2022 (5) TMI 1297 - ITAT ALLAHABAD

Assessment u/s 153A - Validity of assessment u/s 153A when no incriminating material relatable to that assessment year was found during the course of search and seizure operations conducted by Revenue u/s 132(1) - Difference in opinion - Third Member decision - HELD THAT:- As the purpose and purport of framing assessment u/s 153A is to assess or reassess the total income including undisclosed income, and even in the cases where assessment or reassessment proceedings are already completed and assessment orders were passed , which were subsisting when search operations took place, the AO would be competent to reopen the assessment proceedings already made and determine the total income of the tax-payer including undisclosed income, notwithstanding that the assessee has filed return of income before the date of search which stood processed u/s 143(1)(a) of the 1961 Act . The Revenue succeeds on this issue.

Whether assessment framed u/s 153A can be sustained in the absence of notice being issued under the provisions of Section 143(2)? - HELD THAT:- Admittedly notices u/s 153A as well Section 142(1) was issued by Revenue. The assessee did not file return of income within stipulated time as provided in the notice issued u/s 153A of the 1961 Act. This issue should not detain us for long . The Hon’ble Madras High Court in recent decision in B.Kubendran v. DCIT [2021 (4) TMI 467 - MADRAS HIGH COURT] has recently after detailed discussion considering the distinction between provisions of Section 158BC and 153A decided this issue in favour of Revenue , by holding that in framing assessment u/s 153A , due regard must be given to principles of natural justice, which requirement shall stand satisfied either by issuance of notice u/s 143(2) or questionnaire u/s 142(1) was issued by the AO. Thus in framing assessment u/s 153A, due regard must be given to principles of natural justice, which requirement shall stand satisfied either by issuance of notice u/s 143(2) or questionnaire u/s 142(1) issued by the AO. - There is no specific provision in the Act requiring the assessment u/s 153A to be made after issuing notice u/s 143(2) - Thus, we hold this issue in favour of Revenue in the instant case.

Addition u/s 68 - unexplained Credit in bank accounts - We are of the considered view that the appellate order passed by ld. CIT(A) cannot be sustained and is liable to be set aside . We are of the considered view that one more opportunity be provided to assessee to bring on record complete details/evidences in support of its contentions - assessee has also submitted before the Bench that all the necessary documents such as bank statements etc of Shri Ajeya Singh will be produced . Thus, we are setting aside the matter to the file of the AO for fresh adjudication of the issue on merits. Needless to say that the AO shall provide proper and adequate opportunity of heard to the assessee in set aside proceedings. The AO shall admit all the evidences /explanations submitted by assessee in set aside proceedings and adjudicate the matter on merits in accordance with law. The appeal of the Revenue is allowed for statistical purposes.

Assessment u/s 153A - undisclosed income or an income escaped assessment - Income not detected during the course of search and seizure proceedings - HELD THAT:- It can be easily seen that the Hon'ble Supreme Court in Pr. CIT VERSUS MEETA GUTGUTIA [2018 (7) TMI 569 - SC ORDER] has simply dismissed the SLP filed by the Revenue finding no merit in the same. It is not a case of the Hon'ble Supreme Court either considering and deciding the issue on merits in an appeal or giving reasons at the stage of dismissal of SLP. Applying the principles laid down by the Hon'ble Supreme Court in the three cases discussed above, there remains no doubt whatsoever that the dismissal of SLP in Meeta Gutgutia (supra) with the remarks - `We do not find any merit in this petition. The special leave petition is, accordingly, dismissed’ - are no different from the remarks “Special Leave Petition is dismissed on merits” or “Dismissed on merits”, which have been held by the Hon’ble Apex Court as dismissal of SLP without reasons, not leading to any declaration of law by the Hon'ble Supreme Court.

In the hue of the above discussion, the judgment of the Hon’ble Delhi High Court in Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT] cannot be construed to have either been affirmed by the Hon’ble Supreme Court or merged in the order dismissing the SLP against it. This judgment, ergo, ranks pari passu with Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and other judgments of Hon’ble High Courts deciding the issue in favour of assessee, without getting elevated to the status of that of the Hon'ble Supreme Court. The sequitur is that the ratio decidendi laid down by the Hon’ble jurisdictional High Court in Raj Kumar Arora [2014 (10) TMI 255 - ALLAHABAD HIGH COURT] still holds the field and is binding on all the authorities under the jurisdiction of the Hon’ble Allahabad High Court. In view of the foregoing discussion and respectfully following the binding precedent, I agree with the learned AM that there is no legal impediment in making an addition, otherwise than on the basis of any incriminating material found during search, in an assessment u/s 153A for a year whose assessment was not pending on the date of search.

Whether CIT(A) is justified in deleting the additions instead of restoring the matter to the file of AO - HELD THAT:- The ld. JM countenanced the deletion of the addition on the two legal issues discussed above, viz., the failure of the AO to issue notice u/s 143(2) before making assessment u/s 153A and the addition being not based on any incriminating material. Neither did he go into the merits of the addition, nor record his disagreement with the ld. AM on the issue of restoration of the matter to the AO. In the absence of any difference of opinion between the ld. Members on this issue, a fortiori, is that the view taken by the ld. AM restoring the matter to the AO for fresh decision will prevail as the same has not been dissented with by the ld. JM. I answer this question in negative by holding that the ld. CIT(A) was not justified in deleting the addition. Rather he should have restored the matter to the file of AO.