2024 (8) TMI 886 - HC - Income Tax

No additions under Section 153A in completed assessments without incriminating material found during search

The HC held that no additions can be made under Section 153A in completed or unabated assessments if no incriminating material is found during search ... Validity of assessment u/s 153A - no incriminating material found during search - HELD THAT:- In view of the authoritative pronouncement of the Supreme Court in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] held that 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. It is also, however, held that completed/ unabated assessments can be reopened by Assessing Officer in exercise of powers under Section 147/148 subject to fulfillment of conditions as envisaged under Section 147/148 and those powers were saved Thus, the question of law as raised by the revenue would not arise for consideration. As clarified that the completed/unabated assessments can be reopened by the AO in exercise of powers under Section 147/148 subject to fulfillment of conditions as envisaged under the said provisions and as may be permissible in law. All contentions of the parties in that regard are expressly kept open. Issues:Appeals under Section 260A of the Income Tax Act arising from a common judgment and order passed by the Income Tax Appellate Tribunal regarding additions in assessments made under Section 153C of the Act without incriminating material found during search.Detailed Analysis:Issue 1: Interpretation of Section 153A and 153C of the Income Tax ActThe Tribunal considered the decision in Commissioner of Income Tax vs. Continental Warehousing Corporation, which held that no additions are permissible in assessments made under Section 153C if no incriminating material was found during search. The Tribunal referred to the provisions of Section 153A and 153C and concluded that for an assessee under Section 153C, the original assessment or reassessment for the prescribed years shall abate only under specific circumstances as prescribed by the second proviso to Section 153A(1).Issue 2: Legal Position and PrecedentsThe legal position was well-settled by the judgment in Continental Warehousing Corporation case. The Tribunal emphasized that in cases of completed assessments or unabated assessments, no additions can be made by the Assessing Officer without any incriminating material found during the search. The Tribunal also highlighted the Supreme Court's decision in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar Buildwell, which reiterated that completed/unabated assessments can be reopened under Sections 147/148 subject to fulfillment of conditions, saving the powers of the Assessing Officer.Issue 3: Supreme Court's Conclusion and Dismissal of AppealsThe Supreme Court concluded that in cases where no incriminating material is found during the search, the Assessing Officer cannot make additions in completed/unabated assessments. The Court clarified that assessments can be reopened under Sections 147/148 subject to specified conditions. As the Supreme Court upheld the view of the Bombay High Court in the Continental Warehousing Corporation case, the appeals filed by the Revenue were dismissed. The Court emphasized that completed/unabated assessments can be reopened by the Assessing Officer under Section 147/148, subject to fulfilling legal conditions.In conclusion, the High Court upheld the decisions of the Tribunal and the Supreme Court, dismissing the appeals filed by the Revenue. The legal position regarding additions in assessments under Section 153C without incriminating material was clarified, emphasizing the conditions under which assessments can be reopened. The judgments in the Continental Warehousing Corporation case and the Abhisar Buildwell case provided the legal framework for the decisions made by the High Court.