2018 (1) TMI 585 - AT - Income Tax

Initiation of proceeding under Section 153A - absence of any material found during the course of search operation - Held that - Once the time limit for issuing notice under Section 143(2) of the Act expired, on the basis of return filed earlier, the assessment proceeding is terminated and it cannot be said that it was pending on the date of search. In this case, the assessment proceeding was terminated by operation of law since the time limit for issuing notice under Section 143(2) expired. Therefore, the concluded assessment by operation of law on expiry of time limit for issuing notice under Section 143(2), cannot be reopened. Hence, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, there cannot be any assessment for the block period under Section 153A of the Act. Hence, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. - Decided in favour of assessee

Summary

Issues:
1. Delay in filing cross-objections by the assessee.
2. Validity of assessment under Section 153A of the Income-tax Act, 1961 without incriminating material found during search operation.
3. Abatement of assessment proceeding under Section 143(2) of the Act on the basis of return filed before the date of search.

Analysis:
1. The judgment addresses the delay of 64 days in filing cross-objections by the assessee. The Tribunal, after hearing both parties, found sufficient cause for the delay and granted condonation, admitting the appeal.

2. The main issue revolved around the validity of assessment under Section 153A of the Act without any incriminating material found during the search operation. The Departmental Representative argued that initiation of proceedings under Section 153A was based on a search conducted under Section 132, not dependent on incriminating material found during the search. However, the assessee's representative contended that without a search, the Assessing Officer cannot reopen concluded assessments and must base assessments only on material found during the search. The Tribunal analyzed Section 153A and concluded that in the absence of incriminating material, assessments for the block period under Section 153A were not valid, upholding the CIT(Appeals) decision to delete the addition made by the Assessing Officer.

3. The judgment further delved into the abatement of assessment proceedings under Section 143(2) of the Act on the basis of the return filed before the date of the search. The Tribunal determined that once the time limit for issuing notice under Section 143(2) expired, the assessment proceeding was terminated by law, precluding the Assessing Officer from reopening concluded assessments. Consequently, the Tribunal confirmed the CIT(Appeals) decision to delete the addition made by the Assessing Officer.

In conclusion, the Tribunal dismissed all appeals filed by the Revenue and cross-objections by the assessee, confirming the lower authority's order.