2022 (4) TMI 453 - AT - Income Tax

Revision u/s 263 by CIT - order passed by AO u/s.143(3) r.w.s. 153A - Whether no incriminating material in the case of the assessee was found during the course of search proceedings conducted u/s.132(1)? - disallowance of business loss - HELD THAT - When no incriminating material in the case of the assessee for the year under consideration was found during the course of search proceedings conducted u/s. 132(1) thereupon, the Assessing Officer in respect of the unabated assessment of the assessee could have only re-computed its completed assessment and was divested of his jurisdiction of making any independent addition/disallowance. As the Assessing Officer in the backdrop of his limited scope of jurisdiction could not have drawn any adverse inferences as regards the claim of forex loss, and therein made any independent addition/disallowance in the hands of the assessee, therefore, the order passed by him u/s. 153A r.w.s. 143(3) of the Act, dated 29.12.2016 being in conformity with the view taken in case of CIT Vs. Gurinder Singh Bawa 2015 (10) TMI 1761 - BOMBAY HIGH COURT and CIT Vs. Deepak kumar Agarwal 2017 (9) TMI 850 - BOMBAY HIGH COURT could not be dubbed as erroneous, failing which the same could not have been revised by the Pr. CIT. The order passed by the Pr. CIT u/s.263 cannot be sustained. We, thus, restore the order passed by the Assessing Officer u/s. 153A r.w.s.143(3) of the Act - Decided in favour of assessee.

Summary

Issues:
1. Validity of order passed by the Pr. Commissioner of Income Tax (Central) under Section 263 of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer in making additions/disallowances in an unabated assessment without incriminating material found during search proceedings.

Analysis:

Issue 1: Validity of order passed by the Pr. Commissioner under Section 263:
The appeal was against the order passed by the Pr. Commissioner of Income Tax (Central) under Section 263 of the Income-tax Act, 1961, which arose from the original assessment under Section 153A read with Section 143(3) for the assessment year 2009-10. The assessee challenged the order on various grounds, including lack of jurisdiction, failure to consider important facts, and the assessment being already accepted in the original assessment. The Pr. Commissioner set aside the original assessment, leading to the appeal. The Tribunal analyzed the jurisdiction assumed by the Pr. Commissioner under Section 263 and concluded that as no incriminating material was found during search proceedings, the Assessing Officer could only re-compute the completed assessment and not make independent additions. Citing relevant case laws, the Tribunal held that the order passed by the Assessing Officer could not be deemed erroneous, as he was limited in his scope of jurisdiction due to the absence of incriminating material. Therefore, the Tribunal set aside the order passed by the Pr. Commissioner under Section 263.

Issue 2: Jurisdiction of the Assessing Officer without incriminating material:
The Tribunal delved into the jurisdiction of the Assessing Officer in making additions/disallowances in an unabated assessment without any incriminating material found during search proceedings. It was highlighted that as per legal precedents, in cases where no incriminating material is discovered, the Assessing Officer can only reiterate the completed assessment without making further additions. The Tribunal referred to several judgments supporting this view and emphasized that the Assessing Officer, in such scenarios, is restricted from independently adding or disallowing any items. Based on this analysis, the Tribunal concluded that the order passed by the Assessing Officer under Section 153A read with Section 143(3) could not be considered erroneous, and thus, the Pr. Commissioner's order under Section 263 was set aside.

In summary, the Tribunal allowed the appeal, quashed the order passed by the Pr. Commissioner under Section 263, and restored the original assessment order by the Assessing Officer under Section 153A read with Section 143(3) for the assessment year 2009-10.