TMI Blog2019 (6) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for the AY 2011-12 had abated. Hence the assessment for AY 2011-12 has not abated. We have also stated that there is no incriminating paper/documents found during the course of search, based on which the ld. Pr. CIT has proposed revision of the assessment order. The case law on this issue as to whether an addition/disallowance can be made in an assessment framed u/s 143 (3) r.w.s. 153A, where the assessment has not abated and when no incriminating material is found during the course of search is well settled We quash the order passed u/s 263, for the Assessment Year 2011-12 as the issues which the ld. Pr. CIT has raised and directed the Assessing Officer to examine, are beyond the ken of an assessment made u/s 143(3) r.w.s. 153A of the Act. CIT revised the assessment for non-deduction of TDS - HELD THAT:- We are of the considered opinion that the CIT should have made at least a preliminary enquiry with regard to the claim of the assessee that the payment in question is reimbursement of expenditure to its joint-venture partner, and hence no TDS needs to be made. According to the judgement in the case of G.E. India Technology Centre vs. CIT [ 2010 (9) TMI 7 - SUPREME C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1. The ld. Pr. CIT issued a notice u/s 263 of the Act, proposing revision of the assessment orders passed by the Assessing Officer for both the Assessment Years. The ground for revision was that the order passed by the Assessing Officer, for both the Assessment Years was erroneous insofar as it is prejudicial to the interest of the revenue, as there was no enquiry made by the Assessing Officer with regard to (a) agreements for sale against which advance from customers was received (b) to ascertain the date of completion of construction (c) the huge work in the progress shown by the assessee at ₹ 106.30 Crores (d) that the Assessing Officer failed to verify the genuineness of the source of advance from customers and (e) non deduction of T.D.S and consequent disallowance u/s 40(a)(ia) of the Act. These issues are the subject matter of the notice issued by the ld. Pr. CIT u/s 263 of the Act, to the assessee. In reply, the assessee objected by stating that the assessment was completed u/s 153A r.w.s. 143(3) of the Act and the assessment for the Assessment Year 2011-12 has not abated and as none of the issues on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout enquiry by the Assessing Officer. Section 40(a)(ia) of the Act, was not applied. For the Assessment Year 2012-13, he held that the deduction of Real Estate expenditure was allowed without examining the applicability of Section 40(a)(ia) of the Act as no T.D.S. was made. 3.3. He relied on a number of case-law for the proposition that, an assessment order passed without making proper enquiries and proper examination of the claim made by the assessee renders the order erroneous insofar as it is prejudicial to the interest of the revenue. He set aside the assessment orders passed by the Assessing Officer for both the Assessment Years with a direction to pass a fresh assessment order after giving the assessee fair and reasonable opportunity of being heard. 4. Aggrieved the assessee is in appeal before us for both the Assessment Years. 5. The ld. Counsel for the assessee submitted that the ld. Pr. CIT, was wrong in exercising his powers u/s 263 of the Act, for the reason that, none of the issues taken up and set aside by him in the order u/s 263 of the Act, was connected to any incriminating paper or documents found during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and argued that under those circumstances it cannot be said that the assessment order was erroneous and prejudicial to the interests of the revenue. He vehemently contended that the assessing officer could not have made any addition on any of the issues raised by the ld. Pr. CIT, in the original assessment order passed u/s 153A r.w.s. 143(3) of the Act, as no incriminating documents were found. He relied on the decision of this Bench of the Tribunal in the case of M/s. Rashmi Metaliks Ltd. v. A/D.C.I.T, in ITA No. 813 to 816/Kol/2017; Assessment Years:- 2009-10 to 2012-13, order dt. 02/05/2018, for the above proposition that no revision u/s 263 of the Act, can be done under these circumstances. He further relied on a number of decisions in support of his contentions which we would be referring to, as and when required. 6. The ld. D/R, on the other hand, submitted that it is wrong to argue that there was no incriminating material found during the course of search. He referred to para 6 a, of the order of the ld. Pr. CIT and submitted that seized documents marked as EMCO/8 and EMCO/11, were materials based on which the additions were required to be made by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable even by the consent of the parties. Hence applying the propositions of law discussed above to the facts of the case, we are of the considered opinion that the assessee can challenge the order of the ld. Pr. CIT on the legal ground that the issue raised by the ld. Pr. CIT in his order u/s 263 of the Act cannot be a subject matter of addition or disallowance in an assessment made u/s 153A r.w.s. 143(3) of the Act, when the assessment for the assessment year has not abated and when this addition/disallowance are not based on any incriminating material found during the course of search. This issue was raised by the assessee before the ld. Pr. CIT in reply to the showcause notice u/s 263 of the Act. Despite the propositions of law laid down by the Hon ble Jurisdictional High Court, the ld. Pr. CIT issued directions to the Assessing Officer, which is contrary to the propositions of law laid down by the Jurisdictional High Court. 8.1. The ld. Pr. CIT at para 6 a, of his order held that, a perusal of the seized documents/record, during the course of search operation, reveals that at page 42 and 43, marked EMCO/8, consists of the assessee s profit and loss account and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts and other regular vouchers and documents. None of these are connected with any incriminating material found during the course of search. Hence it is beyond the jurisdiction of the Assessing Officer to make any disallowance/addition on these issues in the assessment in question. It is also not the case of the ld. Pr. CIT at the assessing officer has failed to examine the material found during the course of search and that these issues that were set aside by him for fresh adjudication are connected with any of the incriminating material found during the course of search. Under the circumstances, we are of the considered opinion that the exercise of jurisdiction u/s 263 of the Act, was wrong, when the assessment for the Assessment Year 2011-12 had abated. 8.2. The assessee in this case has filed his return of income originally on 20/09/2011 u/s 139 of the Act. The last date for issual of notice u/s 143(2) of the Act, expired on 30/09/2012. No such notice u/s 143(2) of the Act, was issued. Hence the assessment for Assessment Year 2011-12 has not abated. We have also stated that there is no incriminating paper/documents found during the course of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to legal issue raised vide ground no.5 by the assessee that the additions made in this year are beyond the scope of assessment u/s.153A, as no incriminating material was found during the course of search for the impugned Assessment Year; and the assessment had attained finality and was not abated in terms of 2nd Proviso to Section 153A. As stated above, the original return of income was filed in July, 2006 and said return was duly accepted and processed u/s. 143(1) vide intimation dated 25.05.2007. Since no notice u/s. 143(2) was issued thereafter or any other proceedings have been commenced to disturb said return of income, accordingly, it had attained finality much prior to the date of search which was on 20.01.2012. Hence in terms of 2nd Proviso to Section 153A the assessment for the Assessment Year 2006-07 was not pending and accordingly, has to be reckoned as unabated assessment. Under the jurisdiction of Hon'ble Delhi High Court, the law is well settled that in case of unabated assessment, the additions which can be roped-in, in the assessments framed u/s.153A, would only be with regard to any incriminating material or evidence unearthed or fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon supra that the concluded assessments could be disturbed only in the event of presence of any incriminating materials found in the course of search. We find from the above explanation of various seized documents found in the course of search, there was absolutely no material much less any incriminatingmaterial, so as to disturb the earlier concluded assessment for the Asst Year 2010-1 1. Hence the Id AO had rightly not considered the aspect of deemed dividend and claim of depreciation on motor lorries at 30% while framing the search assessment u/s 153A of the Act. Moreover, we find that the assessee had given proper explanations regarding these items before the lower authorities as reproduced above. We find that the assessee had also duly explained the complete contents of the seized documents relied upon by the Id CIT in his order. In our considered opinion, those materials are not incriminating at all and are forming part of regular books of accounts of the assessee. These explanations have been completely ignored by the Id CIT while directing the Id AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etely ignored by the Id CIT while directing the Id AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then the said order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the Id CIT. We hold that even on merits, there is no case made out by the Id CIT for making any addition on the issues proposed in the show cause notice of, Id CIT. In these facts and circumstances, we find that the order of the Id CIT u/s 263 of the Act for the Asst Years 2008-09 to 2011-12 deserve to be quashed. Accordingly, the preliminary ground raised by the assessee on the issue of assumption of jurisdiction u/s 263 of the Act for the Asst Years 2008- 09 to 2011-12 are allowed. (c) M/s Tanui Holdings Pvt. Ltd. v/s DCIT in ITA No. 360 to 363/Kol/2015 dated 20.01.2016; 5.5. We also find that no incriminating materials were found during the search in respect of the issue of deemed dividend. Hence it cannot be the subject matter of addition in 153C proceedings in respect ofcompleted assessments. We hold that when an addition could not be made as per law in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y.2009-10, 2010-11 and 2011-12 are bad in law as no incriminating material relatable to the claim of deduction u/s 80IA(4) of the Act was found during the course of search and as the assessments have not abated and are completed assessments. 8.5. Applying the propositions of law laid down in the above referred case laws to the facts of the case on hand, we quash the order passed u/s 263 of the Act, for the Assessment Year 2011-12 as the issues which the ld. Pr. CIT has raised and directed the Assessing Officer to examine, are beyond the ken of an assessment made u/s 143(3) r.w.s. 153A of the Act. 9. Now we take up ITA No. 1242/Kol/2017 for the Assessment Year 2012-13. 10. For this assessment year, the ld. Counsel for the assessee submits that the only ground on which the ld. Pr. CIT revised the assessment is that no deduction of tax was made regarding payments made to M/s. Avani Projects Infrastructure Pvt. Ltd. he submitted that, it was pointed out to the ld. Pr. CIT that M/s. Avani Projects Infrastructure Pvt. Ltd., was a joint-venture partner and that all the payments in question were only reimbursement of expenditure. He als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word 'erroneous' includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. [Para 11] In cases of wrong opinion or finding on merits, the Commissioner has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The Commissioner cannot remand the matter to the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is erroneous. Therefore, the Commissioner must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the Commissioner must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the Commissioner can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record. Nothing bars/prohibits the Commissioner for collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. [Para 17] In the instant case, the findings recorded by the Tribunal are correct as the Commissioner has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the Commissioner is that 'order passed by Assessing Officer may be erroneous'. The Commissioner had doubts about the valuation and sale consideration received but the Commissioner should have examined the said aspect himself and given a finding that the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
