THE PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 vs. OXYGEN BUSINESS PARK PVT. LTD (FORMERLY KNOWN AS ACHVIS SOFTECH PVT. LTD.)

Briefly stated, circumstances relevant for present purposes are as follows. The respondent/assessee was engaged in development of Special Economic Zone (SEZ) for information technology enabled services in Noida, U.P. On 30.09.2011, the respondent/assessee filed its return of income for the Assessment Year 2011-12 and the same was processed under Section 143(1) of the Act. Thereafter, on 29.10.2013, search and seizure action under Section 132 of the Act was carried out at the premises of the respondent/assessee and accordingly, notice dated 11.11.2014 under Section 153A of the Act was issued, calling upon the respondent/assessee to file return of income consequent to the search action. On 22.03.2016, the respondent/assessee requested the appellant/revenue to treat the original Digitally Signed By:VAISHALI CHAUHAN Signing Date:08.12.2023 12:09:49 Signature Not Verified

As mentioned above, in the course of preliminary hearing learned counsel for the appellant/revenue did not press the proposed question No. Digitally Signed By:VAISHALI CHAUHAN Signing Date:08.12.2023 12:09:49 Signature Not Verified

So far as legal position is concerned, the decision of this court in the case of Kabul Chawla (supra) was upheld by the Supreme Court in the case of PCIT vs Abhisar Buildwell Pvt. Ltd., (2023) SCC OnLine SC 481. The issue as to whether the Assessing Officer can consider all material that is available on record, including that found during the search and make an assessment of total income was considered by different High Courts, taking divergent views. Some of the High Courts, including this court took a view that where no assessment proceedings are pending on the date of initiation of search, the Assessing Officer may consider only the incriminating material found during the search and is precluded from considering any Digitally Signed By:VAISHALI CHAUHAN Signing Date:08.12.2023 12:09:49 Signature Not Verified

In the case of Kabul Chawla (supra), after detailed discussion, this court held thus: “37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the „total income‟ of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs “in which both the disclosed and the undisclosed income would be brought to tax”. iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material”. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word „assess‟ in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word „reassess‟ to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing Digitally Signed By:VAISHALI CHAUHAN Signing Date:08.12.2023 12:09:49 Signature Not Verified

After examining the views of different High Courts, the Supreme Court in the case of Abhisar Buildwell (supra) approved of the view taken by this court in the case of Kabul Chawla (supra) and held thus: “22. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 23. 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 of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the „total income‟ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/ unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/ Digitally Signed By:VAISHALI CHAUHAN Signing Date:08.12.2023 12:09:49 Signature Not Verified

The case of Dr. A.V. Sreekumar (supra), relied upon heavily by the appellant/revenue is completely distinguishable in the sense that in the said case, the material considered in addition to the material unearthed during search action was the documents received by the revenue through Tax Evasion Petition (TEP), filed prior to the search; and that one of the contentions was that the said documents received by the revenue through Tax Evasion Petition could not be relied upon to make additions since the same were not seized in the search conducted. The Kerala High Court in the said case, expressing agreement with the aforesaid legal proposition laid down by this court, observed that the case before it stood on different footing insofar as the said documents received by the revenue prior to search action were incriminating material by themselves, which led to initiation of search action. That is not the case in the present matter. In the present matter, admittedly, the assessment for the Assessment Year 2011-12 was finalized on 20.01.2012 and no notice under Section 143(2) of the Act was issued, as such no assessment was pending on the date of search action i.e. 29.10.2013. Also admittedly, in the present case, during the search action against the respondent/assessee no incriminating material was found and the material in the form of statement of Shri B.P. Singh now sought to be relied upon by the appellant/revenue was recorded subsequent to the search action. Therefore, the proposed question of law numbered 2.2 in the memo of appeal cannot be admitted as substantial question of law.

In view of the aforesaid, we are unable to find any substantial question of law in this appeal for our consideration under Section 260A of the Act.

Therefore, the appeal is dismissed.