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Facts
The assessee's case for AY 2017-18 was originally assessed under Section 143(3). Later, post a search in a group case, a notice under Section 153A was issued, and an assessment order was passed. The Principal Commissioner (Pr.CIT) initiated proceedings under Section 263, alleging that the assessment order was erroneous and prejudicial to the revenue due to non-verification of a cash loan transaction.
Held
The Tribunal held that the Pr.CIT erred in invoking Section 263. The information regarding the cash loan was vague and not linked to the assessee's assessment year. No incriminating material was found during the search related to the assessee for the relevant AY. Therefore, the Pr.CIT lacked jurisdiction to revise the order.
Key Issues
Whether the Pr.CIT had jurisdiction under Section 263 to revise an assessment order passed under Section 153A when no incriminating material was found concerning the assessee for the relevant assessment year.
Sections Cited
263, 153A, 143(3), 153C, 147, 40(a)(i), 269SS, 69C, 132, 132A, 147/148
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Assessment Year: 2017-18 Shamkant Keshav Kotkar V PCIT(Central), Pune. (Prop. Nandan Builders), s. Flat No.1, Nandadeep Apartment, Prabhar Road, Erandwana, Pune – 411004. PAN: ABEPK3581D Appellant/ Assessee Respondent / Revenue Assessee by Shri Kishor B Phadke Revenue by Shri Amit Bobde,IRS–Commissioner of Income tax(DR) Date of hearing 18/11/2025 Date of pronouncement 31/12/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal is filed by the Assessee against the order of ld.PrincipalCommissioner of Income Tax(Central), Pune passed under section 263 of the Income Tax Act, 1961 for A.Y.2017-18, dated 11.03.2025 emanating from Assessment Order u/s.143(3) read with section 153A of the Income Tax Act, 1961 dated 05.06.2022. The assessee has raised following grounds of appeal :
“1. The learned PCIT(Central), Pune erred in law and on facts in assuming jurisdiction u/s 263 of the ITA, 1961 on the analogy that the order passed u/s 153A r.ws 143(3) of the ITA, 1961 dated 05/06/2022 was erroneous and prejudicial to the interest of the revenue.
The learned PCIT erred in law and on facts in concluding that order u/s 1534 r.w.s 143(3) erroneous to the interest of the revenue, without appreciating that the proceedings w.r.t alleged transaction with Mr. Sachin Nahar do not fall within the purview of Section 1534 Since alleged material was found during course of search on a third party, provisions of Section 153C/147 are applicable. Hence, there is no scope for any enquiry/addition to be made under Section 153A 3. The learned PCIT erred in law and on facts in concluding that order u/s 153A r.ws 143(3) erroneous and prejudicial to the interest of the revenue, without appreciating that, AY 2017-18 is an "unabated" year, and there is no incriminating material found during search proceedings for A.Y.2017- 18. Hence, learned AO could not have assumed jurisdiction with respect other material & thereby, no objection to non-enquiry/lack of enquiry can be made against the ld. AO w.r.t the material found during search on Mr. Sachin Nahar 4. The learned PCIT erred in law and on fact in not appreciating that, there is no mention of Appellant or any related group / individual in the seized material of Mr. Sachin Nahar, or of the alleged cash transaction with Mr. Sachin Nahar on the basis of which it has been concluded that order u/s 153Ar.w.s 143(3) is erroneous and prejudicial to the interest of the revenue.
5. The learned PCIT erred in law and on fact in passing order u/s 263 without dealing with the various contentions and arguments made raised by the Appellant. Hence, the learned PCIT has not passed a speaking order going against the principle of natural justice.
Appellant craves leave to add, alter, clarify, explain, modify, delete any or all of the grounds of appeal
, and to seek any just and fair relief. Submission of ld.AR :
2. Ld.Authorised Representative(ld.AR) for the Assessee Mr.Kishor Phadke filed paper book containing 201 pages.
2.1 The ld.AR Mr.Kishor Phadke submitted that in this case, original assessment order was passed on 12.12.2019 for A.Y.2017- 18 under section 143(3) of the Act, accepting returned income at Rs.2,18,66,125/-. In this case, Assessee had e-filed return of income on 07.11.2017 declaring total income at Rs.2,14,60,110/-, then Assessee revised return on 03.07.2018 declaring income to Rs.2,18,66,125/-. Ld.AR filed copy of the assessment order dated 12.12.2019 passed u/s 143(3) of the Act for AY 2017-18. There was a search u/s.132 of the Act, in Nandan Group on 03.02.2021, which included residence of assessee. Ld.AR submitted that notice u/s.153A dated 14.12.2021 was issued by Assistant Commissioner of Income Tax, Central Circle-2(4), Pune for A.Y.2017-18. Copy of the said notice is at page no.111 of the paper book. Then, the AO issued notices u/s.142(1) calling for various details which are at page no.112 to 119 of the Act. Copy of e-proceedings acknowledgment demonstrating details filed by assessee in response to the notice are at page no.120 and 121 of the paper book. Assessee’s submission before the Assessing Officer is at page no.133 to 200 of the paper book. Ld.AR submitted that order u/s.153A r.w.s 143(3) was passed on 05.06.2022 with a small 3 addition of Rs.1,189/- under section 40(a)(i) of the Act. The Assessing Officer disallowed interest on TDS of Rs.1,189/- and added Rs.1,189/- to the returned income. Ld.AR submitted that A.Y.2017-18 was unabated assessment. Therefore, addition could have been made only based on incriminating documents. Since there were no incriminating documents for A.Y.2017-18, Assessing Officer has not made any addition. Pr.CIT issued notice u/s.263 of the Act, alleging that there was document showing cash loan taken by assessee from Mr.Sachin Nahar. Ld.AR submitted that in the show cause notice issued u/s.263 of the Act, Pr.CIT(Central), Pune has not referred to any specific document to allege cash loan. Ld.AR submitted that Assessee requested Pr.CIT to provide the document and statement of Sachin Nahar. Accordingly, some loose sheets were provided and statement of Sachin Nahar was provided. Ld.AR further submitted that nowhere in the statement Mr.Sachin Nagar has alleged any cash loan being given to the assessee. Ld.AR invited our attention to the so-called documents on which Pr.CIT is relied which is at page no.90 of the paper book. Ld.AR submitted that there is no year or date mentioned on the said paper. There is no mention of the assessee’s name. Ld.AR submitted that the copies 4 provided by Pr.CIT are absolutely blur. Ld.AR filed enlarged copies of the document to demonstrate that hardly anything could be read from the said page. Ld.AR submitted that in these facts since the documents relied does not establish any cash loan taken by assessee through Sachin Nahar, neither it specifies the period, hence it is a dumb document. Ld.AR submitted that all these arguments were raised during the proceedings u/s.263 of the Act, which has been reproduced by ld.Pr.CIT in the order u/s.263, but Pr.CIT has not rebutted any of these arguments. Ld.AR further submitted that the so-called original paper which was alleged to be seized during search conducted in case of Sachin Nahar was never shown to the Assessee. Ld.AR therefore submitted that the order u/s.263 is bad in law. Ld.AR further submitted that since the assessment order was passed u/s.153A and there was no incriminating material showing cash loans taken by assessee through Sachin Nahar, hence, no addition could have been made. Ld.AR relied on the decision of Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax Vs. Abhisar Buildwell (P.) Ltd., [2023] 451 ITR 212 dated 24.04.2023. Ld.AR further submitted without prejudice that any document which is found during search of other persons, in this 5 case Mr.Sachin Nahar, cannot be used in the case of the Assessee without AO recording satisfaction and then invoking proceedings u/s.153C of the Act. Ld.AR submitted that assessee had asked for copy of satisfaction note recorded by Assessing Officer of Mr.Sachin Nahar during the proceedings u/s.263 of the Act, but Pr.CIT has not provided any such copy. On merits, ld.AR submitted that Assessee has not taken any such cash loan and hence, there is no question of any addition. Accordingly, ld.AR submitted that order u/s.263 is bad in law.
2.2 Ld.AR submitted that the Assessee is not aware about any information on INSIGHT portal as claimed by Ld.DR. Hence it cannot be relied.
3. Ld.AR for the Assessee relied on following case laws : ACIT Vs. Benefit TradelinkLtd., [2025] 175 taxmann.com 818 ITAT Ahmedabad Tribunal. Hon‟ble Supreme Court of India in PCIT Vs. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC). High Court of Delhi Bench in PCIT Vs. Meeta [2017] 82 taxmann.com 287 (Delhi) Hon‟ble Supreme Court in ITO Vs. Saksham Commodities Ltd., [2025] 170 taxmann.com 87 (SC). 6 Submission of ld.DR : 4. Ld.Departmental Representative(ld.DR) for the Revenue Mr.Amit Bobde-IRS, Commissioner of Income Tax(DR) vehemently supported order u/s.263 of the Act. Ld.DR submitted that the Assessing Officer i.e.ACIT, Central Circle-2(4), Pune had information which was submitted by Asst.Commissioner of Income Tax, Central Circle Circle1(1), Pune vide letter dated 02.03.2021 regarding Search in the case of Sachin Nahar and Cash Loan taken by Nandan Builders i.e.Assessee. Ld.DR filed copy of letter No.Pn/DCIT.Cen.Cir.1(1)/Sharing of Info./2020-21/ dated 02.03.2021.As per the said letter dated 02/03/2021 Statement of Mr.Sachin Nahar was recorded u/s 132(4) on 01/08/2017.Ld.DR submitted that this information was available on Insight Portal of the Income Tax Department to the Assessing Officer. Ld.DR submitted that thus at the time of assessment order the AO was having information on INSIGHT Portal regarding the cash loan taken by Assessee from Sachin Nahar. Ld.DR for the Revenue further submitted that there cannot be two Assessment Proceedings at the same time for A.Y.2017-18 for one Assessee, one based on 153A and another u/s.153C. Therefore, the AO had to consider the 7 information regarding cash loan during the Assessment Proceedings u/s 153A. The AO has not verified the issue of Cash Loan; hence the Assessment Order is erroneous and prejudicial to the interest of revenue. As per Explanation-2 of the Section 263, Assessment Order will be deemed to be erroneous and prejudicial if Pr.CIT is of the opinion that Assessment Order(AO) is passed without making any Inquiry or verification. Ld.DR relied on the decision of Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd., 454 ITR 2012.
Ld.DR further submitted that in this case the AO had failed to verify issue of cash loan hence Pr.CIT was right in invoking provisions of section 263. Findings & Analysis : 6. We have heard both the parties and perused the records. In this case, undisputed basic facts as per Assessment Orders are as under : Assessee filed return of Income electronically on 07.11.2017 for A.Y.2017-18 declaring total income at Rs.2,14,60,110/-. Then, Assessee filed revised return of income on 03.07.2018 declaring total income at Rs.2,18,66,125/-. The Assessee‟s case was selected for complete scrutiny through CASS. Accordingly, the Assessing Officer-Assistant Commissioner of Income Tax, Circle-2, Pune issued various notices. Assessee filed relevant details. The Assessing Officer passed an 8 assessment order u/s.143(3) for A.Y.2017-18 on 12.12.2019 accepting the returned income. It is mentioned in the assessment order that assessee is a Director in a company called Nandan Buildcon Private Limited. During the year, Assessee had shown following income: o Income from Salaries o Income from House Property o Loss from Business o Capital Gain o Income from other source 7. A search action u/s.132 of the Income Tax Act, 1961 was conducted at the residence of Assessee-Shamkant Keshav Kotkar along with other Nandan Group Cases on 03.02.2021. Therefore, Assessee’s case was centralized with DCIT, Central Circle-2(4), Pune by the Competent Authority. A notice u/s.153A dated 14.12.2021 for A.Y.2017-18 was served on the Assessee. Assessee e-filed his return of income u/s.153A of the Act for A.Y.2017-18 on 21.12.2021 declaring total income at Rs.2,18,66,130/-. It is to be noted that the returned income shown by the Assessee in the return filed in response to notice u/s.153A is same as shown in the revised return filed on 03.07.2018. The Assessment Order u/s.153A r.w.s 143(3) was passed on 05.06.2022. Minor addition of Rs.1,189/- with reference to interest on TDS has been made under section 40(a)(i) of the Act.
The Principal Commissioner of Income Tax(Central)[Pr.CIT], Pune on perusal of the records, invoked jurisdiction u/s.263 of the 9 Act. The Pr.CIT issued Show cause notice to the Assessee dated 30.05.2024 u/s.263 of the Act, which is reproduced here as under : “02. In the above mentioned case, on verification of case records for A.Y.2017-18 it has been observed that the assessee had filed original return income for AY 2017-18 on 03.07.2018 on DECLARING TOTAL INCOME AT Rs.2,18,66,130/-. A search action u/s 132 of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) was conducted in Nandan Group of cases on 03.02.2021 wherein residence and office premise of the assessee was also covered. The scrutiny assessment was completed u/s 143(3) r.w.s 153A of the Act on 05.06.2022 by assessing the total income at Rs.2,18,67,319/-.
On perusal of the assessment records and information available with this office, it is seen the assessee is engaged in the business of real estate construction and development. Further, it is observed that the assessee had taken loan in cash through Shri Sachin Nahar of Rs.1,00,00,000/- against which he had paid interest of Rs.12,18,000/- in cash during the F.Y. 2016-17 relevant to A.Y. 2017-18. Further, on perusal of the ITR filed by the assessee for the year under consideration, it is noticed that assessee has not disclosed such cash loans and interest paid thereon in the ROI. On the basis of the information available on records, it is clear that the assessee has violated the provisions of section 269SS of the Act by accepting cash loan of Rs 1,00,00,000/- Further, as the source of interest paid in cash amounting to Rs.12,18,000/- is also not ascertained, the same needs to be treated as unexplained expenditure of the assessee as per the provisions of section 69C of the Act. The AO failed to ascertain whether the assessee had correctly disclosed all the particulars of his income for the year under consideration 04 In view of the above, it is found that the no verification on the aforesaid issue has been done in the assessment proceedings by the AO As per explanation (2) to section 263(1) of the Act, an order without making inquiries or verification which should have been made is deemed to be erroneous in so far as it is prejudicial to the interest of revenue 05 Considering the above facts of the case, it is seen that the AO had not examined and verified the above issue. Therefore, assessment order u/s 143(3) r.ws 153A of the Act dated 05.06.2022 passed by the AO for A.Y 2017-18 appears to be erroneous in so far as it is prejudicial to the interest of revenue. 10 06 In view of the facts and circumstances mentioned above, the assessment order passed u/s 143(3) rw.s 153C of the Act in the case of Shri Shamkant Keshav Kotkar for A.Y 2017-18 prima facie appears to be erroneous in so far as it is prejudicial to the interest of revenue in terms of the provisions of Explanation-(2)(a) to Section 263(1) of the Income Tax Act. I, therefore, intend to set aside/ modify the assessment order within the meaning of section 263 of the I.T Act, 1961 An opportunity of being heard is therefore, given to you You are requested to attend in person or through your authorized representative on 21.06.2024 at 12:30 PM in my office 07 If you have authorized any representative to attend on your behalf, please ensure that the Power of Attorney with proper court fee stamp is filed on or before the date of hearing. If you do not wish to attend in person or through your authorized representative, you may file written submission along with necessary evidence in support of your contention before the due date of hearing Further it may be noted that no adjournment will be provided and in case on non appearance/non submission of reply, order will be passed on merits.” 8.1 Thus, the Pr.CIT issued notice u/s.263 based on some information that Assessee had taken loan in cash through Shri Sachin Nahar of Rs.1 crore during the year.
The concluding paras 7.1 and 7.2 of the order u/s.263 are reproduced here as under: “7.1 In this regard, on perusal of case records, it is clear that during the search action in the case of Shri Sachin Nahar, it is found that the assessee had taken cash loan amounting to Rs.1,00,00,000/- and had paid interest in cash of Rs.12,18,000/-Shri Sachin Nahar is working as finance broker He is working as middleman who provides a platform for those investors who are having surplus fund and the borrowers who are in the need of funds. The said finding was accepted by Shri Sachin Nahar in his statement recorded u/s 132(4) by stating that he earned commission from the business of money lending in cash. After the search action, he worked out the commission earned in providing cash loan to various parties and offered Rs. 1,50,00,000/- on total cash loan provided of Rs. 113 Crores for taxation in the return of income filed in response to notice u/s 153A of the Act. On perusal of assessment 11 records, it was found that the information that assessee had accepted cash loan and paid interest in cash was shared by the ACIT, CC-1(1), Pune vide his letter dated 02.03.2021 and the information was uploaded on Insight Portal on 12.03.2021 In the case of the assessee, search action was carried out on 03.02.2021 and notice u/s 153A was issued on 14.12.2021. Further assessment u/s 143(3) r.w.s 153A was completed on 05.06.2022. From the above, it is clear that the said incrimination material was available with the AO during the assessment proceedings u/s 153A of the Act. 7.2 On the basis of the information available on records, it is clear that the assessee has violated the provisions of section 269SS of the Act by accepting cash loan of Rs 1,00,00,000/- Further, as the source of interest paid in cash amounting to Rs. 12,18,000/- is also not ascertained, the same was required to be examined by the AO. No verification on the aforesaid issue had been done in the assessment proceedings by the Assessing Officer.The Assessing Officer had not examined and verified the above issue having tax implications during the course of assessment proceedings. Thus, issues discussed in the show-cause notice were not at all examined by the Assessing Officer in the course of assessment proceedings.”
We have perused the submission filed by the Assessee and the order u/s.263 carefully. It is observed that nowhere in the show cause notice or in the order, the Pr.CIT has specifically mentioned about the so-called document based on which it has been alleged by Pr.CIT that Assessee had taken cash loan of Rs.1 crore through finance broker Sachin Nahar. The Pr.CIT has also referred to a statement recorded u/s.132(4) of Mr.Sachin Nahar, however again ld.Pr.CIThas not specifically referred to any specific Question, answer of Mr.Sachin Nahar alleging cash loan to Assessee.
During the proceedings u/s.263 of the Act, ld.AR for the Assessee had requested ld.Pr.CIT to share the so-called documents 12 on which Pr.CIT was relying. Assessee has filed copy of these documents at page no.90 and 91 of the paper book. First and foremost thing, original documents were never produced before us. Though in earlier hearing dated 13.10.2025 we had directed ld.DR to produce the incriminating material. The photocopies of the documents which are in the paper book are very faint and difficult to read. However, it is noted that assessee during the proceedings u/s.263 of the Act, has specifically pleaded before ld.Pr.CIT that the so-called page does not contain any date, hence, the relevant Financial Year cannot be understood from the said page. It was also pleaded before ld.Pr.CIT by Assessee that there is no mention of Assessee i.e.Shamkant Keshav Kotkar on the said page(Page no.88 to 90 of the paper book). These pleadings of the Assessee have been mentioned in the order u/s.263 of the Act, but Pr.CIT has not rebutted the contentions of the Assessee. We have already reproduced the relevant paragraphs of the order u/s.263 of the Act, and it can be observed from these paragraphs that nowhere Pr.CIT has mentioned the date of impugned transaction. Nowhere Pr.CIT has mentioned the impugned document on which said transaction is mentioned. We have gone through the statement of Mr.Sachin 13 Nahar recorded u/s 132(4) of the Act, by Dy.Director Income Tax(Investigation), Unit-1(3) Pune,which has been filed by Assessee in the paper book and it is noted that nowhere Mr.Sachin Nahar has stated that he had organized any cash loan of Rs.1 crore for Mr.Shamkant Keshav Kotkar during F.Y.2016-2017. The Statement of Mr.Sachin Nahar was started on 01/08/2017 and concluded on 04/08/2017 with intermittent breaks.It is important to mention here that during the proceedings u/s.263, Assessee had taken the plea that his name does not appear in the statement of Mr.Sachin Nahar, however, the said pleading has not been rebutted by Pr.CIT in the order.
11.1 Thus, it can be observed that entire thrust of the order u/s.263 is based on some document which was alleged to have been seized during search in the case of Mr.Sachin Nahar which was conducted in August 2017, which gives information regarding cash loan of Rs.1 crore obtained by Assessee. Therefore, we requested ld.DR for the Revenue to file copy of the said document. Ld.DR filed a photo copy along with letter of Mr.Sachin Nahar filed before Deputy Director of Investigation dated 16.10.2017 containing explanation of [A] Mr.Sachin Nahar regarding the documents. The relevant part of the explanation of Mr.Sachin Nahar is reproduced here as under :
Amount Depositor Borrower 2000 A.KALI NANDAN THE SAID AMOUNT IS ON PAGE NO 24 OF BUNDLE NO 9. IT IS FURTHER SUBMITTED THAT THE SAID AMOUNT AGAIN RENEWED/REPEATED ON PAGE NO.17 OF BUNDLE NO.B 10 AND FURTHER RENEWED ON PAGE NO.82 & 122 IN BUNDLE NO.B 06 2000 R PATEL NANDAN THE SAID AMOUNT IS ON PAGE NO 24 OF BUNDLE NO 9. IT IS FURTHER SUBMITTED THAT THE SAID AMOUNT AGAIN RENEWED/REPEATED ON PAGE NO.17 BUNDLE NO.B 10 AND FURTHER RENEWED ON PAGE NO.82 & 122 IN BUNDLE NO.B 06 AND ON PAGE NO.07 IN BUNDLE NO.B 07 1000 OR NANDAN THE SAID AMOUNT IS ON PAGE NO 24 OF BUNDLE NO 9. IT IS FURTHER SUBMITTED THAT THE SAID AMOUNT AGAIN RENEWED/REPEATED ON PAGE NO.17 OF BUNDLE NO.B 10 AND FURTHER RENEWED ON PAGE NO.82 & 122 IN BUNDLE NO.B 06 AND ON PAGE NO.07 IN BUNDLE NO B 07.
12. We have also perused the copy of the impugned document which has been filed by ld.DR for the Revenue and noted that there is no date mentioned. From the narration of Mr.Sachin Nahar which is reproduced above, which was filed by ld.DR for the Revenue, even Mr.Sachin Nahar has not specified the date. Mr.Sachin Nahar inhis explanation has merely referred “NANDAN”. There is no 15 mention of Shamkant Keshav Kotkar. The group has got various entities like Nandan Associates, Nandan VSP Developers, Nandan Buildcon Pvt Ltd. etc. Mr.Shamkant Keshav Kotkar(Assessee) is having Proprietary concern called Nandan Builders as seen from the Computation of Income submitted in the Paper Book page 1-3. Thus, from the so-called documents one cannot decide the year of taxability and Mr.Sachin Nahar has also not explained the date of impugned transaction.
12.1 We have perused the Notices issued by the Assessing Officer (AO). The Assessing Officer vide notice u/s.142(1) dated 11/05/2022 had specifically asked regarding Loan from Sachin Nahar. Copy of the said Notice and the annexure enclosed with the notice is at page 151 to 176 of the PB filed by the assessee. The relevant part of the Annexure is reproduced here under :
Date Name Amount Reference Assessee’s Remark claim 31.10.19 Sunil Nahar 20000000 Page no 21 Contra and of bundle 13.11.19 no 03 Loan 11.11.19 Sachin Nahar 5000000 Contra Receipt 18.11.19 Sachin Kokate 2500000 Advance received 12.2 Thus, it can be observed that the AO has considered the transaction pertaining to Sachin Nahar to be of another Assessment 16 year and not A.Y.2017-18. We had specifically asked this question to Ld.DR, however, Ld.DR submitted that the Sachin Nahar mentioned in the Notice u/s.142 issued by AO is different than the Sachin Nahar referred by Pr.CIT. However, no documents have been filed by revenue to prove the same. The Pr.CIT has not bothered to consider the notice u/s.142 and the explanation filed by the Assessee.
12.3. Therefore, in these facts, we are of the opinion that the AO had asked specific question and was satisfied by the reply of the assessee that the transaction does not pertain to AY 2017-18 and hence no addition has been made in AY 2017-18. In such circumstances Hon’ble Supreme Court in the case of PCIT vs. NYA International 482 ITR 281 vide order dated 17/02/2025 has explained the law that Commissioner should have examined the issue on merits and should have given finding based on merits that the Assessment Order is erroneous and prejudicial to the interest of revenue. The Pr.CIT has not examined the impugned documents and not given any specific finding.
13 There is no document brought to our record to establish that the so-called cash loan pertains to A.Y.2017-18.
14. Ld.Pr.CIT has vaguely alleged without any document that Assessee had taken cash loan of Rs.1 crore through Mr.Sachin Nahar. In these facts and circumstances of the case, ld.Pr.CIT has erred in alleging that Assessing Officer had failed to verify the issue during assessment proceedings u/s.153A for A.Y.2017-18. The information which was available with the Department which we have discussed in the earlier para above is vague and one cannot conclude that transactions pertain to A.Y.2017-18. In these facts and circumstances of the case, we do not find any infirmity with the assessment order passed under section 153A of the Act, for A.Y.2017-18. Accordingly, we are of the opinion that order u/s.263 passed by ld.Pr.CIT is devoid of merits, hence, quashed.
In this case, admittedly order u/s.153A was passed for A.Y.2017-18 on 05.06.2022. In the assessment order dated 05.06.2022, there is no discussion regarding any incriminating material. It is an admitted fact by both the parties that A.Y.2017-18 was unabated assessment year. The Hon’ble Supreme Court in the 18 case of PCIT Vs. Abhisar Buildwell P. Ltd., 454 ITR 212 dated 24.04.2023 has explained the law regarding Section 153A as under : “incriminating material is found, even in case of unabated/completed assessment, the AO wouldhave the jurisdiction to assess or reassess the 'total income' taking into consideration theincriminating material collected during the search and other material which would includeincome declared in the returns, if any, furnished by the assessee as well as the undisclosedincome. However, in case during the search no incriminating material is found, in case ofcompleted/unabated assessment, the only remedy available to the Revenue would be to initiatethe reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of theconditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left withno remedy. Therefore, even in case of block assessment under section 153A and in case ofunabated/completed assessment and in case no incriminating material is found during thesearch, 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.
If the submission on behalf of the Revenue that in case of search even where noincriminating material is found during the course of search, even in case of unabated/completedassessment, the AO can assess or reassess the income/total income taking into considerationthe other material is accepted, in that case, there will be two assessment orders, which shall notbe permissible under the law. At the cost of repetition, it is observed that the assessment undersection 153A of the Act is linked with the search and requisition under sections 132 and 132A ofthe Act. The object of Section 153A is to bring under tax the undisclosed income which is foundduring the course of search or 19 pursuant to search or requisition. Therefore, only in a case wherethe undisclosed income is found on the basis of incriminating material, the AO would assumethe jurisdiction to assess or reassess the total income for the entire six years block assessmentperiod even in case of completed/unabated assessment. As per the second proviso to Section153A, only pending assessment/reassessment shall stand abated and the AO would assume thejurisdiction with respect to such abated assessments. It does not provide that allcompleted/unabated assessments shall abate. If the submission on behalf of the Revenue isaccepted, in that case, second proviso to section 153A and sub-section (2) of Section 153A wouldbe redundant and/or rewriting the said provisions, which is not permissible under the law.
For the reasons stated hereinabove, we are in complete agreement with the view taken bythe Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case ofSaumya Construction (supra) and the decisions of the other High Courts taking the view that noaddition can be made in respect of the completed assessments in absence of any incriminatingmaterial.
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 132A, the AO assumes the jurisdiction for block assessment under section 153A;
(ii) all pending assessments/reassessments shall stand abated;
(iii) in case any incriminating material is found/unearthed, even, in case ofunabated/completed assessments, the AO would assume the 20 jurisdiction to assess orreassess the 'total income' taking into [A] consideration the incriminating materialunearthed during the search and the other material available with the AO including theincome declared in the returns; and…………….”
15.1 Thus, Hon’ble Supreme Court has explained that in case of unabated, completed assessments the Assessing Officer would assume jurisdiction to assessee or reassess total income, only if there is any incriminating material found.
In this case, as we have discussed in earlier paragraphs, there is no incriminating material discussed by Pr.CIT found during the search of the Assessee, for A.Y.2017-18 which is a completed assessment, hence Assessing Officer has no jurisdiction to assess or reassess the total income u/s 153A of the Act. Therefore, the order u/s.153A r.w.s 143(3) for A.Y.2017-18 dated 05.06.2022 is not erroneous and prejudicial to the interest of the revenue. Accordingly, Pr.CIT had no jurisdiction to invoke proceedings under section 263 of the Act.
It is important to mention here that Assessment Order u/s.143(3) for AY 2017-18 in the case of the Assessee Shamkant Keshav Kotkar was passed on 12/12/2019, whereas Search in the case of Sachin Nahar was conducted in August 2017. The information 21 regarding Cash Loan was forwarded by Assistant Commissioner of Income Tax, Central Circle-1(1) Pune initially vide letter No.Pn./DCIT/CC/1(1)/Info/2019-20 dated 10/06/2019 to Assessing Officer of the Assessee which is evident from the letter dated 02/03/2021 filed by the Ld.DR for the Revenue. The said letter is scanned and reproduced here as under :
17.1 Thus, at the time of Assessment Proceedings u/s.143(3) the impugned information was available with the AO of the Assessee.Therefore, if at all PCIT wanted to invoke jurisdiction u/s 263, then the PCIT should have invoked it against original Assessment Order u/s 143(3). Therefore, even for this reason, the order u/s.263 against the Assessment Order u/s 153A , is bad in law.
Therefore, for all the reasons discussed in earlier paragraphs, the order u/s.263 for A.Y.2017-18 dated 11.03.2025 is quashed. Accordingly, grounds of appeal raised by the Assessee are allowed.