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Facts
The assessee's appeals were filed against separate orders passed by the CIT(A) for assessment years 2013-14, 2015-16, and 2016-17. The Assessing Officer (AO) made additions under section 153A read with section 143(3), comprising ad-hoc disallowance of various expenses without any incriminating material found during the search.
Held
The Tribunal held that the object of section 153A is to bring undisclosed income found during a search into tax, and such assessment is only valid if there is incriminating material. In the absence of any such material, additions made under section 153A for unabated assessments are not sustainable.
Key Issues
Whether additions made under section 153A r.w.s. 143(3) are valid in the absence of any incriminating material found during the search.
Sections Cited
153A, 143(3), 57(iii), 132, 132A, 139(1), 143(1), 147, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘E‘ BENCH
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeals have been filed by the assessee against separate impugned order of even date on 30/06/2023 passed by CIT(A)-49, Mumbai for the quantum of assessment passed u/s.153A r.w.s. 143(3) for the A.Y.2013-14, 2015-16 and 2016-17.
Shyam Mahabirprasad Jatia 2. In all the years, one of the legal issue which has been raised that ld. AO has passed assessment order u/s.153A r.w.s. 143(3) thereby, making various additions which comprised of adhoc disallowance of various heads of expenses without any incriminating material found in the course of search.
The brief facts are that a search and seizure action u/s.132 was carried out in the case of the assessee on 17/04/2018 and as on date of search, the status of assessment for A.Y.2013-14, 2015-16 and 2016-17 were as under:-
Particulars AY 2013-14 AY 2015-16 AY 2016-17 Date of filing 23.07.2013 28.08.2015 21.07.2016 return under section 139(1) of the Act Income as per Rs. 11,80,670/- Rs. 88,85,450/- Rs. 4,55,78,270/- ITR Taxes Paid Rs. 188,612/- Rs. 25,67,124/- Rs. 1,54,43,529/- Date of 29.11.2013 07.10.2015 23.11.2016 intimation u/s 143(1)of the Act Date of No assessment No assessment No assessment assessment u/s order passed u/s order passed u/s order passed u/s 143(3) of the 143(3) of the Act 143(3) of the Act 143(3) of the Act Act, if any Date of No No No assessment reassessment reassessment reassessment u/s 147 of the order passed u/s order passed u/s order passed u/s Act, if any 147 of the Act 147 of the Act 147 of the Act Last date to 30.09.2014 30.09.2016 30.09.2017 issue notice u/s 143(2) of the Act Date of 17.04.2018 17.04.2018 17.04.2018 conducting search & seizure u/s 132 of the Act Date of Notice 23.10.2019 23.10.2019 23.10.2019 issued u/s 153Aofthe Act Date of filing 05.11.2019 05.11.2019 05.11.2019 return in declaring total declaring total declaring total response to income as Rs. income as Rs. income as Rs. notice 11,80,670/-. 88,85,450/-. 4,55,78,270/-. u/s 153Aofthe Act Date of order 24.06.2021 24.06.2021 24.06.2021 u/s 153Ar.w.s. 143(3) of the Act Variance made Addition of Disallowance of Disallowance of to the returned Rs. 2,57,604/- Rs. 3,06,6 18/- Rs. 7,47,815/- income under the head of of Expenses Income from Expenses claimed u/s 57 of Salary claimed u/s 57 of the Act the Act
On perusal of the assessment order as well as the appellate order, it is seen that in all the years the ld. AO has made disallowance of expenses u/s. 57(iii) for the A.Y.2015-16 and Shyam Mahabirprasad Jatia 2016-17 for Rs.3,06,618/- & 7,47,815/- respectively; and addition of Rs.2,57,604/- under the head ‘income from salary’. Nowhere, the ld. AO and ld. CIT (A) has stated or has referred to any seized or incriminating material found in the course of search in all these years as noted above at the time of search. The assessments for A.Y.2013-14, 2015-16 and 2016-17 had attained finality and in terms of proviso to Section 153A, and therefore, all the assessments are to be reckoned as unabated assessment. It is now a well settled proposition of law as held by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P) Ltd in Civil Appeal No.6580 of 2021 wherein the Hon’ble Supreme Court held that the object of section 153A is to bring under tax undisclosed income which is found during course of search or pursuant to search or requisition, therefore, only in a case where undisclosed income is found on the basis of incriminating material, Assessing Officer would assume the jurisdiction to assess or reassess total income for entire six years block assessment period even in case of completed/unabated assessment. In case of search under section 132 or requisition under section 132A, Assessing Officer assumes jurisdiction for block assessment under section 153A and that all pending assessments/reassessments shall stand abated. In respect of completed assessments/unabated assessments no addition can be made by Assessing Officer in absence of any incriminating material found during course of search under section 132 or requisition under section 132A.
Shyam Mahabirprasad Jatia 5. Thus, as admitted all the additions which have been made by the AO are adhoc disallowance of expenses which are neither based on any incriminating material found in the course of search nor any seized document. Thus, these additions are beyond the scope of Section 153A and accordingly, the same are deleted.
In the result, all the appeals of the assessee are allowed.
Order pronounced on 3rd October, 2024.