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Facts
The assessee, Mayurply Industries Pvt. Ltd., faced search and seizure action under Section 132, leading to assessments under Section 153A for AYs 2010-11 to 2018-19. Appeals were filed with delay against ex-parte orders of the CIT(A) which upheld additions, including unexplained share capital under Section 68 for AY 2010-11, and other additions under Sections 68, 36(1)(va), 40(a)(ia), and 69 for later AYs.
Held
The Tribunal condoned the delay in filing appeals. For AYs 2010-11 and 2012-13 to 2015-16 (unabated assessments), it held that additions without incriminating material found during search were invalid, relying on the Supreme Court's ruling in PCIT v. Abhisar Buildwell P. Ltd. For AYs 2016-17, 2017-18, and 2018-19 (abated assessments), while the AO had jurisdiction, the Tribunal admitted additional evidence and remanded the cases for fresh adjudication on merits.
Key Issues
Whether additions made under Section 153A for unabated assessments are valid without incriminating material from a search, and the process for admitting additional evidence and remanding abated assessment appeals for re-adjudication.
Sections Cited
132, 253(5), 253(3), 253(4), 153A, 143(3), 133(6), 68, 144(3), 139(1), 143(2), 132A, 147, 153, 153A(1), 153C, 139, 148, 149, 151, 158BA, 113, 153B, 143(1)(a), 36(2), 41(4), 36(1)(vii), 36(1)(va), 40(a)(ia), 69
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Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
Before: SHRI RAJESH KUMAR, AM & SHRI MANOMOHAN DAS, JM
These are the appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Guwahati (hereinafter referred to as the “Ld. CIT (A)”] dated 10.06.2024, 11.06.2024, 12.06.2024, 13.08.2024, 14.08.2024, 30.09.2024 for the AYs 2010-11, 2012-13 to 2017-18, 2018-19 respectively.
At the outset, it was pointed out by the ld. Counsel for the assessee that there is a delay in filing these appeals for which condonation IT(SS)A 1/GTY/2024 for A.Y. 2010-11 03. First, we would take up ITA(SS)A No.1/GTY/2024 for A.Y. 2010-11. At the outset, the ld. Counsel for the assessee raised legal issue challenging the jurisdiction of the AO in making the addition in case of unabated assessment on the date of search without any incriminating material found and seized during the course of search and therefore, the additions made in the order u/s 153A read with section 143(3) are without valid jurisdiction and are bad in law.
In the appellate proceedings, the ld. CIT (A), after discussing the assessment order, came to the conclusion that the addition was rightly made u/s 68 of the Act in respect of unexplained share capital/ share premium when assessee or authorized representative failed to attend the appellate proceedings on behalf of the assessee and ld. CIT (A) passed an ex-parte order.
The ld. AR, at the outset, vehemently submitted that additions were without any valid jurisdiction and therefore the assessment framed by the AO is invalid and needs to be quashed for the reasons that the additions were made without valid jurisdiction under the Act. The ld. Authorized Representative submitted that the return was filed u/s 139(1) of the Act on 30.03.2011 and therefore, time period for issuing notice u/s 143(2) of the Act had already expired on 30.09.2011 i.e. six months from the end of the financial year in which the return of income was filed by the assessee. Thus, the assessment had attained its finality on the date of search. In other words, the assessment is unabated on the date of search within the meaning of Section 153A of the Act. The ld. Authorized Representative submitted that it is settled position of law that in case of unabated assessment year ,the additions can only be made by the AO with reference to or on the basis of incriminating material found and seized during the course of search and not otherwise. The ld. Authorized Representative in defense of his arguments relied on the decision of Hon'ble Apex Court
On the other hand, the ld. DR sought time from the Bench during the course of hearing to seek clarification from the ld. AO whether the addition made on the basis of incriminating materials found and seized during search. Accordingly, the sufficient time of more than two weeks was allowed to the ld. DR. On the next date of hearing when the case was called for hearing, the ld. DR has pointed out that so far as the A.Ys. 2010-11 to 2015-16 are concerned, there were no incriminating material found and seized during the course of search. However, he prayed that the issue has not been examined at the level of appellate authority and therefore, may be restored to the file of the ld. CIT (A).
After hearing the rival contentions and perusing the materials available on record ,the undisputed facts as gathered by us from the “5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any 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 132 A of the Act, 1961 or not.
6. It is the case on behalf of the Revenue that once upon the search under section 132 or requisition under section 132A, the assessment has to be done under section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass
(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/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Civil Appeal Nos.7738-7739/2021, 7736-7737/2021, 7732-7735/2021 and 7740- 7743/2021
Insofar as the aforesaid Civil Appeals preferred by the assessee – M/s Kesarwani Zarda BhandarSahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 6-9-2016 passed in 269/2014, 15/2015, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21-9-2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was
12. I have also carefully considered the reasons given by the learned Accountant Member in his proposed order for remanding the case back to the Assessing Officer. In the first four paras he records the findings of the ld. CIT (Appeals) that assessee failed to produce the relevant evidence in support of its claim that cheques by the parties were dishonoured and secondly despite proper opportunity given by the lower authorities, the assessee did not file copies of the relevant suits filed in Court to enable lower authorities to verify the relevant facts. I have already noted above that the assessee, before the learned CIT (Appeals), had claimed that proper opportunity was not given to it by the Assessing Officer. Queries on bad debts were raised only in February, 2004 vide order sheet entry dated 9-2-2004. In response thereto the assessee had furnished details of bad debt vide letter dated 19-2-2004. It was again fixed on 27-2-2004 and on that very date, the assessment order was passed. The learned CIT (Appeals) accepted that proper opportunity was not given. The assessee, therefore, placed further evidence before the learned CIT (Appeals) and on that, CIT (Appeals) asked for a remand report. The relevant portion of the remand report has been noted above. 12.1 As regards the non-filing of copies of action taken by the assessee against debtors, even the learned Accountant Member has noted that copies of proceeding taken against the debtors were duly filed before the lower authorities. Therefore, the statement made in the order of the CIT (Appeals) is not correct. 12.2 Reason No. (iii) in Accountant Member's order that the assessee could not establish that written off debts had not been taken into account for determining
The other issues raised on merit by the assessee are not being adjudicated at this stage and may be decided at a later stage if need arises for the same in future. The appeal of the assessee is allowed.
IT(SS)A No. 2 to 5/GTY/2024 for A.Ys. 2012-13 to 2015-16 013. Since, the legal issue raised in these appeals for A.Ys. 2012-13 to 2015-16 is similar to one as decided by us in IT(SS)A No.01/GTY/2024 for A.Y. 2010-11 above, therefore, our decision would, mutatis mutandis, apply to these appeals as well. Consequently , the appeals of the assessee in IT(SS)A Nos. 2 to 5/GTY/2024 for A.Ys. 2012-13 to 2015-16 are also allowed.
IT(SS)A Nos. 6 & 7/GTY/2024 for A.Ys. 2016-17, 2017-18 and A.Y. 2018-19 014. In these appeals, the assessee has challenged the addition on legal issue as well as in merit. For the sake of convenience, we would first take the facts from A.Y. 2016-17 and decide the issue accordinly. The grounds for A.Y. 2016-17 is extracted below:-
“1. For that the assessment order dated 30.12.2019 passed u/s 153A r.w. section 143(3) is bad in law and is liable to be quashed.
So far as the grounds on merit are concerned, the assessee has filed before us the application for admission of additional evidences under Rule 29 of the Rules comprising various expenses debited to the Profit and Loss Account along with copies of ledger accounts, TDS returns and documents relating to loan creditors and submitted that since these documents could not be submitted at the time of assessment proceedings because the director of the assessee company who was looking after the matter with an assistant could not attend the proceedings and therefore, proper compliance could not be made before the ld. AO by furnishing these evidences. The ld. AR submitted that since these are very important documents in order to decide and adjudicate the matter correctly and to assess the income as per the provisions of the Act, therefore, same may kindly be admitted. Accordingly, we are inclined to admit the aforesaid evidences and restore and relegate the appeal to the file of the ld. AO for fresh adjudication on the issue after taking into account these evidences after offering reasonable opportunity to the assessee. The appeal of the assessee is allowed for statistical purposes.
The issue raised in IT(SS)A Nos. 7/GTY/2024 for A.Ys. 2017-18 and & A.Y. 2018-19 are similar to one as decided by us in A.Y. 2016-17 in IT(SS)A No. 6/GTY/2024. Therefore, our decision would, mutatis mutandis, apply to IT(SS)A Nos. 7/GTY/2024 & . Consequently , the appeals of assessee in IT(SS)A Nos. 7/GTY/2024 & for
In the result IT(SS)A Nos. 1 to 5/GTY/2024 for A.Ys. 2012-13 to 2015-16 are allowed & IT(SS)A Nos. 6 & 7/GTY/2024 for A.Ys. 2016- 17, 2017-18 and A.Y. 2018-19 are allowed for statistical purposes.
Order pronounced in the open court on 24.03.2025.