TaxTMI 
TaxTMI 
2025 (10) TMI 153
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....he assessment made was premised on a search conducted in the office premises of the assessee [M/s. Atria Wind (Kadambur) Pvt. Ltd.], on 17.12.2020, under Section 132 of the Act. It was noted that thereafter notice under Section 153A of the Act was issued. The Assessing Officer [AO] determined the total income of the assessee at Rs. 1,89,11,81,757/-. The said determination was based on an addition of a sum of Rs. 1,91,95,68,251/- made on account of capital gains. During the previous year relevant to AY 2017-18, a partnership firm namely M/s. Perpetual Investments, was converted into a private company [the assessee]. The said conversion entailed the transfer of the entire assets and liabilities from the partnership firm to the assessee company. Whereas the assessee claimed that the conversion of the partnership firm to a company, did not entail transfer of its capital assets as envisaged under Section 2(47) of the Act; the AO did not accept the same and held that the conditions as specified under Section 47(xiii) of the Act were not fully satisfied and therefore, the benefit of excluding the transfer of assets as a transfer for the purpose of capital gains, was not available. 3. T....
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.... 132 or requisition under Section 132-A of the 1961 Act or not. 24. It is the case on behalf of the Revenue that once upon the search under Section 132 or requisition under Section 132-A, the assessment has to be done under Section 153-A of the 1961 Act and the AO thereafter has the jurisdiction to pass assessment orders and to assess the "total income" taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. xxx xxx xxx 26. In Kabul Chawla [CIT v. Kabul Chawla, 2015 SCC OnLine Del 11555 : (2016) 380 ITR 573], the Delhi High Court, while considering the very issue and on interpretation of Section 153-A of the 1961 Act, has summarised the legal position as under : (SCC OnLine Del para 38) "Summary of the legal position 38. On a conspectus of Section 153-A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under Section 132 of the Act, notice under Section 153-A(1) will have to be mandatorily issued to ....
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.... Saumya Construction (P) Ltd., 2016 SCC OnLine Guj 9976 : (2016) 387 ITR 529], the Gujarat High Court, while referring the decision of the Delhi High Court in Kabul Chawla [CIT v. Kabul Chawla, 2015 SCC OnLine Del 11555 : (2016) 380 ITR 573] and after considering the entire scheme of block assessment under Section 153-A of the 1961 Act, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no addition can be made by the AO and the AO has no jurisdiction to reopen the completed assessment. In paras 15 and 16, it is held as under : (Saumya Construction case [CIT v. Saumya Construction (P) Ltd., 2016 SCC OnLine Guj 9976 : (2016) 387 ITR 529], SCC OnLine Guj) "15. On a plain reading of Section 153-A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under Section 132 or a requisition under Section 132-A of the Act. Once a search or requisition is made, a mandate is cast upon the assessing officer to issue notice under Section 153-A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediat....
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....portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of Section 153, the intention of the legislature is clear viz. to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition viz. incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of Section 153-A of the Act, in every case where there is a search or requisition, the assessing officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the R....
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.... 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 reopen the completed/unabated assessments, unless any incriminating material is found with respect to assessment year concerned falling within last six years preceding the search. Therefore, on true interpretation of Section 153-A of the 1961 Act, in case of a search under Section 132 or requisition under Section 132-A 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....