2023 (6) TMI 1214 - AT - Income Tax

Assessment u/s 153A - belated filing of returns - statutory time limit provided for filing the returns of income in response to notice under section 153A - HELD THAT - When a search is initiated, the assessee is not required to file his return till such time he receives notice u/s 153A of the Act. Once such notice is received, the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. As the revised return filed by the assessee for the assessment years 2011-12 to 2016-17 are invalid returns and have to be declared non-est, for the reason that these are nothing but revising of belated returns filed on 13.06.2018. Hence, the entire additional incomes offered by the assessee in the revised returns filed on 13.12.2018 for assessment years 2011-12 to 2016-17 cannot be taxed at all in the relevant assessment years as it had been offered in the invalid and non-est revised return. Addition made towards unsecured loans u/s 68 and consequential disallowance of interest on such loans - Admittedly, there is absolutely no incriminating material found during the course of search for assessment years 2011-12 to 2015-16 in respect of making addition made towards unsecured loans under section 68 of the Act and consequential disallowance of interest on such loans. Hence, the earlier assessment years for assessment years 2011-12 to 2015-16 cannot be disturbed at all by learned AO while framing the search assessments under section 153A of the Act. This issue is no longer res integra in view of the recent decision of the Hon ble Supreme Court in case of PCIT Vs. Abhisar Buildwell Pvt. Ltd 2023 (4) TMI 1056 - SUPREME COURT wherein the decision of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT has been upheld by the Hon ble Apex Court. Hence, in view of the same, all the additions made by learned AO in the search assessments for assessment years 2011- 12 to 2015-16 are hereby directed to be deleted. In view of our earlier observations made that the revised returns filed by the assessee for the assessment years 2011-12 to 2015-16 on 13.12.2018 are invalid and non-est, the income to be determined for assessment years 2011-12 to 2015-16.

Issues Involved:
1. Delay in filing appeals.
2. Validity of assessment orders based on time-barred revised returns.
3. Treatment of additional income offered in revised returns.
4. Legality of additions made to returned income under Section 68.
5. Disallowance of interest on unsecured loans.
6. Validity of assessments without incriminating material for unabated years.
7. Treatment of belated returns and their revision.
8. Double taxation of the same income.

Summary:

1. Delay in Filing Appeals:
The Tribunal condoned a 2-day delay in filing the appeals, considering the small duration of the delay, and admitted the appeals for adjudication.

2. Validity of Assessment Orders Based on Time-Barred Revised Returns:
The assessee's returns for AYs 2011-12 to 2016-17 were filed in response to a notice under Section 153A beyond the prescribed time limit, making them belated returns. The Tribunal held that belated returns cannot be revised, and thus, the revised returns filed on 13.12.2018 are invalid and non-est.

3. Treatment of Additional Income Offered in Revised Returns:
The additional income of Rs. 74,96,096/- offered by the assessee in the revised returns for AYs 2011-12 to 2016-17 cannot be taxed as it was offered in invalid and non-est revised returns. The Tribunal suggested that the additional income should be sustained and added for AY 2017-18 to avoid double taxation.

4. Legality of Additions Made to Returned Income Under Section 68:
Additions made by the AO for AYs 2011-12 to 2015-16 on account of unsecured loans under Section 68 and disallowance of interest on such loans were held to be invalid as there was no incriminating material found during the search for these unabated assessment years.

5. Disallowance of Interest on Unsecured Loans:
For AY 2016-17, the disallowance of interest paid on unsecured loans was directed to be deleted since the Tribunal had already deleted the additions made on account of unsecured loans in earlier years.

6. Validity of Assessments Without Incriminating Material for Unabated Years:
The Tribunal held that for unabated assessment years (2011-12 to 2015-16), the AO could not disturb the assessments without any incriminating material found during the search. This was supported by the Supreme Court decision in PCIT Vs. Abhisar Buildwell Pvt. Ltd.

7. Treatment of Belated Returns and Their Revision:
The Tribunal concluded that returns filed under Section 153A beyond the prescribed time limit are belated and cannot be revised. This was supported by the Supreme Court decision in Kumar Jagdish Chandra Sinha Vs. CIT.

8. Double Taxation of the Same Income:
The Tribunal emphasized that the additional income offered in the invalid revised returns should be sustained for AY 2017-18 to avoid double taxation.

Conclusion:
All appeals of the assessee were allowed, with the Tribunal directing the deletion of all additions made by the AO for AYs 2011-12 to 2016-17 based on the invalid revised returns and lack of incriminating material. The additional income offered in the invalid revised returns should be considered for AY 2017-18 to prevent double taxation.

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