TaxTMI 
TaxTMI 
2025 (3) TMI 816
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.... 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 Assessment Order dated 31.12.2018 and assessed t....
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....uthorities 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, the deponent of the statement had provided the minute details relating to the transactions. It appears that the retraction statement ....
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....ally 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 Stocks used for the purpose clearly indicate that its quoted price at the peak was the result of rigging. iii) The above mentioned facts have been independently also been confirmed by SEBI. iv) That s....
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....i 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 source of this credit is the unaccounted cash of the assessee. The assessee was asked to explain the source of this credit. The explanation offered that it is sale proceeds of shares are found to be not satisfactory. The assessee did not even furnish the purchase details of the shares, ....
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....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, the completed assessment connot be disturbed in the absence of "Incriminating material". Even if documents are available pertaining to the assessment year in question, but they have to additionally satisfy the requirement of law that "there must be incriminating material " and not merely some material. Hence, there can be n....
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....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 material found and there is no scope for any general or routine addition or disallowance. In view of the above facts, and in the absence of any reference to any incriminating material as regards the impugned addition, found during the course of search, I have no hesitation in holding that the impugned addition which has been made solely on the basis of a retracted....
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....14 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 unabated proceeding, no addition was warranted without any incriminating material. The Id. AR drew our attention to the fact that the AO has made the addition only on the basis of a statement given by the assessee's father which was retracted within ten days. And the Ld. AR drew our attention to pages 96 to 105 of the paper book wherein the affidavit of the assessee retracting the statement is found to be rep....
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....n 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 taxmann.com 398. In Meeta Gutgutia (supra) the Hon'ble Delhi High Court has considered the entire gamut of the lis in hand and has analysed and the aforesaid legal position was reiterated that unless there is incriminating material qua each of the A Ys in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law for ....
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.... 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. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of 'undisclosed income' for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the 'undisclosed income' and (ii) regular assessment in accordance wi....
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....f 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 year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other....
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.... 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 during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under section 147/48 of the Act, subject to fulfillment of the conditions mentioned in section 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to h....
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....f 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 in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismis....