2023 (4) TMI 1380 - AT - Income Tax

Validity of assessment order u/s.153A r.w.s.143(3) as barred by limitation - HELD THAT - Without adhering to the time limits prescribed both under the Pre Amended Proviso and Post Amended Proviso, the Ld. AO completed the assessment order on 27.02.2015 which is clearly time barred u/s. 153B of the Act. Since in both the situations, the limitation period expires on 31.03.2014, but the Assessing Officer passed the assessment orders only on 27.02.2015 which is clearly time barred. However our Jurisdictional High Court in the case of Anil Kumar Gopikishan Agrawal 2019 (6) TMI 746 - GUJARAT HIGH COURT has held that it is the Date of Search that has to be considered to be relevant date for purpose of applying amended provisions of section 153C 1 of the Act. Therefore, we have no hesitation in confirming the findings of the CIT(A) on the issue of assessment order passed as time barred. Thus the Ground Nos. 1 to 3 raised by the Revenue are devoid of merits and against the provisions of law, therefore the same are liable to be dismissed. Addition of Off Shore Bank Account - As no incriminating document was found during the course of search proceedings. Further it appears that the Income Tax Department is also not sure of its own source of information and the veracity of the information, on which heavy reliance is placed. It is common knowledge, from the press reports, that the information received by the Department from France was based on stolen unverified/leaked documents. The search undertaken by the Department at various premises of assessee was a shot in the dark to try to recover something to give substance to the unverified data received by it from France. Thus the department was not able to find anything either at the residence or the various business premises of the assessee, relating to the offshore bank account. Decided against revenue.

Issues Involved:

1. Delay in filing the appeal due to COVID-19 pandemic.
2. Validity of assessment order based on time limitation under Section 153B of the Income Tax Act.
3. Absence of incriminating material found during search proceedings.
4. Evidentiary value of statements recorded under Section 132(4) and subsequent retraction.
5. Addition of Rs. 7.5 crores based on alleged foreign bank account.

Detailed Analysis:

1. Delay in Filing the Appeal:

The appeal filed by the Revenue was noted to have a delay of two days, but this was excused due to the COVID-19 pandemic. The Supreme Court had extended the time limit for filing appeals starting from March 15, 2020, thus there was no delay in filing the appeal.

2. Validity of Assessment Order Based on Time Limitation:

The assessment order was challenged on the grounds of being time-barred. The Ld. CIT(A) noted that the assessment should have been completed by March 31, 2014. The reference for exchange of information was made on December 19, 2012, and as per the provisions, the exclusion period should have been six months. The assessment was completed on February 27, 2015, which was beyond the statutory time limit. The Tribunal upheld that the assessment order was indeed time-barred, confirming the findings of the Ld. CIT(A).

3. Absence of Incriminating Material Found During Search Proceedings:

The Tribunal noted that no incriminating documents were found during the search proceedings. The assessment was based on the presumption of an offshore bank account, which was not substantiated by any evidence found during the search. The Ld. CIT(A) and the Tribunal both agreed that the addition could not be sustained in the absence of incriminating material as required under Section 153A.

4. Evidentiary Value of Statements Recorded Under Section 132(4) and Subsequent Retraction:

The assessee retracted the statement made under Section 132(4), claiming it was made under duress. The Tribunal referred to the jurisdictional High Court's decision that mere admission without corroborative evidence cannot justify additions. The Tribunal found that the statement recorded at odd hours and later retracted could not be the sole basis for the addition.

5. Addition of Rs. 7.5 Crores Based on Alleged Foreign Bank Account:

The Tribunal found that the addition of Rs. 7.5 crores was based on unverified information purportedly received from France. The information was not corroborated by any evidence from the search or subsequent inquiries. The Tribunal noted that the Department had not received any confirmation from Swiss authorities regarding the alleged bank account, rendering the addition unsustainable.

Conclusion:

The Tribunal dismissed the Revenue's appeal, confirming that the assessment order was time-barred and that no incriminating material was found to justify the addition. The cross-objection filed by the assessee was deemed infructuous as the assessment order itself was quashed.

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