DCIT, Central Circle-13, New Delhi vs Sh. Anand Kumar Minda

'5.1 The appellant had taken broadly the pleadings on:

(i)

Legal ground that the assessment of the year under consideration was completed assessment and in the absence of any seized material the case of the appellant was covered by the judgement of jurisdictional High Court in the case of CIT Vs Kabul Chawla

(ii)

On merit, the additions are not sustainable due to the submissions made along with supporting evidences.

5.2

The issue is first adjudicated on the legal technical ground.

5.2.1

In such situation, the issue, when no incriminating material/evidence is found and assessments in those years are completed assessments, can any addition/disallowance be made, has been dealt with and answered by Hon'ble Jurisdictional High Court in the case CIT vs. Kabul Chawla, as mentioned by appellant in its submission. Hon'ble Court has taken a view in such cases that although section 153A 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 Assessing Officer 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. As per Hon'ble Court, such assessment has to be made under the section 153A/153C only on the basis of the seized material. It is further opined by Hon'ble Court that completed assessment can be interfered with by the Assessing Officer while making the assessment in the section 153A only on the basis of some incriminating material found 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. In the subsequent decisions also, Hon'ble court has reiterated their aforesaid views. In the case Pr. CIT vs Ram Avtar Verma 395 ITR 252, Hon'ble Court has supported the aforesaid view that if the assessments are completed on the date of search and no incriminating material is found during the search, assessment u/s 153A of the Act is invalid. Similar view has been taken by Hon'ble Court in the case of Pr. CIT vs Meeta Gutgutia 395 ITR 526 also wherein assessments were completed on the date of search but no incriminating material pertaining to those completed assessment years were found during search, Hon'ble Court held that invocation of section 153A for those years was invalid.

5.2.2

Now the facts of the appellant are to be examined in view of this legal position. The search was conducted in the case of the appellant on 08.06.2017. The appellant had filed the return of income on 31.08.2012, which was assessed u/s 143(3) on 30.03.2014. This was also not an abated assessment as there is no such indication in the assessment order and as confirmed by the appellant. It is clear from the assessment order as well as submissions of the appellant that search and seizure action 132(1) of the Act was undertaken by the Department in the case of appellant on 08.06.2017 and on that date, assessment for the A.Y. 2012-13 was completed assessment. In this assessment year, the additions could have been made by the AO only on the basis of incriminating material/evidence found during the search proceedings. However, as can be seen from the present assessment order, the additions have not been made on the basis of any incriminating material found during the search proceedings, but only on the basis of scrutiny of return of income filed in regular course by the appellant. This fact is evident from the assessment order where there is neither any reference to any seized material nor statement recorded during search on this issue.

5.2.3

In view of above, it can be seen that the additions have been made by AO not on the basis of any incriminating material/evidence found during the search proceedings. Since the assessment year under consideration is completed assessment year, any addition/disallowance ought to have been made by AO on the basis of such incriminating material/evidence as found during the search proceedings in view of various decisions, including CIT Vs. Kabul Chawla(supra), of Hon'ble Jurisdiction High Court. In view of this, the aforesaid additions made by AO are not sustainable & deserve to be deleted as made during the regular course of assessment proceedings, and not on the basis of incriminating material/evidence found during the search proceedings. I, therefore, delete the aforesaid additions made by AO and allow the respective grounds taken by appellant. However, if in future the ratio-decidendi of the above decision of Hon'ble High Court gets reversed, the appeals will revive on these issues.

5.2.4

. In view of the decision given in the para above, the other grounds of appeals taken by the appellant are not being adjudicated as these will have academic value only."

'14. In view of the above and for the reasons stated above, it is concluded as under:

(i)

that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A;

(ii)

all pending assessments/reassessments shall stand abated;

(iii)

in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and

(iv)

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 under section 132 or requisition under section 132A of the Act, 1961. 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."

A.Y. 2013-14