2016 (3) TMI 1235 - AT - Income Tax

Assessment u/s 153A validity - Held that - The assessments in the case of all of these assessees were either completed or the time for issuance of notices under S.143(2) had already lapsed by the date of search. Also there was no material whatsoever found during the course of search relating to any of the assessees herein and therefore, it can safely be concluded that there was no incriminating material was found relating to the assessee s for the relevant assessment years during the course of search. It has been held in various cases that unless and until there is incriminating material relating to the assessee found during the course of search, there cannot be any assessment under S.143(3) read with S.153A, as far as the concluded assessments are concerned. Learned counsel for the assessee has successfully demonstrated before us that in all these cases, either assessments were completed or the due date for the issuance of notice under S.143(2) has lapsed prior to the date of search. Therefore, we quash the impugned assessments made under S.143(3) read with S.153A - Decided in favour of assessee.

Summary

Issues:
Assessment under Section 143(3) read with Section 153A without incriminating material found during search.

Analysis:
The judgment involves ten appeals by assessees of a common group for assessment years 2005-06 and 2006-07 in one case and 2005-06 to 2008-09 in two other cases. The appeals challenge a common order of the Commissioner of Income-tax (Appeals) VII, Hyderabad. The main issue raised in all appeals is whether assessments under Section 143(3) read with Section 153A can be made without any incriminating material found during the search. The assessees argued that completed assessments or cases where the time limit for issuing notices under Section 143(2) had lapsed cannot be disturbed without incriminating material. The Assessing Officer had estimated income at 8% of gross receipts due to lack of cooperation and absence of books of account during the search. The assessees contended that assessments were made without any incriminating material, rendering them invalid.

The assessees contended that no incriminating material was found during the search, and assessments could not have been completed under Section 143(3) read with Section 153A without such material. They relied on previous decisions to support their argument. On the other hand, the Departmental Representative argued that the lack of cooperation from the assessees raised doubts about the accuracy of their books of account, justifying the estimation of income by the Assessing Officer. However, the Tribunal noted that assessments were either completed or the time for issuing notices under Section 143(2) had lapsed before the search, and no incriminating material was found during the search related to any of the assessees. Citing precedent cases, the Tribunal concluded that assessments without incriminating material were not valid. Therefore, the Tribunal quashed the assessments made under Section 143(3) read with Section 153A and allowed the assessees' appeals.

In conclusion, the Tribunal allowed all ten appeals of the assessees, as assessments made without incriminating material were deemed invalid. The Tribunal's decision was based on the lack of such material found during the search and the legal precedent that assessments under Section 143(3) read with Section 153A require incriminating material to be valid. As a result, all other grounds raised by the assessees became academic, and the Tribunal did not address them, leading to the allowance of the appeals.