2018 (10) TMI 1887 - AT - Income Tax

Proceedings u/s 153A - no assessment proceeding was pending being the date of search - HELD THAT - Admittedly, for the assessment years 2009-10 and 2011-12 under consideration, the assessee filed the return of income on 20.11.2009 and 05.11.2011 and the return was processed under Section 143(1) of the Act and no assessment order was passed under Section 143(3) of the Act. In the meantime, there was search under Section 132 of the Act on 03.09.2013. On the date of search, the time limit for issuing notice under Section 143(2) of the Act had expired. Therefore, it is obvious that the return filed by the assessee before the date of search was terminated by operation of law. In other words, no assessment proceeding was pending on 03.09.2013 being the date of search. This Tribunal is of the considered opinion that when the assessment proceeding is not pending on the date of search, the Assessing Officer can assess or re-assess the income only on the basis of material found during the course of search operation. In this case, admittedly, there was no material found during the course of search operation, therefore, this Tribunal is of the considered opinion that in view of the judgment of Apex Court in Meeta Gutgutia 2018 (7) TMI 569 - SC ORDER the Assessing Officer cannot initiate proceeding under Section 153A of the Act. - Decided against revenue.

Summary

Issues:
- Appeal against orders of Commissioner of Income Tax (Appeals) for assessment years 2009-10, 2011-12, 2013-14, and 2014-15.
- Maintainability of Revenue's appeals for assessment years 2013-14 and 2014-15 due to tax effect below ?20 lakhs.
- Dispute regarding completion of assessment under Section 153A of the Income-tax Act, 1961 for assessment years 2009-10 and 2011-12.

Analysis:
1. Maintainability of Appeals for Assessment Years 2013-14 and 2014-15:
The Tribunal dismissed the Revenue's appeals for these years as the tax effect involved was below ?20 lakhs, aligning with the CBDT circular setting the monetary limit for filing appeals before the Tribunal. The circular dated 11.07.2018 was considered, leading to the dismissal of the appeals.

2. Completion of Assessment under Section 153A for Assessment Years 2009-10 and 2011-12:
In the case of assessment years 2009-10 and 2011-12, the dispute revolved around the completion of assessment under Section 153A of the Income-tax Act, 1961. The Departmental Representative argued that the Assessing Officer should have completed the assessment under Section 153A despite no material being found during the search operation. The Representative cited judgments from Kerala High Court and Karnataka High Court to support their stance. However, the Tribunal, after considering submissions from both sides, held that since no material was found during the search operation, the Assessing Officer could not initiate proceedings under Section 153A. The Tribunal referred to the Apex Court judgment in PCIT v. Meeta Gutgutia and concluded that the completed assessment of earlier years cannot be reopened without incriminating material found during the search operation. Therefore, the Tribunal confirmed the orders of the lower authority for assessment years 2009-10 and 2011-12.

3. Legal Precedents and Conclusion:
The Tribunal highlighted that the judgments cited by the Departmental Representative were not applicable to the facts of the case, referring to the Apex Court judgment in Meeta Gutgutia as the guiding precedent. The Tribunal emphasized that without material found during the search operation, the Assessing Officer cannot initiate proceedings under Section 153A. Consequently, all four appeals filed by the Revenue were dismissed, affirming the decisions of the lower authority for the relevant assessment years.

The judgment was pronounced on 5th October 2018 at Chennai by the Appellate Tribunal ITAT Chennai, with detailed reasoning provided for each issue raised in the appeals.