THE ACIT, CENTRAL CIRCLE -1(4), CHENNAI vs. PRINCE GEM & JEWELLERY PVT.LTD., CHENNAI

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ITA 2214/CHNY/2017Status: DisposedITAT Chennai30 September 2022AY 2008-094 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that in the absence of incriminating material found during the search, no addition can be made in an assessment framed under section 153A if the assessment for that year was unabated as on the date of the search.

What were the facts?

A search was conducted on the assessee's premises, leading to an assessment under section 153A. The Assessing Officer made an addition of Rs. 2,69,80,350/- towards cessation of liability for creditors payable for more than six years.

What were the issues?

Whether additions can be made in a section 153A assessment for unabated years without incriminating material found during search, specifically regarding cessation of liability.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 153A,Section 41(1)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI G. MANJUNATHA, HON’BLE

Hearing: 22.09.2022Pronounced: 30.09.2022

आदेश / O R D E R

PER G. MANJUNATHA, ACCOUNTANT MEMBER:

1.

This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-18, Chennai, dated 20.06.2017 and pertains to assessment year 2008-09.

2.

The brief facts of the case are that a search u/s.132 of the Act, was conducted on 02.11.2010 at the business premise of the company.

Consequent to search, the assessment has been completed u/s.143(3) r.w.s.153A of the Act, and determined total income at Rs.10,81,64,430/-

M/s.Prince Gem & Jewellery Pvt. Ltd. :: 2 :: by making addition of Rs.2,69,80,350/- towards cessation of liability for creditors payable for more than six years. The assessee carried the matter in appeal before the First Appellate Authority and the Ld.CIT(A) for the reasons stated in his appellate order dated 20.06.2017 deleted the additions made by the AO on the ground that additions towards cessation of liability is not supported by any incriminating material found as a result of search and thus, in absence of any incriminating material, no additions can be made in the assessment framed u/s143(3) r.w.s.153A of the Act.

Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before us.

3.

The Ld.DR submitted that the Ld.CIT(A) erred in deleting additions made towards cessation of liability u/s.41(1) of the Act, towards unabated liability for more than six years without appreciating the fact that the moment search took place, assessment for six assessment years immediately preceding assessment year, in which, search took place needs to be assessed and the AO shall have power to assess total income including undisclosed income, if any, found as a result of search. In this regard, he relied upon the decision of the Hon’ble Kerala High Court in the case of E.N.Gopakumar v. CIT (Central) reported in [2016] 75 taxmann.com 215 (Kerala).

4.

The Ld.AR, on the other hand, supporting the order of the Ld.CIT(A) submitted that the issue is squarely covered in favour of the assessee by M/s.Prince Gem & Jewellery Pvt. Ltd. :: 3 ::

the decision of the Hon’ble Bombay High Court in the case of CIT v.

Continental Warehousing Corporation (Nhava Sheva) Ltd., reported in [2015] 232 Taxman.com 270 (Bombay), where, it has been held that in absence of incriminating material, no addition can be made towards any income in the assessment framed u/s.153A/153C of the Act, if such assessment is unabated as on the date of search.

5.

We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. In this case, search took place on 02.11.2010 in the business premise of the assessee and as on the date of search, assessment for the AY 2008-09 is unabated/concluded, because, either the original assessment has been completed u/s.143(3) of the Act, or time limit for issue of 143(3) notice expires on 30.09.2009 i.e. much before the date of search. Therefore, we are of the considered view that assessment for the impugned assessment year is unabated/concluded as on the date of search. Therefore, as per settled principle of law by the decision of various courts including the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), no addition can be made in absence of any incriminating material, if such assessment is unabated/concluded as on the date of search. The Hon’ble Supreme Court in the case of Pr.CIT v. Meeta Gutgutia Prop. M/s.Ferns N Petals [2018] 257 Taxman 441 (SC), had considered an identical issue and held that in absence of incriminating material found as a result of search for each

M/s.Prince Gem & Jewellery Pvt. Ltd. assessment year, no addition can be made, if such assessment is unabated/concluded as on the date of search. Since, assessment for the impugned assessment year is unabated/concluded as on the date of search and further, the additions made by the AO towards cessation of liability u/s.41(1) of the Act, is not supported by any material found as a result of search, we are of the considered view that the AO erred in making addition in the assessment framed u/s.143(3) r.w.s.153A of the Act. The Ld.CIT(A) after considering relevant facts has rightly deleted the additions made by the AO. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue.

6.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced on the 30th day of September, 2022, in Chennai.

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