VIVIMED LABS LIMITED,HYDERABAD vs. ACIT, CENTRAL CIRCLE-3(4), HYDERABAD

Learned DR submitted a report of the learned Assessing Officer wherein the learned Assessing Officer submitted that the assessment for the assessment year 2016-17 and 2017-18 stood quashed, but in the interest of Revenue consequential orders were passed for all the 4 assessment years as per the relief granted by the Tribunal, in accordance with the observations of the Tribunal at paragraph number 31 of the order of the Tribunal.

We have gone through the record in the light of the submissions made on either side. For the sake of completeness, we extract hereunder the relevant observations of the Tribunal in the common order, hereunder:- “29. We further note that the assessee's former three years 2014-15 to 2016-17 also raise an iden�cal legal ground challenging validity of the impugned assessments for want of incrimina�ng material found or seized during the course of search. It prima facie emerges from a perusal of these appeals ITA Nos. 186 to 188/Hyd/2021 that the assessee had inter alia not filed a valid return submi�ed no return and furnished a valid return before search in former three appeals, respec�vely. There is no further denial to the fact that the DRP has prepared an annexure of so- called seized documents in A.Y. 2016-17's direc�ons which turn out to be the assessee's regular books of accounts and documents only. That being the case, we find that the tribunal's order in assesses's case ITA Nos.184 and 185/Hyd/2021 for preceding two assessment years 2012-13 and 2013-14 dated 07.04.2022 has quashed the assessment proceedings on the very issue as follows : "4. We have given our though�ul considera�on to rival pleadings and find no merit in Revenue's stand. We first of all deem it appropriate to take note of certain basic facts. The assessee had interalia filed its sec�on 139(1) returns dt.29.09.2012 and 30.11.2013 which followed the Transfer Pricing Officer's "TPO" sec�on 92CA(3) orders dt.29.01.2016 and 31.10.2016; respec�vely. Suffice to say, the impugned search ac�on took place therea�er on 09.11.2016 followed by the DRP's direc�ons dt.20.12.2016 in A.Y. 2012-13. Both these assessments therea�er stood treated as "abated" ones in light of sec�on 153A(1) 2nd proviso and the Assessing Officer ini�ated sec�on 153A proceedings followed by yet another assessments including reference made to the TPO as well as dra� assessment and objec�ons filed before the DRP which duly stand disposed off as per law.

5. We wish to observe in light of the case laws quoted at the assessee's behest as well as a�er taking into considera�on the hon'ble apex court's landmark decision in CIT Vs. Sinhaghad Technical Educa�onal Society (2017) 84 taxmann.com 290 (SC) that no such proceedings ini�ated u/s 153A of the Act sustainable in law for want of incrimina�ng material found or seized during the course of search. We make it clear that although the Revenue has vehemently argued that there indeed exists sufficient seized material in light of the annexures a�ached with the DRP's direc�ons (supra), a perusal thereof sufficiently indicates that this so called material parts already formed of the assessee's books which had already been considered in both the corresponding scru�ny assessments pending on the date of search. This tribunal's Special Bench's decision in All Cargo Global Logis�cs Ltd. Vs. DCIT (2012) 137 ITD 287 (ITAT-Mum) (SB) holds that incrimina�ng material is that material which is found during the course of search and not produced in the course of original assessment and undisclosed income or property disclosed during the course of search, as the case may be. We find from a perusal of the case(s) records and more par�cularly in light of the DRP's compila�on of the alleged seized material it only includes the assessee's expenses / claims or EBIDTA details etc. which could hardly be termed as anything incrimina�ng in the foregoing terms.

Mr. Sai referred to Gopal Lal Bhadruka Vs. DCIT 346 ITR 106 (AP) that an assessing authority could also consider any other material during the search assessment. The instant plea hardly carries any substance since the ques�on framed therein was not regarding lack of incrimina�ng material but the Assessing Officer's jurisdic�on to take all other material into account in a search assessment which is not the issue before us. We thus accept the assessee's instant legal ground to quash both these assessments thereby rendering all other pleadings on merits to have been become infructuous. Ordered accordingly." We therefore decline the assessee's instant legal ground in A.Y.s. 2014-15 and 2015-16 and accept the same in A.Y. 2016-17's appeal i.e. ITA 188/Hyd/2021. The impugned assessment stands quashed in this last assessment year i.e. 2017-18 therefore.

The assessee's 12th substan�ve grievance in A.Y. 2016-17 is that the learned lower authori�es have erred in law and on facts in making sec�on 43B disallowance of Rs.19,17,38,828/- despite the fact that the DRP's corresponding direc�ons deciding its objec�ons had granted substan�ve relief. That being the case, we direct the learned Assessing Officer to verify the necessary factual posi�on and allow the impugned relief as per law in light of DRP's direc�ons which are binding on him u/s 144C(13) of the Act. This 12th substan�ve grievance is accepted subject to the assessing authority's factual rec�fica�on in above terms. No further ground has been pressed before us.

To sum up, the assessee's three appeals to 187 and 189/Hyd/2021 are partly allowed and ITA No.188/Hyd/2021 is allowed in foregoing terms. Its corresponding stay applica�on Nos. 36 to 39/Hyd/2021 stand rendered infructuous in very terms. A copy of this common order be placed in respec�ve case files.”

As could be seen at paragraph No. 29 of the common order referred to above, the Tribunal observed that for the years 2014-15 to 2016-17 identical legal grounds challenging the validity of the assessments for want of incriminating material found or seized during the course of search were raised, and in the case of assessment for the assessment year 2016-17 the addition made was only basing on assessee’s regular books of accounts and documents and therefore the contention of the assessee was accepted in respect of the assessment for the assessment year 2016-17. It goes without saying that while accepting the contention of the assessee that for want of incriminating material found or seized at the time of search, the addition made basing on the assessee’s regular books of accounts and documents does not stand and the Tribunal quashed the assessment for the assessment year 2016-17. So also para 29 of the order of the Tribunal further shows that the impugned assessment stands quashed in the last assessment year, namely, 2017-18 therefore. This