ACIT CENTRAL CIRCLE 2 (2), CHENNAI vs. ACHARYA HOMES AND ESTATES P LTD, CHENNAI

Smt. Ruby George, the Ld. Departmental Representative, submitted that there was a search in the premises of the assessees on 03.09.2013. According to the Ld. D.R., it was found during the course of search operation that the assessees have received advances in cash during the financial year 2010-11 relevant to assessment year 2011-12. Since no explanation was offered by the assessees, according to the Ld. D.R., the Assessing Officer treated the advances as income of the assessee during the year under consideration. Since the assessees could not produce any substantial evidence, the Assessing Officer assessed the advances as income of the assessee. However, on appeal by the assessees, according to the Ld. D.R., the CIT(Appeals) deleted the addition on the ground that there was no incriminating material found during the course of search operation. In fact, according to the Ld. D.R., incriminating material in the form of audited tally statement was found, therefore, the CIT(Appeals) is not correct in saying that no incriminating material was found. Hence, according to the Ld. D.R.,the decision of Special Bench of this Tribunal in All Cargo Global Logistics Ltd. v. DCIT (2012) 137 ITD 287 and the judgment of Karnataka High Court in Principal CIT v. Smt. Lakshmi Singh (2017) 78 taxmann.com 207 may not be applicable to the facts of the case.

On the contrary, Shri K.M. Mohandass, the Ld. representative for the assessees, submitted that for the assessment year 2011-12, the assessee in filed its return of income on 31.03.2012, the assessees in I.T.A. No.1607, 1608, 1609, 1610 and 1612/Chny/2018 filed their return of income on 30.09.2011 and the assessee in I.T.A. No.1611/Chny/2018 filed the return of income on 31.03.2012. In all cases, according to the Ld. representative, the search took place on 03.09.2013. The time limit for issuing notice under Section 143(2) of the Act was 31.03.2012. Admittedly, the search took place on 03.09.2013.

Therefore, according to the Ld. representative, the assessment proceeding initiated after filing the return of income on regular course before the date of search, culminated by operation of law on 31.03.2012. Hence, on the date of search, i.e. on 03.09.2013, no assessment proceeding was pending before the Assessing Officer. Therefore, according to the Ld. representative, the pending assessment proceeding or the assessment proceeding which was culminated or terminated by operation of law cannot be reopened by the Assessing Officer. According to the Ld. representative, the Assessing Officer is expected to complete the assessment only on the basis of material found during the course of search operation.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that all the assessees have fled the return of income in the regular course before the date of search which took place on 03.09.2013. The time limit for issuing notice, on the basis of the return of income filed before the search, expired well before the date of search. The Assessing Officer also processed the return under Section 143(1) of the Act and issued intimation before the date of search. Therefore, admittedly, no assessment proceeding was pending on the date of search on 03.09.2013. In other words, the assessment proceeding on the basis of return already filed terminated / culminated by operation of law. Therefore, no assessment proceeding was pending on the date of search, hence, the concluded assessment or the assessment which was terminated by operation of law cannot be reopened by the Assessing Officer.

We have carefully gone through the provisions of Section 153A and 153C of the Act. When the assessment was concluded either by order under Section 143(3) of the Act or otherwise by operation of law cannot be reopened. The reassessment or the assessment has to be made under Section 153A / 153C of the Act only on the basis of the incriminating material found during the course of search operation. In this case, the Revenue claims that audited statement in the form of tally accounts was said to be found during the course of search operation. It is not in dispute that the very same document was already available before the Assessing Officer along with the return of income. Therefore, at any stretch of imagination, it cannot be said that the audited statement in the form of tally accounts is an incriminating material found during search as claimed by the Revenue. In the absence of any incriminating material, this Tribunal is of the considered opinion that there cannot be any assessment under Section 153A / 153C of the Act as found by the CIT(Appeals). This view of ours is fortified by the judgment of Apex Court in Principal CIT v. Meeta Gutgutia (2016) 385 ITR 624. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, all the appeals filed by the Revenue are dismissed.