AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 816
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....ssessment for A.Y. 2014-2015 is not abated ? 2. Whether on facts and circumstances of the case, the Hon'ble Tribunal was correct in law holding that the assessment for a Assessment Year is not abated when no assessment order was passed prior to passing order u/s 153A of the Income Tax Act?" 3. The brief facts of the case are that the sole respondent submitted Income Tax Returns under Section 139 (1) of the Income Tax Act, 1961 (hereinafter referred to as "the Income Tax Act") on 31.07.2014 declaring income of Rs.2,00,080/-. However, a search and seizure operation under Section 132 of the Income Tax Act was conducted on the residential premises of the sole respondent on 02.06.2016 and thereafter, in continuation of that, on 11.07.2016 again a search was conducted. On the basis of the search results, the case was selected for scrutiny under Section 153A of the Income Tax Act and a notice was issued to the sole respondent to file Return of Income within 15 days. In compliance of the notice under Section 153A of the Income Tax Act, the respondent e-filed his return of income and thereafter, proceedings were carried out and ultimately, the Assessing Officer has issued Assess....
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....t of coercion, threat etc. In this regard reliance is made on the decision of various hon'ble judicial authorities as under: In the case of the KTMS Mohammed, 197 ITR 196 (1992), the SC while throwing further light on the evidentiary value of the retracted statement said that retracted statement has to be seen with great circumspection. The statement, if obtained by any inducement, threat, coercion or by any improper means, must be rejected. At the same time, it is to be noted that, merely because a statement is retracted, it cannot be recorded as in-voluntary or unlawfully obtained. It is only for the maker of the statement who alleges inducement, threat, promise, etc. to establish that such improper means have been adopted. In P.S. Barkathali v. Directorate of Enforcement, New Delhi AIR 1981 KER 81, the hon'ble High Court observed as under: "Even though the statement was subsequently retracted, the significance of admission in the first place cannot be under-mined. It is well established that mere bald retraction cannot take away the importance and evidentiary value of the original confession, specially in view of the fact that in this case, th....
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.... company etc. all these features are well discussed to show that the shares are nothing but penny stock. Summing up the above facts, it appears that the assessee is basically a salaried person and does not bear even minimum interest and information in regard to the share trading. In his statement recorded on oath u/s 132 (4) on 02.06.2016, he has admitted the fact of routing the unaccounted income of the family by way of pre-arranged long term capital gain in the regular books of the account of the assessee. The same had also been accepted by Shri Rohit Jain, Chairman of the CMJ Group. Further unaccounted income of Rs.4,23,30,000/- had also been disclosed in the hand of the assessee as tabulated above vide disclosure petition dtd. 29/08/2016 which was subsequently admitted by the assessee in his statement on oath. 15. CONCLUSION 15.1. In view of the discussion made above and considering the facts and circumstances of the case, the following facts become manifestly clear:- i) That some unscrupulous operators in the capital market were running a scheme of providing entries of LTCG for a commission. ii) The financial result of the Penny Sto....
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....xed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. [See: Parimisetti Seetharamamma (supra) at P.5361. But, in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to Income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is, prima facie, evidence against the assessee, viz. the receipt of money, and if he falls to rebut, the said evidence being un-rebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee the Department cannot, however, act unreasonably." 15.2. In the case the assessee has shown credit exempt income of Rs. 4,23,23,713/- on sale of share of M/s Rutron International Limited, as is evident from the investigation the actual ....
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....ee is computed as under in light of the discussions made in the foregoing paras:- Returned income: Rs. 2,00,080/- Add: As discussed in para 15.2 Rs. 4,23,30,000/- Assessed Income : Rs. 4,25,30,080/-" 5. Being aggrieved with the Assessment Order dated 31.12.2018, the respondent preferred an appeal before the Commissioner of Income Tax (Appeals), Guwahati under Section 250 of the Income Tax Act, raising as many as 16 grounds. 6. The Commissioner of Income Tax (Appeals), vide order dated 08.04.2019, allowed the said appeal while recording a finding of fact that the Assessing Officer had invoked the jurisdiction under Section 153A of the Income Tax Act without there being any incriminating material whereas the law is well settled that in the absence of incriminating material, a completed assessment cannot be opened invoking the powers under Section 153A. 7. The relevant portions of the judgment passed by the Commissioner of Income Tax (Appeals) are reproduced hereunder: "The present legal position is that, in an assessment under Section 153A, in absence of any "incriminating material", the completed assessment has to be reiterated. In other words, th....
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....ment year. Also the time limit for issuance as well as service of notice under Section 143/2) of the Act in the case of the Appellant for the above assessment year had already expired on 30/09/2015. Thus as on the date of Search in the case of the Appellant, i.e. on 02/06/2016, the assessment for the above assessment year 2014-15 was a completed assessment and therefore following the ratio of the above judgments as discussed earlier, in the absence of any incriminating documents or material, the already completed assessment cannot be disturbed unless any incriminating material is found during the course of search. In this case, it is vivid that the AO has not referred to any such incriminating material found during the course of search in the impugned order. Thus, it is clear that the above addition has been made without reference to any incriminating material. Even at the cost of repetition, it is clear from the ratio of the above judgments, that the law is trite that in assessments under Section 153A, with regard to years where the assessment have been completed i.e. unabated assessment year, the scope of addition is to be restricted only to the extent of incriminating m....
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....s of appeal raised by the revenue are as under : "1. That in the fact and circumstances of the case and the law in this matter, the Ld. CIT(A) is not justified in deleting the addition stating that the assessment for the Ay 2014-15 is non-abated and stood already completed despite the fact that the original assessment in this case for Ay 2014-15 against the return filed on 31.07.2014 was abated and the assessment u/s 153A r.w.s. 143 (3) on 31.12.2018 is an abated assessment.. 2. The Ld. CIT(A) was not justified in deleting the addition stating that in absence of any incriminating material the addition made by the AO in the impugned order is deleted while the original assessment in this case for Ay 2014-15 was abated." 9. The ITAT rejected both the above referred grounds vide impugned judgment dated 07.04.2022 and affirmed the findings of the Commissioner of Income Tax (Appeals). 10. The relevant portions of the impugned order dated 07.04.2022 passed by the ITAT are reproduced hereunder: "11. The next issue is with regard to the Ld. CIT(A)'s finding that since there was no incriminating material and since the assessment year 2014-15 is an unabate....
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....ditions. The Id. CIT(A) has given a finding of fact that other than the assessee's father's statement regarding the LTCG of assessee, there was no incriminating material found during search qua the assessee qua the AY 2014-15. In such a scenario, no addition was legally sustainable as held by the Hon'ble Delhi High court in Kabul Chawla (supra) and in this context it is noted that similar ratio was agreed upon in the case of Meeta Gutgutia (supra) Delhi High Court. And it is noted that several other High Courts have also come to similar conclusion either by following Kabul Chawla (supra) or otherwise. This includes the decisions of the Hon'ble Gujarat High Court in Pr CIT v. Soumya Constructions (P.) Ltd. [2016] 387 ITR 529[2017] 81 taxmann.com 292 (Guj); Pr. CIT v. Devangi alias Rupa [Tax Appeal Nos 54. 55 to 57 of 2017, dated 2-2-2017]; the Hon'ble Karnataka High Court in CIT v. IBC Knowledge Park (P) Ltd. [2016] 385 ITR 346/69 taxmann.com 108 (kar.); the Hon'ble Calcutta High Court in Pr. CIT v. Salasar Stock Broking Ltd. [GA No. 1929 of 2016, date 24-8-2016] and the Hon'ble Bombay High Court in CIT v. Gurinder Singh Bawa 12016] 386 ITR 483/12017] 79 taxm....
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....ics, reported in [2023] 156 taxmann.com 691 (SC) and (iv) Principal Commissioner of Income-tax Central 2 Vs. S.S. Con Build (P) Ltd., reported in [2023] 151 taxmann.com 317 (SC). 13. The Hon'ble Supreme Court, in Abhisar Buildwell (P) Ltd. (supra), while affirming the view taken by the Delhi High Court in the case of Commissioner of Income Tax, Central III CIT Vs. Kabul Chawla, [2015] 61 taxmann.com 412/234 Taxman 300/ [2016] 380 ITR 573 (Delhi) as well as by Gujarat High Court in the case of Pr.CIT Vs. Saumya Construction (P.) Ltd. [2017] 81 taxmann.com 292/[2016] 387 ITR 529 (Guj.) has held as under: "8. For the reasons stated hereinbelow, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. ....
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....search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment....
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....viso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case durin....
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....(supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: (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....