2019 (3) TMI 567 - AT - Income Tax

Assessment u/s 153A - all the returns before conducting the search and the time limit to issue notice u/s 143(2) already lapsed - non abated assessments - HELD THAT - In the present case, the assessee has filed all the returns before conducting the search and the time limit to issue notice u/s 143(2) of the Act already lapsed and a search is conducted and no incriminating material is found. A.O. called for books of accounts and other relevant documents and assessment is completed u/s 153A r.w.s. 143(3). The search was initiated in the business premises of the assessee on 29.1.2014 and therefore the time limit for issue of notice u/s 143(2) is lapsed. All the assessment years from 2008-09 to 2012-13 are concluded and non abated assessments. A.O. cannot reopen the assessments u/s 153A. In so far as the above submission is concerned from the assessment order and even from the CIT(A) s order, there is nothing on the record which says that the additions made by the A.O. are based on any incriminating material. Even when the same was pointed out to D.R., she is not able to establish the fact that additions are based on any incriminating material, therefore we find that the additions made by the A.O. for all the years are not based on any incriminating material found during the course of search. It is only based on subsequent search by issue of notice u/s 153A calling for the various documents from the assessee additions are made. The assessee in respect of concluded assessments cannot be reopened, we find that in all the assessment years from 2008-09 to 2012-13, there is no scope for the A.O to issue a notice u/s 143(2) of the Act for the reason that the time limit is already over before the date of search itself i.e. on 29.1.2014. Therefore, in our opinion, all the assessment years from 2008-09 to 2012-13 are concluded assessments and non abated assessments and any addition has to be made in respect of those assessment years, there must be an incriminating material. In the present case, there is no incriminating material and therefore, the additions made by the A.O. cannot survive. - Decided in favour of assessee

Summary

Issues Involved:
1. Legality of additions in years where assessment proceedings were not pending and no incriminating material was found during the search.
2. Justification of addition towards unsecured loans received.
3. Justification of addition towards alleged unexplained expenses on foreign tours.

Detailed Analysis:

Legality of Additions in Non-Pending Assessments:
The Tribunal addressed the issue of whether additions can be made in assessment years where proceedings were not pending and no incriminating material was found during the search. The Tribunal observed that the assessee had filed returns for the assessment years 2008-09 to 2012-13, and these assessments were completed under section 143(1) of the Income Tax Act. A search was conducted on 29.1.2014, and notices under section 153A were issued. The Tribunal noted that for the years 2008-09 to 2012-13, the time limit for issuing notices under section 143(2) had expired, making these years concluded assessments. The Tribunal cited several judicial precedents, including CIT Vs. Kabul Chawla, PCIT Vs. Meeta Gutgutia, and PCIT Vs. Soumya Constructions, which held that in the case of concluded assessments, no additions can be made unless there is incriminating material found during the search. The Tribunal concluded that since no incriminating material was found, the additions made by the Assessing Officer (A.O.) were not justified and could not survive.

Justification of Addition Towards Unsecured Loans:
The Tribunal examined the addition of ?3,00,000 towards unsecured loans received, treating them as unexplained. The Tribunal reiterated that in the absence of any incriminating material found during the search, such additions cannot be made in concluded assessments. Since the assessment years in question were concluded and no incriminating material was found, the Tribunal held that the addition towards unsecured loans was not justified.

Justification of Addition Towards Alleged Unexplained Expenses on Foreign Tours:
The Tribunal also addressed the addition of ?1,20,000 towards alleged unexplained expenses on foreign tours. It reiterated the principle that without incriminating material found during the search, no additions can be made in concluded assessments. As no such material was found, the Tribunal held that the addition for foreign tour expenses was not justified.

Conclusion:
The Tribunal allowed the appeals filed by the assessee for the assessment years 2008-09 to 2012-13, reversing the orders of the CIT(A). It held that no additions can be made in respect of concluded assessments under section 153A unless there is incriminating material found during the search. The Tribunal followed the judicial precedents favoring the assessee and applied the principle that in the case of ambiguity in taxing provisions, the construction that favors the assessee must be adopted.