TaxTMI 
TaxTMI 
2026 (7) TMI 514
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....g on the decision of the Hon'ble Bombay High Court ignoring the fact that said issue was pending before the Hon'ble Supreme Court of India in various other Appeals? B. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in narrowing down the scope of assessment u/s. 153A in respect of completed assessments by holding that only undisclosed income and undisclosed assets detected during the search could be brought to tax? C. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income like income relating to foreign assets that comes to the notice of the assessing Officer? D. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in holding that no addition u/s. 69A of the IT Act could be made ignoring the crucial facts of the case? 3. Similarly, the substantial question of law framed in Appeal being ITXA No. 132 of 2020 is as under:- Whether on the facts and circumstances of ....
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....nce lying in the bank account of Ruby Enterprises Inc. stood at USD 4,020.02. 7. Pursuant to receipt of the above information, on 25th and 26th August 2011, a search action was carried out on the entities in the Rosy Blue Group, including the Assessee. 8. The present Appeals are concerned with Assessment Year 2006-07, and it is an admitted position that no assessment proceedings were pending in his case for this year at the time of search. Hence, the assessment proceedings did not abate in terms of the second proviso to Section 153A of the IT Act. Also, no incriminating material was found during the course of the search as relatable to this year. During the course of search, Mr. Russell Mehta (being the Assessee's son) clarified that his uncle Mr. Dilip Mehta (being the Assessee's brother, and then a resident of Belgium) was acting as a legal representative of the Estate of Late Mr. Ramniklal R Mehta (being the Assessee's father), and who would be aware of the said foreign bank accounts. Based thereon, the Investigation Wing of the Income-tax Department which had carried out the search action, sought information from Mr. Dilip Mehta, who responded by his letter dated 06.01.20....
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....come for the Assessment Years 2006-07 to 2011-12. Pursuant thereto, on 06.03.2013, the Assessee filed his Returns of Income for the said years, including the year under consideration. Similar notices were also issued to other members of the Mehta family, and in the Return of Income as filed by the Estate of Late Mr. Ramniklal Mehta, the aforesaid amount of Rs.11,46,72,012 was offered for tax. 10. In the Assessment Order dated 30.05.2014 passed under Section 153A in the case of the said Estate, the entire rupee equivalent of the peak balance lying in the HSBC bank account of White Cedar Investments Limited (being Rs.2,00,12,56,838) was added by their Assessing Officer as unexplained money under Section 69A of the IT Act. Though not relevant for the issue under consideration, but for completeness of facts, the said Assessment Order passed in the case of the Estate has been found by the Tribunal to be unjustified for various technical reasons. 11. Be that as it may, the Returns of Income filed by the Assessee were selected for scrutiny. In the course of the assessment proceedings, the Assessee reiterated and confirmed that he did not have any bank account outside India. The asse....
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.... the Commissioner of Income-tax (Appeals)-47, Mumbai [for short "the CIT(A)"], which Appeal was partly allowed by him by his Appellate Order dated 31.03.2017. The submissions made by the Assessee before him with respect to the scope of an Assessment under Section 153A being restricted to such additions based on incriminating material found in the course of search and justification in respect of Assessment of the amount of Rs.1,79,333 lying in the bank account of Ruby Enterprises Inc. were dismissed by him. However, he deleted the addition of Rs.2,00,12,56,838 being Rupee equivalent of the USD funds lying in the bank account of White Cedar Investments Ltd. 13. Aggrieved by the aforesaid Appellate Order, both the Assessee as well as the Revenue filed Appeals before the Tribunal. The Assessee inter alia urged that the additions made by the Assessing Officer were beyond the scope of Section 153A as they were solely based on the Base Note which was already available with him before conducting the search. The Base Note was not a document found in the course of the search. Admittedly, the assessment proceeding for the year under consideration was not pending at the time of search. Henc....
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.... paragraph 18 of the appellate order, the Tribunal observed as under:- "18. In the above legal background, if you examine the facts of the present case, we found that the assessment for the impugned assessment year is unabated as on the date of search, which is because the assessment for the impugned year has been completed u/s 143 (1) of the Act, and the time limit for issue of notice u/s 143(2) was expired much before the date of search i.e. 25/08/2011. It is also an admitted fact that tile addition made by the AO is not supported by any incriminating material found as a result of search. In fact, the AO made additions on the basis of 'Base Note' received by the government of India under exchange of information between French Government and Indian Government under the provisions of DTAA, and said Base Note was received prior to search. The sole reason for conducting search in the case of the assessee is information received from French Government in form of Base Note with regard to undisclosed bank account in HSBC Bank Geneva. Therefore, we are of the considered view that the additions made by the AO is merely based on Base Note which is not found as a result of search o....
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....es Russel Speechlys also supported the case of the Assessee. Since the Revenue could not prove with necessary material that the said bank accounts belonged to the Assessee herein, the provisions of Section 69A of the IT Act could not be invoked, was the finding of the Tribunal. It has also observed that the sole basis for addition is the Base Note received from the French Government, but which is an unauthenticated document not received from the bank directly. Though the information exchanged between two sovereign countries cannot be ignored, but the contents of the Base Note are incomplete. Based thereon, the Tribunal deleted both the aforesaid additions made by the AO. Aggrieved by the Appellate Order passed by the Tribunal, the Revenue has filed the present Appeals. 16. In this factual backdrop, the learned Counsel Mr. Suresh Kumar, appearing for the Revenue, relied upon the Assessment Order and argued that the additions made are justified. He, however, was unable to point out any material to contravene the factual findings given by the Tribunal to the effect that on the day of search i.e. on 25/26.08.2011, no assessment proceedings were pending in the case of the Assessee fo....
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....ments in a company being White Cedar Investments Ltd. The said company and Ruby Enterprises Inc. had bank accounts with HSBC Bank in Geneva. Pursuant thereto, a search and seizure action was carried out at the premises of entities belonging to the Rosy Blue Group, including the Assessee herein. On the date of search, i.e. on 25/26.08.2011, no assessment proceedings were pending in the case of the Assessee for the Assessment Year 2006-07. The intimation issued under Section 143(1) of the IT Act for the year under consideration became final in the absence of any notice for scrutinising the assessment being issued under Section 143(2) of the IT Act. Hence, the assessment did not abate. In such circumstances, in the Assessment Order passed under Section 153A of the IT Act, only such additions could be made which were based on incriminating material found in the course of the search. That the Base Note, which formed the sole basis for the additions as made by the Assessing Officer in respect of balances lying in the bank account of White Cedar Investments Ltd. and Ruby Enterprises Inc. held with HSBC Bank, Geneva, which was already available with the Revenue before the search, does not ....
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....ecision of the Supreme Court in Principal CIT vs. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 wherein the Supreme Court in such context considering the views taken by different High Courts, namely the Gujarat High Court, Delhi High Court, this Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan High Court, and the Kerala High Court as set out in para 7 of the said decision and examining the provisions of s. 153(A) of the IT Act as also, in the context of the search action taken under s. 132 has held that when no incriminating material was unearthed during the search, the AO cannot assess or reassess income taking into consideration other materials in respect of completed assessment/unabated assessments. It was held that in respect of completed/unabated assessments, no addition can be made by the AO in the absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Income-tax Act. The Supreme Court held that however, the completed/unabated assessment can be re-opened by the AO only in exercise of powers under s. 147/148 of the Income Act. Such is not the case in the present proceeding....
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....aking 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 1961 Act. 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 dismissed. No costs." 11. Mr. Jasani, learned counsel for the respondent/assessee has also placed reliance on the decision of the Division Bench of this Court of which one of us (G.S. Kulkarni, J.) was a member in Principal CIT vs. Welspun India Ltd. (2024) 167 taxmann.com 333 (Bom) wherein following the decision of the Supreme Court in Principal CIT vs. Abhisar Buildwell (P) Ltd. (supra) in similar ci....