TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 1541
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.... fact that the original assessment u/s 143(3) was completed by AO after considering all the aspects and full facts of the case and therefore leaving no scope for the order to be erroneous and prejudicial to the interest of the revenue. 4. That the order passed by the Ld. Principal Commissioner of Income Tax may be kindly quashed. 5. That the appellant craves to leave, add, alter or amend any of the ground at or before hearing. 3. Facts in Brief:- On 29/12/2016, the assessee, for the year under consideration, originally filed his return of income under section 139(1) of the Income Tax Act, 1961 ("the Act") declaring total income of Rs. 5,87,870. The assessment under section 153A of the Act was completed on 23/04/2021, determining total income at Rs. 5,87,870. The assessee is engaged in the business of marketing agricultural produce and soil conditioner. Additionally, during the relevant assessment year, the assessee worked as a partner in Radha Enterprises, a business engaged in grinding, and received a salary from Trimbekeshwar Agro Industries P. Ltd. 4. The Income tax Officer, Air Intelligence Unit, Chennai Airport has intercepted Shri. Vikas Gupta at Chenn....
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....ph 2 Total 23,00,000 7. Finally, the learned CIT(A), considering the submissions of the assessee, quashed the assessment order by directing the Assessing Officer to reframe the assessment by considering the specific issues and make necessary enquiries to ascertain the income of the assessee. The findings of the learned CIT(A) are as under:- "8. I have carefully considered the facts of the case and the submissions made by the assessee. In response to the show cause, the assessee has filed a written submission dated 08/01/2024 which is placed on record. The reply submitted by the assessee is considered, but found not acceptable for the detailed reasons mentioned hereunder. (a) The assessee in its submission has stated that "he assessee has taken unsecured loan from the persons during the year under consideration. Further, for your honour's verification for creditworthiness and genuineness of the transaction we hereby attach a copy of ITR Acknowledgement & Computation at annexure listed below and copy of duly highlighted bank statement showing receipt of amount at Annexure 4. The assessee has further st....
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....n on account of section 68 do no emanate from any seized documents which are incriminating in nature. In this regard, we refer and rely upon the decision of the Co-ordinate Bench of the Tribunal, Kolkata Bench, in Arati Ray v/s DCIT, ITA no.778/Kol./2024, for the assessment year 2014-15, order dated 11/07/2024, wherein the Bench, on identical issue, held as under:- "14. We have duly considered the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing o....
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....ed by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show-cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After....
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....le under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee....
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....assessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post- search 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 ....
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....e, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso 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 incrimina....
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....t case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, 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) 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" 21. In view of the above position of law, a short question before us is, whether scope of assessment under section 153A could be enhanced to include recomputation of long-term capital gain qua those assessments, which are unabated. The assessments in each appellant's case have attained finality. It is pertinent to note that in paragraph no. 4.1 of the impugned order in the case of each assessee, ld. PCIT has observed that assessment orders under section 153A were passed without making necessary inquiry, verification, investigation on the issue. The ld. PCIT further observed that reliance placed by the assessees....