TaxTMI 
TaxTMI 
2023 (8) TMI 520
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....justified in deleting the disallowances of Rs. 15,46,46,174/- u/s 40(a)(ia) of the I.T. Act, by holding that processing u/s 143(I) is an assessment which is concluded and unabated which cannot be disturbed in the absence of incriminating material found in the course of search. (ii) Whether the Hon'ble ITAT was justified in holding that the inference drawn from the ledger and books of accounts found during the course of search and statement recorded during search do not constitute incriminating material for addition u/s 40(a)(ia) for Rs. 15,46,46,174/- during assessment/s 153A r/w 143(3). (iii) Whether the Hon'ble ITAT was justified in holding that the facts of the present case where inference was drawn from the ledger/books of accounts found during the course was similar to the facts in the case of CIT Vs. Kabul Chawla 380 ITR 573(Del) where addition was made u/s 2(22)(e) of the I.T. Act, 1961 and admittedly no incriminating material was found during the search?" 4. The genesis of the case was that, there was a search and seizure operation u/s 132 of the I.T. Act in the case of the respondent Shyama Power Group India Ltd. from 25.02.2014 upto 18.03.2014. The respondent/asse....
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....und in relation to the period referred to in the notice, then proceedings under the provisions of Section 153A of the I.T. Act cannot be initiated. The copy of the Ledger Account of M/s. Meitei Electricals Motor Works as referred to in the Notice cannot be considered as incriminating material in so far as Section 153A is concerned rendering the notice redundant. The respondent (assessee) vide the same letter dated 24.08.2015 had furnished explanation for non-deduction of tax at source for the Assessment Year 2011-12. It is submitted that there were eight (8) Naga sub-contractors who had independently carried-out the works and the bills were raised by the sub-contractors through M/s Meitei Electricals Motor Works as agents-cum-contractors of the assessee company. The amount of Rs. 15,94,88,694/- pertaining to AY 2011-12 in fact was the amount for the sub-contractors. The man power in the tribal areas was sourced by M/s Meitei Electricals Motor Works who also worked as an agent of the sub-contractors and the aforementioned amount was credited to its account. This fact was clearly revealed by the Proprietor of M/s Meitei Electricals Motor Works namely Sri Mohendra Singh Lurembam in th....
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....nder the head of non-deduction of TDS on the amount credited but not paid. The respondent assessee had also filed a petition under Rule 27 of the Income Tax Appellate Tribunal Rules, raising a question of law. 10. The Income Tax Appellate Tribunal, Guwahati Bench, vide order dated 14.11.2018 passed in I.T.A. No. 07/Gau/2017 for the Assessment Year 2011-12 dismissed the appeal filed by the appellant and allowed the Rule 27 petition filed by the respondent assessee. 11. It was held by the ITAT that the assessment framed u/s 143(1) of the Act for the A.Y. 2011-12 which was unabated/concluded assessment, on the date of search deserves to be undisturbed in the absence of any incriminating materials found in the course of search and accordingly deleted the disallowance u/s 40(a)(ia). 12. It was held by the ITAT that the provisions of Section 132 of the Act relied upon by the learned DR would be relevant only for the purpose of conducting the search action and initiating proceeding u/s 153 A of the Act. Once the proceeding u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatment for abated assessment and unabated ....
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....or controverted by the Assessing Officer. It was also not controverted that since the work was done by the Naga sub-contractors, therefore there was no requirement of deduction of tax at source, as their income is exempted u/s 10(26) of the I.T. Act. The subcontractors, through their statements both oral and written, have affirmed that the work was done by them for the assessee through M/s Meitei with the understanding to pay 2% commission from the payment of the assessee. Through concurrent decisions by CITA as well as by the ITAT, it was held that no incriminating material was found in the course of search. It was also held that the assessment framed u/s 143(1) of the Act for the assessment year 2011-12, which was unabated/concluded assessment, deserves to be undisturbed in the absence of any incriminating material found in the course of search. 17. It has been observed by the Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell P. Ltd. in Civil Appeal No. 6580 of 2021 and other connected appeals filed by the revenue that:- "11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under....
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....uation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 1534 and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. lf the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment which shall not be permissible under the law. At the cost of repetition it is observed that the assessment under Section 153A of the Act was linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, t....