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2019 (6) TMI 581 - AT - Income TaxRevision u/s 263 - original assessment order passed u/s 153A r.w.s. 143(3) - HELD THAT - AO was also directed to examine the sale agreements, work in progress, sundry creditors and advanced from customers as disclosed by the assessee in the books of accounts. From the above directions it is clear that whatever issue the Pr. CIT directed the AO to examine is part of entries in the regular books of accounts and other regular vouchers and documents. None of these are connected with any incriminating material found during the course of search. Hence it is beyond the jurisdiction of the AO to make any disallowance/addition on these issues in the assessment in question. It is also not the case of the ld. Pr. CIT at the AO has failed to examine the material found during the course of search and that these issues that were set aside by him for fresh adjudication are connected with any of the incriminating material found during the course of search. Exercise of jurisdiction u/s 263 of the Act, was wrong, when the assessment for the AY 2011-12 had abated. Hence the assessment for AY 2011-12 has not abated. We have also stated that there is no incriminating paper/documents found during the course of search, based on which the ld. Pr. CIT has proposed revision of the assessment order. The case law on this issue as to whether an addition/disallowance can be made in an assessment framed u/s 143 (3) r.w.s. 153A, where the assessment has not abated and when no incriminating material is found during the course of search is well settled We quash the order passed u/s 263, for the Assessment Year 2011-12 as the issues which the ld. Pr. CIT has raised and directed the Assessing Officer to examine, are beyond the ken of an assessment made u/s 143(3) r.w.s. 153A of the Act. CIT revised the assessment for non-deduction of TDS - HELD THAT - We are of the considered opinion that the CIT should have made at least a preliminary enquiry with regard to the claim of the assessee that the payment in question is reimbursement of expenditure to its joint-venture partner, and hence no TDS needs to be made. According to the judgement in the case of G.E. India Technology Centre vs. CIT 2010 (9) TMI 7 - SUPREME COURT held that when there is no element of income in the remittance, no deduction of ta at source need be made. In the case on hand when both the parties are assessed by the same assessing officer under the Pr. CIT s jurisdiction, come enquiry had to be made. By not doing so, the Pr. CIT has, in our opinion, not come to a conclusion as to how the assessment order in question is erroneous in so far as it is prejudicial to the interests of the revenue. Hence we have to necessarily hold that the revision of the assessment u/s 263 , by the Pr. CIT, is bad in law in this Assessment Year 2012-13. - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment or addition/disallowance in an assessment under section 153A. 2. Examination of seized documents and their classification as incriminating material. 3. The jurisdiction of the Principal Commissioner of Income Tax (Pr. CIT) under section 263. 4. Requirement of Tax Deducted at Source (TDS) on payments and the consequent disallowance under section 40(a)(ia). Issue-Wise Detailed Analysis: 1. Validity of the Assessment or Addition/Disallowance in an Assessment under Section 153A: - The Tribunal examined whether the validity of the assessment or the validity of the addition/disallowance in an assessment can be disputed in a proceeding under section 263 of the Act. - It was held that the assessment is a preliminary proceeding, whereas revisionary proceedings under section 263 are collateral. Thus, the validity of preliminary proceedings can be challenged in revisionary proceedings. - The Tribunal noted that the Assessing Officer (AO) could not make any addition/disallowance in an assessment under section 153A read with section 143(3) when the assessment year had not abated and no incriminating material was found during the search. This was supported by various case laws, including the Hon’ble Delhi High Court’s decision in CIT v. Kabul Chawla and CIT v. RRJ Securities Ltd. 2. Examination of Seized Documents and Their Classification as Incriminating Material: - The Tribunal scrutinized the documents referred to by the Pr. CIT, which included the profit and loss account, balance sheet, details of flats, and various payments made by the assessee. - It was concluded that these documents were part of the regular books of accounts and could not be considered incriminating material. The Pr. CIT did not classify these documents as incriminating in his order. - The Tribunal emphasized that without incriminating material, no additions could be made in the assessment under section 153A. 3. The Jurisdiction of the Principal Commissioner of Income Tax (Pr. CIT) under Section 263: - The Tribunal held that the Pr. CIT’s exercise of jurisdiction under section 263 was incorrect as the assessment for the Assessment Year 2011-12 had not abated. - The Tribunal referred to several case laws, including the Hon’ble Calcutta High Court’s decision in CIT, Kolkata-III Vs. Veerprabhu Marketing Limited, which established that no addition or disallowance could be made in an assessment under section 153A without incriminating material. - The Tribunal quashed the order passed under section 263 for the Assessment Year 2011-12, as the issues raised by the Pr. CIT were beyond the scope of an assessment under section 153A. 4. Requirement of Tax Deducted at Source (TDS) on Payments and the Consequent Disallowance under Section 40(a)(ia): - For the Assessment Year 2012-13, the Pr. CIT revised the assessment on the ground that no TDS was deducted on payments made to M/s. Avani Projects & Infrastructure Pvt. Ltd. - The Tribunal noted that the assessee had argued that the payments were reimbursements to a joint-venture partner, and hence, no TDS was required. - The Tribunal referenced the Hon’ble Delhi High Court’s decision in D G Housing Projects Ltd., which held that the Commissioner must make a preliminary enquiry to conclude that the assessment order is erroneous. The Pr. CIT had not conducted such an enquiry. - Consequently, the Tribunal held that the revision of the assessment under section 263 for the Assessment Year 2012-13 was bad in law. Conclusion: - The Tribunal allowed both appeals of the assessee, quashing the orders passed under section 263 for both the Assessment Years 2011-12 and 2012-13, as the issues raised by the Pr. CIT were not based on any incriminating material found during the search and were beyond the scope of an assessment under section 153A.
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