2022 (1) TMI 1240

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....nufacturing composite Polymer Insulators. A search and survey operation u/s 132 of the Act was conducted in the case of M/s Olectra Greentech Ltd, being the assessee, and its other associated companies on 09/11/2017 and the assessee was one of the persons whose premises was covered u/s 132 of the Act. Consequent upon search, a notice u/s 153A was issued to the assessee on 21/03/2018 and in response to which, the assessee filed its return of income on 02/07/2018 declaring an income of Rs. 8,47,91,090/-. After filing of return of income, the AO issued notice u/s 143(2) on 26/10/2018 and other statutory notices were issued. 3.1 During the course of assessment proceedings, the AO observed that there was a difference in the interest income offered in the financial statements and Form No. 26AS available and, therefore, such difference of interest income of Rs. 6,39,294/- was added to the returned income of the assessee. 3.2 Further, the AO observed that the assessee had debited an amount of Rs. 16,64,866/- in the P&L Account as prior period expenses. In this regard, the explanation offered by the assessee was rejected by the AO and disallowed the said amount of Rs. 16,64,866/- on t....

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.... any incriminating material for the unabated assessment years. When the case is opened by issuing notice u/s 153A(1), the AO is at liberty to complete the assessments for the unabated assessment years as he thinks fit. In support his arguments, he relied on the following judgments: 1. Gopal Lal Bhadruka Vs. DCIT, 346 ITR 106 (AP) 2. E.N. Gopa Kumar, [2017] 390 ITR 131 8. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. It is observed that search was conducted on 09/11/2017 and accordingly, as per the notice issued by the AO, the assessee had filed its return of income u/s 153A of the Act on 21/03/2018. The AO made the additions on the basis of the books of account only without referring to any incriminating material found during the course of search. In respect of interest income, there was a difference in the financial statements and Form 26AS only, We find that the difference has been offered by the assessee in the subsequent assessment years, which is clear from the order of the CIT(A). In respect of prior period expenses, the assessee had debited it in P&L Account and the ....

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....h material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition....

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....t that in a search assessment, no addition can be made to the concluded assessments without there being any incriminating material found during the course of search proceedings. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have appreciated that the Ld. AO has erred in passing the order u/s 153A of the Act without obtaining the prior approval of the competent authority JCIT/ Additional commissioner of income tax u/s 153D of the Act. The Ld. CIT(A) erred in not deleting the addition ofRs. 6,39,294/ towards difference in interest income between Profit and loss account and 26AS and thereby setting aside to the file of the Ld. AO without appreciating the fact that assessee has offered interest income to tax in the subsequent years. The Ld. CIT(A) erred in confirming the disallowance of Rs. 16,64,866/ relating to prior period adjustments without appreciating the facts of the case. The Ld. CIT(A) ought to have considered that the prior period items are nothing but the write off of closing balances of previous years The Ld. CIT(A) erred in not considering the fact that the term Write off is erro....