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Facts
A search and seizure operation under section 132 was conducted on the Minda Group, during which documents belonging to the assessee, Manish Merchants Pvt Ltd, were also seized. Based on a satisfaction note, an assessment was initiated under section 153C for AY 2013-14, and an addition of Rs. 75,00,000/- was made on a protective basis, which was confirmed by the CIT(A). The assessee challenged the assessment, arguing that no incriminating material for AY 2013-14 was found.
Held
The Tribunal found that the incriminating document (a loan agreement) identified in the satisfaction note pertained to FY 2010-11 (AY 2011-12), not the relevant AY 2013-14. Citing Supreme Court precedents, the Tribunal reiterated that for each assessment year under a block assessment, separate incriminating material is required. Since no incriminating material was found for AY 2013-14, the assessment order for that year was quashed.
Key Issues
Whether an assessment order framed under section 153C is valid if no incriminating material pertaining to the specific assessment year is found during the search operation.
Sections Cited
153C, 142(1), 143(2), 143(3), 132, 153A
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Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI YOGESH KUMAR U.S
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A)-26, New Delhi dated 13.11.2017 pertaining to A.Y. 2013-14.
The grievances of the assessee read as under:
“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against law and facts on record.
2 The Hon’ble Commissioner of Income Tax (A) has failed to consider that the issuance of notices u/s 153C I 142(1)/143(2) of the Income Tax Act, 1961 by the learned Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.
3 The Hon’ble Commissioner of Income Tax (A) has erred in confirming addition of Rs. 75,00,000/- made on protective basis by the Assessing(officer without going through the facts of the case, statutory provisions as well as explanation filed during the course of assessment proceeding as well as during appellate proceeding and order so passed shows lack of application of mind.
4. The Hon’ble Commissioner of Income Tax (A) while confirming the addition made by the learned Assessing officer has failed to consider the fact that during the course of search no incriminating documents in respect of transaction appearing in the bank account have been found and as such addition made by the Assessing officer while passing the order u/s 153CI 143(3) is against the provision contained in the Income Tax Act, 1961.
5. The Hon’ble Commissioner of Income Tax (A) officer while confirming the addition made on protective basis has failed to consider that the substantive addition made in the hands of companies of JP Minda group has been deleted by Hon'ble Commissioner 0f Income Tax (A) on the ground that the investment made by the appellant is genuine.
6. The appellant herein craves its right to alter, amend, add and I or withdraw any grounds of appeal and I or to take any additional grounds of appeal.”
3. At the very outset, referring to Ground No. 4, the ld. counsel for the assessee stated that the impugned assessment order is void ab initio, in as much as, the same has been framed without there being any incriminating material for the year under consideration.
The ld. counsel for the assessee referred to the satisfaction note dated 29.01.2016 and placed strong reliance on the decision of the co- ordinate bench in one of the group cases Jagat Overseas ITA No. 6192/DEL/2017.
The ld. DR could not controvert to the submissions of the ld. counsel for the assessee and placed strong reliance on the orders of the authorities below.
We have carefully considered the orders of the authorities below and have gone through the relevant material on record.
Briefly stated, the facts of the case are that search and seizure operation u/s 132 of the Income-tax Act, 1961 [the Act, for short] was conducted in Minda Group of cases on 20.09.2013. During the search and seizure operation, documents belonging to the assessee were also seized from the business and residential premises of the Minda Group.
Following satisfaction note was drawn by the ACIT, Central Circle-13, New Delhi:
It can be seen from the above satisfaction note that the incriminating/seized document pertains to F.Y. 2010-11 relevant to A.Y 2011-12. A.Y before us is A.Y 2013-14 and it can be safely concluded that no incriminating material was found pertaining to A.Y 2013-14 basis which the assessment could have been framed.
The ratio laid down by the Hon'ble Supreme Court in the case of Singhad Technical Education Society 397 ITR 344 squarely applies wherein the Hon'ble Supreme Court has held that for each A.Y of the block period, there should be separate incriminating material to frame assessment. This has been reaffirmed by the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt Ltd 454 ITR 212.
In light of the satisfaction note [supra] and the ratio laid down by the Hon'ble Supreme Court [supra], we are of the considered view that the impugned assessment order cannot stand on its own legs and hence quashed.
Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case.
In the result, the appeal of the assessee in is allowed.
The order is pronounced in the open court on 16.01.2024.