ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE1-(2), HYDERABAD vs. M/S. VPR MINING INFRASTRUCTURE PVT LTD, HYDERABAD

At the outset, the argument of the learned AR is that when there is no incriminating material found during the search in case of a concluded assessment, no addition could be made. According to him, authorities below failed to appreciate the difference between the abated and un- abated assessments and the well settled principle under section 153A of the Act that the jurisdiction to make assessment for a concluded assessment is limited to incriminating material found during the course of search. In support of his contentions, he placed reliance on the latest decision of the Hon'ble Apex Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. [2023] 149 taxmann.com 399 (SC).

Per contra, learned DR submits on behalf of the Revenue that section 153A of the Act does not limit the jurisdiction of the learned Assessing Officer to make the addition to the seized material alone and on the other hand, it is the bounding duty of the learned Assessing Officer to initiate proceedings under section 153A of the Act, the moment the search warrant is executed. According to the learned DR, there is no room from interpretation of this aspect and no discretion is left with the learned Assessing Officer to initiate or not initiate proceedings under section 153A of the Act in case of a search or, to limit his power to assess basing on the incriminating material alone. Learned DR placed reliance on several decisions reported in support of her contentions, namely, Gopal Lal Bhadruka vs. DICT (2012) 27 taxmann.com 167 (AP), E.N. Gopakumar vs. CIT (2016) 75 taxmann.com 215 (Ker), CIT vs. Raj Kumar Arora (2014) 52 taxmann.com 172 (All), Suman Poddar vs. ITO, SLP No. 26864/2019, dt. 22/11/2019 (SC), Suman Poddar vs. ITO, dt. 17/09/2019 (Del), Suman Poddar vs. ITO, dt. 25/07/2019 (ITAT, New Delhi), Krishna Devi vs. ITO, ITA No. 6356/Del/2019, dt. 04/01/2022, SEBI vs. Rakhi Trading Pvt. Ltd., Civil Appeal No. 1969 of 2011, 08/02/2018 (SC), Anandtex International P. Ltd., vs. ACIT, ITA No. 2476/Del/2018, dt. 24/02/2022. He also placed reliance on the decision reported in B. Kishore Kumar vs. DCIT [2014] 52 taxmann.com 449 (Madras) against which, the SLP was dismissed by the Hon’ble Apex Court. Learned DR tried to make a distinction between the assessments concluded under section 143(3) of the Act and 143(1) of the Act, to say that the concluded assessment means only such assessment, which is terminated by the order passed under section 143(3) of the Act. Learned DR further submitted that there is incriminating material available in this case in the form of the statements made by various entry operators and also the statement of the assessee in this case.

We have gone through the record in the light of the submissions made on either side. Insofar as the facts and figures are concerned, there is not much dispute. Revenue does not contradict the observations of the learned CIT(A) that inasmuch as the return of income was filed on 06/12/2012 for the assessment year 2012-13 and no notice was issued under section 143(2) of the Income Tax Act, 1961 (“the Act”) before the expiry of the time for issuance of such notice, and therefore, the assessment remained unabated and no addition could be made in the absence of any incriminating material found during the search.

In view of the fact that the assessee has not received any notice(s) under section 143(2) of the Act before the expiry of the period to issue notice under such section, in view of the settled position of law stated above, it can safely be concluded that no assessment proceeding was pending as on 06/10/2015, the date of search in the case of the assessee.

Coming to the aspect of fastening the liability on the assessee in the shape of additions pursuant to the search and seizure operations, in the absence of any incriminating material to be found in such search and seizure operation, though the divergent views taken on this aspect are brought to our notice by both the counsel, the Hon'ble Supreme Court put a quietus to the issue by the decision in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra). While in complete agreement with the view taken by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla, (2015) 61 taxmann.com 412 (Delhi) and the Hon'ble Gujarat High Court in the case of PCIT Vs. Saumya Construction (2016) 387 ITR 529 and the decisions of the other Hon'ble High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material, Hon’ble Apex Court concluded that- 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.

This decision applies to the facts of the case and respectfully following the same, we hold that since no incriminating material was found in the case of assessee for the relevant assessment year, the concluded assessment cannot be disturbed, and the addition made by the learned Assessing Officer cannot be sustained, and therefore, we do not find any illegality or irregularity in the findings of the learned CIT(A). Accordingly, we uphold the said findings and dismiss the appeal of the Revenue.

In the result, appeal of the Revenue is dismissed.