THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL vs. M/S. N.M. AGROFOOD PRODUCTS PRIVATE LIMITED

Facts

The appeal by the Principal Commissioner of Income Tax (PCIT) challenges an order dated 24.08.2022 passed by the Income Tax Appellate Tribunal (ITAT), Jaipur Benches. The ITAT had affirmed an order dated 25.11.2021 passed by the Commissioner of Income Tax (Appeals) (CIT(A)). The dispute pertains to assessment year 2012-13. The Assessing Officer (AO) made an addition on account of alleged unexplained expenses. The assessee, M/s. N.M. Agrofood Products Private Limited, had successfully challenged this addition before the CIT(A). The core of the challenge was that additions under Section 153A of the Income Tax Act were impermissible for completed assessments without incriminating material found during a search, especially when assessment proceedings were not pending at the time of the search.

Held

The Tribunal held that in cases of search under Section 132 or requisition under Section 132A, the AO assumes jurisdiction for block assessment under Section 153A. Pending assessments stand abated. Crucially, for completed/unabated assessments, the AO can only assume jurisdiction to assess or reassess if incriminating material is found during the search. In the absence of any such incriminating material unearthed during the search, the AO cannot make any addition or reassessment in respect of completed/unabated assessments. The Tribunal cited the Supreme Court's decision in Abhisar Buildwell P. Ltd., which clearly states that in the absence of incriminating material, no addition can be made for completed assessments under Section 153A. The High Court, in the present appeal, agreed with this settled legal position and found no substantial question of law arising for consideration. Therefore, the appeal was dismissed.

Key Issues

1. Whether, in the absence of incriminating material unearthed during a search, additions can be made under Section 153A of the Income Tax Act, 1961, in respect of assessment years where the assessments were already completed prior to the date of the search? (Question of law) Assessee's Contention: The assessee argued that additions under Section 153A are permissible only if based on incriminating material found during the search, particularly for assessment years whose assessments were already concluded before the search. They relied on various decisions, including the Supreme Court's ruling in Meeta Gutgutia Vs. Pr. CIT and decisions from the ITAT Jaipur Benches. Revenue's Contention: The revenue, through its counsel, conceded that the issue was no longer res integra in light of the Supreme Court's decision in Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell P. Ltd. This implies the revenue did not press for a contrary view based on the Supreme Court's pronouncement.