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2018 (12) TMI 1673 - AT - Income TaxAssessment u/s 153A - whether in respect of unabated assessments (no pending proceedings) as on the date of search, the AO could frame the search assessment u/s 153A of the Act by making certain additions without any incriminating materials found during the course of the search? - HELD THAT - The scheme of the Act provides for abatement of pending proceedings as on date of search. It is not in dispute that the assessment for the assessment year from 2008-09 to 2011-12 falls under the ambit of unabated assessment as on the date of search. There is no differentiation as found in the intent of the legislature to differentiate whether the assessments were originally framed u/s 143(1) or 143(3) or 147 of the Act. Therefore, if any incriminating material is not found during the course of search related to those concluded years, the Act does not confer any power on the AO to disturb the finding given thereon and income determined thereon as finality has already been reached and no proceedings were pending on the date of search. In respect of abated assessments, fresh assessments are to be framed by the AO u/s 153A of the Act which would have a bearing on the determination of the total income by considering all the aspects, wherein the existence of incriminating materials do not have any relevance. However, in respect of unabated assessments, the legislature has conferred powers on the AO to follow the assessments already concluded unless incriminating materials are found in the course of the search. Disallowances made for the Assessment years i.e. 2008-09, 2009-10, 2010-11 2011-12, which were unabated/concluded assessments as on date of search cannot be made in the search assessments in the absence of any incriminating material found in the course of search and accordingly all those additions are directed to be deleted. Since the legal issues are addressed, we refrain from giving our findings on the merits of disallowances under the provisions of the Act. Accordingly, grounds raised by the assessee for Assessment Years i.e. 2008-09, 2009-10, 2010-11 2011-12, are allowed. Addition on account of dividend income - Year of assessment - HELD THAT - Dividend income was not received by the assessee in the year ending 31-3-2012 and accordingly the same was not liable to be taxed in the year under consideration, i.e. AY 2012-13. The assessee has declared the dividend income pertaining to the assessment year 2012-13 in the assessment year 2013-14 amounting to 15,29,220.00 which was duly accepted by the Revenue. AO has enquired the credit entries in the bank by issuing a common notice u/s 142(1) wherein he asked assessee to furnish the details of entries of dividend reflecting for each year. Further, in reply of the same notice assessee submitted details of each year dividend received. However, even in reply assessee did not submit detail of any dividend for the year ending 31st March 2012. Once assessee contended that she has not received any dividend for the year and submitted all the relevant details the onus was on AO to establish that assessee had received dividend income. The controversy also arises regarding the amount determined by the AO for the dividend income in the year under consideration. In this regard we find that the AO has taken the amount of dividend i.e. 43,12,165 for the year ending 31-3-2012 as recorded in the dividend warrant dated 27-9-2012 which was mentioned in Sri-Lankan currency. Thus the AO has also erred in treating the amount recorded in Sri-Lankan currency in dividend warrant as dividend income of the assessee - thus addition made on account of dividend income for the year under consideration is on without any basis and documentary evidence. Once we have held that the assessee has not received any dividend income in the year under consideration - appeal of the assessee is allowed. Time limit for completing the assessment under section 153A - HELD THAT - The maximum time limit as per section 153B to complete the assessment for the assessment year 2013-14 was 31/03/2016. It is evident from the assessment order that AO has passed the order on 23/12/2016 which is beyond the due date. This fact was also brought to the notice of the ld. DR, however, he also could not bring anything record to justify the delay in passing the assessment order as per the time limit given under the statute. Therefore as per the above, as the AO could not pass the assessment order under the given time limit, the order passed by the AO is invalid and bad in the eyes of the law. Accordingly, we allow the grounds of appeal raised by the assessee on legal ground and refrain ourselves to adjudicate the issue raised on other ground and on the merit.
Issues Involved:
1. Validity of assessment proceedings under section 153A of the Income Tax Act. 2. Additions made without incriminating material. 3. Taxation of dividend income from a Sri Lankan company. 4. Allowance of concessional tax rate under section 115BBD. 5. Credit for tax paid in Sri Lanka under the Double Taxation Avoidance Agreement (DTAA). 6. Time limit for completion of assessment under section 153B. Detailed Analysis: 1. Validity of Assessment Proceedings under Section 153A: The primary issue was whether the Assessing Officer (AO) could frame assessments under section 153A for years where no incriminating material was found during the search. The Tribunal noted that the search and seizure operation was conducted on 26.04.2013, and the six assessment years were reopened. It was highlighted that for the years 2008-09 to 2011-12, the assessments were concluded (unabated) as of the search date, while for 2012-13 and 2013-14, the assessments were pending (abated). The Tribunal held that in the absence of incriminating material, the AO could not disturb the concluded assessments for the years 2008-09 to 2011-12. 2. Additions Made Without Incriminating Material: The Tribunal emphasized that additions for the years 2008-09 to 2011-12, which were concluded assessments, could not be made without any incriminating material found during the search. The Tribunal relied on the Gujarat High Court's decision in the case of *Principal Commissioner of Income Tax vs. M/s. Saumya Construction Pvt. Ltd.*, which held that additions could only be made based on incriminating material found during the search. 3. Taxation of Dividend Income from a Sri Lankan Company: For the year 2012-13, the Tribunal found that the dividend income from the Sri Lankan company was declared on 27.09.2012 and received in the financial year 2012-13. The Tribunal noted that the dividend income was not received in the year ending 31.03.2012 and thus was not liable to be taxed in the year 2012-13. The Tribunal directed the AO to delete the addition made on account of dividend income for the year 2012-13. 4. Allowance of Concessional Tax Rate under Section 115BBD: The assessee contended that the concessional tax rate under section 115BBD should be applied to the dividend income received from the Sri Lankan company. However, since the Tribunal held that the dividend income was not received in the year 2012-13, this issue became academic and did not require separate adjudication. 5. Credit for Tax Paid in Sri Lanka under DTAA: The assessee argued that credit for tax paid in Sri Lanka on the dividend income should be allowed under the DTAA. Again, as the Tribunal held that the dividend income was not received in the year 2012-13, this issue was not adjudicated separately. 6. Time Limit for Completion of Assessment under Section 153B: For the year 2013-14, the Tribunal noted that the assessment order was passed on 23.12.2016, beyond the statutory time limit of 31.03.2016. The Tribunal held that the assessment order was invalid and bad in law due to the delay in passing the order. Consequently, the Tribunal allowed the appeal on this legal ground without addressing the merits of the other issues. Conclusion: The Tribunal allowed the appeals for the years 2008-09 to 2011-12 by deleting the additions made without incriminating material. For the year 2012-13, the Tribunal directed the deletion of the addition on account of dividend income. For the year 2013-14, the Tribunal invalidated the assessment order due to the delay in passing the order, allowing the appeal on legal grounds. The Tribunal refrained from adjudicating other issues on merits due to these findings.
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