2023 (4) TMI 1413 - HC - Income Tax

Scope of assessment u/s 153A - HELD THAT - The legal issue which has been raised by the revenue has been answered in Abhisar Buildwell P Ltd. 2023 (4) TMI 1056 - SUPREME COURT held that it is an agreement with a view taken in the case of Commissioner of Income Tax Central -III vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and that of Saumya Construction 2016 (7) TMI 911 - GUJARAT HIGH COURT as held 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 u/s 132 or requisition u/s 132A. 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.

Summary

The Calcutta High Court dismissed the revenue's appeal challenging the Income Tax Appellate Tribunal's order concerning the scope of assessment under Section 153A of the Income Tax Act. The Court relied on the Supreme Court's ruling in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell [P] Ltd. ([2023] 149 taxmann.com 399 [SC]), which clarified the legal position as follows:i] Upon search under Section 132 or requisition under Section 132A, the Assessing Officer (AO) assumes jurisdiction for block assessment under Section 153A.ii] All pending assessments/reassessments stand abated.iii] If incriminating material is found during the search, the AO can assess or reassess the total income, including completed or unabated assessments, considering such material and other available information.iv] If no incriminating material is found, the AO cannot make additions in completed or unabated assessments based solely on other material. However, reopening under Sections 147/148 remains available if conditions under those sections are met.The Court held that this ruling aligns with precedents from the Delhi High Court (Commissioner of Income Tax [Central]-III vs. Kabul Chawla [2016] 380 ITR 573) and Gujarat High Court (Principal Commissioner of Income Tax-4 vs. Saumya Construction [2016] 387 ITR 529). Consequently, the appeals and review petition by the revenue were dismissed with no costs, and the question of law was answered in accordance with the Supreme Court's decision.