THE PR COMMISSIONER OF INCOME TAX CIT (A) vs. MR M A SIDDIQUE

THE PR. COMMISSIONER OF INCOME TAX, CIT(A) CENTRAL CIRCLE C. R. BUILDING, QUEENS ROAD BENGALURU-560001.

THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 C R BUILDING ATTAVARA, MANGALURU-575001. …APPELLANTS

THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 C. R. BUILDING, ATTAVARA, MANGALURU-575001. ...APPELLANTS (BY SRI. DILIP M., ADVOCATE AND SRI. Y.V. RAVIRAJ, AVOCATE)

THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 C R BUILDING, HC-KAR ATTAVARA MANGALURU-575 001. ...APPELLANTS (BY SRI. DILIP M ., ADVOCATE AND SRI. Y.V. RAVIRAJ, ADVOCATE)

The assessee in all the three appeals is one Sri.M.A.Siddique. A search under Section 132 of the Income Tax Act, 1961 (for short 'the Act') was conducted on the business premises of Supreme Group on 24.11.2015 and consequently, assessment order dated 29.12.2017 was passed under Section 153(A) read with Section 143(3) of the Act in all the above three appeals. The Assessing Officer, the Deputy Commissioner of Income Tax, Central Circle-1, Mangaluru on the basis of incriminating documents seized/impounded and on the basis of evidence gathered, made additions and issued demand notice accordingly.

Aggrieved by the said assessment order, the respondent/assessee preferred appeal before the Commissioner of Income Tax (Appeals) (for short, ‘CIT(A)’) and the CIT(A) by order dated 18.10.2019, partly allowed the appeal of the respondent/assessee with an observation that the Assessing Officer could not have made additions relying on the documents which were very much available at the time of original assessment under Section 143 of the Act and he was of the further opinion that no new materials were unearthed during the course of search. He was also of the further opinion that no proceedings under Section 143 of the Act were pending and as such, no proceedings under Section 153A of the Act could have been initiated. Against the order of the CIT(A), the Revenue preferred ITA.No.63/Bang/2020 for the assessment year 2013-14, ITA.No.64/Bang/2020 for the assessment year 2014-15 and ITA.No.62/Bang/2020 for the assessment year 2012-13. The Income Tax Appellate Tribunal (for short, ‘the Tribunal’) by common order dated HC-KAR 17.08.2020 dismissed the appeals filed by the appellants/Revenue. Against which, the above three appeals are filed for the assessment years 2014-15, 2013- 14 and 2012-13.

The above three appeals are admitted on 15.04.2021 to examine similar or identical substantial questions of law which are raised in ITA.No.18/2021, which reads as follows: “(1) Whether on the facts and circumstances of the case, the Tribunal's order can be said as perverse since Tribunal has held that assessment order passed under Section 153A read with Section 143(3) of the Act is bad in law by holding that as there were no new material, assessment is not possible under Section 153A of the Act without appreciating that there was no regular assessment passed in case of assessee prior to date of search and even otherwise assessing authority is empowered to assessee or re-assess the total income of assessee in consequence to search conducted under Section 132 of the Act?

Heard learned counsel Sri.Y.V.Raviraj as well as learned counsel Sri.Dilip.M., for appellants/Revenue and learned counsel Miss.Dr.Sheetal Borkar for Sri.Mallahar Rao.K., learned counsel for respondent/assessee. Perused the entire appeal papers.

Learned counsel Sri.M.Dilip for appellants/Revenue would submit that both the CIT(A) as well as the Tribunal failed to properly appreciate the material on record and without appreciating the material on record have come to a wrong conclusion. Further, learned counsel would submit that the Tribunal as well as CIT(A) finding that there were no new material is perverse HC-KAR and without appreciating that there was no regular assessment. Further, learned counsel would submit that the conditions laid down under Section 153A of the Act is fully satisfied. As such, both the CIT(A) and the Tribunal could not have interfered with the assessment order. Thus, he would pray for allowing the appeals.

On the other hand, learned counsel Miss. Dr.Sheetal Borkar for the respondent/assessee would support the order of the CIT(A) as well as the Tribunal by contending that no new materials were found during the search and as such there is no new material for addition. Further, learned counsel would submit that there was no proceedings pending under Section 143 of the Act. As such, the appellants/Revenue could not have initiated proceedings under Section 153A of the Act. Thus, it is prayed for dismissal of the appeals.

Having heard the learned counsel appearing for the parties and on perusal of the entire appeal papers, we HC-KAR are of the considered opinion that no substantial questions of law would arise for consideration and the substantial questions of law raised by appellant/Revenue is to be answered against the Revenue and in favour of the respondent/assessee.

There is no dispute that a search was conducted under Section 132 of the Act on 24.11.2015 on the business premises of the Supreme Group and the respondent/assessee was the proprietor of the Supreme Group. The CIT(A) on examination of the entire material on record has rightly recorded that the proceedings under Section 143 of the Act had been completed by the time search was conducted on the business premises of the respondent/assessee. In such circumstances, it was not open for the appellants/Revenue to initiate proceedings under Section 153A of the Act. Moreover, during the course of search, no new materials were found or unearthed to make any addition. The appellants/Revenue HC-KAR has not placed on record any material to indicate unearthing of any new material during the course of search. In the facts and circumstances of the present case, the findings of either the CIT(A) or the Tribunal cannot be said to be perverse. The finding of the CIT(A) as well as the Tribunal is based on the material placed on record.

The Hon'ble Apex Court in the case of Principal Commissioner of Income-Tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd. [(2023) 149 Taxmann.com 399 (SC)] was examining the scope of assessment under Section 153A of the Act and at paragraph 14 it is held as follows: “36. In view of the above and for the reasons stated above, it is concluded as under: (i) That in case of search under Section 132 or requisition under Section 132-A, the AO assumes the jurisdiction for block assessment under Section 153-A;

Further the Tribunal during the course of its order has recorded that CIT(A) has given a categorical finding that case of the assessee squarely falls outside the purview of Section 153A of the Act because the assessment has not abated and no new material was found or unearthed during the course of search. Moreover, HC-KAR it is a concurrent finding of fact recorded by the CIT(A) as well as the Tribunal.

The above decision would aptly apply to the fact situation of the present appeals. Following the above dictum of the Hon’ble Apex Court, the appeals are dismissed, answering the substantial questions of law against Revenue and in favour of respondent/assessee.