriminating material is found for a concluded assessment year, the AO has no power to disturb the finality of that assessment. Revenue's Contention: The Revenue has proposed the substantial question of law challenging the Tribunal's finding that an assessment under Section 153A cannot be made for a concluded and unabated assessment year without incriminating material.

Which sections of the Income-tax Act were involved?

Section 260A,Section 153A,Section 143(3)

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Cause title — parties, addresses and appearances
C/TAXAP/216/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 216 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX Versus RAMESHBHAI JIVRAJ DESAI ========================================================== Appearance: MRS MAUNA M BHATT, SENIOR STANDING COUNSEL(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 18/09/2020

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1.

This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad “C” Bench, Ahmedabad dated 17.01.2020 in IT (SS)A No. 107/Ahd/2017 for A.Y. 2008-09. 2. The Revenue has proposed the following substantial question of law for the consideration of this Court:- C/TAXAP/216/2020

The order continues below.

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