2023 (4) TMI 688 - AT - Income Tax

Validity of assessment u/s 153A - assessment barred by limitation - completion of assessment proceedings after the expiry of time limit prescribed u/s 153B 1 - period available to the AO is less than 60 days for the purpose of limitation - Whether CIT A has not following the proposition of law laid down in the Finance Act, 2012? - addition made on account of deposit/ investments in HSBC Geneva bank account - HELD THAT - Though this ground is not specific about the assessment order is barred by limitation, but considering that the CIT A has not following the proposition of law laid down in Finance Act, 2012 , which means about the amendment made in Clause viii of the Explanation to section 158B 1 of the Finance Act 2012, thereby extending the period of limitations from six months to 12 months with effect from 1st day of July 2012. Competent Authority namely Under Secretary FT TR-III 2 vide its letter dated 21-02-2013 sought for information under the provisions of Exchange of information article to Indo-Switzerland, DTAA. Since the reference been made after 1st July 2012, the amended extension period of 12 months will be applicable in the present case. Memorandum explaining the changes in the Income Tax Act vide Finance Bill 2012 stated that the time period to be excluded would start from the date on which the process of getting information is initiated by making an reference by the Competent Authority in India to the foreign tax authorities and end with the date on which information is received by the Commissioner. In the present case since the reference was made on 21-02-2013 by the Competent Authority, the extended 12 months period expires on 20- 02-2014. But the normal time barring period for completion of assessment order is on 31-03-2014. Thus there is 38 days time available from 21-02-2013 to 31-03- 2014. Since the regular time limit of 38 days available with the AO, as per the above proviso, 60 days namely further time of 22 days, that is upto 22-04- 2014 is available to the AO for completion of the assessment order. However the Ld Assessing Officer completed the assessment order on 17-02-2015 which is clearly barred by limitation. Both the AO and Ld CIT DR could not able to justify that the assessment order passed is well within the period of limitation. CIT A in his Appellate order at paragraph 6.19 has elaborately dealt this issue and held that the assessment order is barred by limitation, since the same is passed after 22-04-2014. Therefore no hesitation in holding that the assessment orders passed by the Ld Assessing Officer on 17-02-2015 are clearly barred by limitation and the assessment orders are non existing in the eye of law. Thus the Ground raised by the Revenue is devoid of merits and the entire Revenue appeals fails and deserve to be dismissed. Whether any incriminating material should be seized during the course of search for making assessment under section 153A? - We find that the document relied upon by the AO is not an evidence much less admissible evidence in view of the fact that data shown IS NOT IN ORIGINAL BUT PHOTO COPIES, which were not authenticated. It neither have any signature of the Banking Authority nor it has the Bank Logo/emblem in it. Mere appearance of some personal details of the assessee on the three pages photostat copy does not validate the information as true and correct. Since personal details are easily available from known sources and therefore such details do not validate the case of the AO in any manner. What the AO attempted to draw an inference that the assessee owns and maintains foreign bank account, based on some unverified sheet of paper which is indicative of a bank statement, it is upon the AO to prove the truthfulness of the same. But till the stage of second appellate proceedings before this Tribunal, being the highest facts findings authority, the Revenue failed to prove the same with necessary materials and proper evidences. Decided against revenue. Authenticity of Documentary evidence - The very fact that the information available with the department was not authentic, is the reason why search took place, as the Revenue wanted to confirm this unauthentic information with some corroborating material (to be hopefully found from the possession of the assessee). The only requirement/plea of the assessee was that, he may be given copy of any document to prove the allegation, which was NOT PROVIDED since it is non-existing document. This amply proves that the satisfaction note of the Investigation Wing was also on a wrong footing as they came only for roving inquiry. Unauthenticated and uncorroborated sheets of papers should not be considered as evidence, whether primary or secondary and therefore addition made by the Ld AO on such document is liable to be deleted. Ground raised by the Revenue namely deletion of addition made on account of deposit/ investments in HSBC Geneva bank account are devoid of merits and the same is liable to be dismissed. Processing of returns of income filed by the assessee as made by the Assessing Officer under section 143(1) could not be regarded as assessment and it is, therefore, not a case where the assessments for both the years under consideration could be said to have been completed - Special Bench, Mumbai in the case of All Cargo Global Logistics Ltd. ( 2012 (7) TMI 222 - ITAT MUMBAI(SB) wherein it was held that in a case or in a circumstances where the proceedings have reached finality, assessment under section 143(3) read with section 153(3) has to be made as was originally made and in a case certain incriminating documents were found indicating undisclosed income, then addition shall only be restricted to those documents/incriminating material. Additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. The said additions made for both the years under consideration are, therefore, deleted allowing the relevant grounds of the assessee's appeals.

Summary

Issues Involved:
1. Validity of assessment orders under section 153A without incriminating material.
2. Legality of additions based on foreign bank account information.
3. Validity of assessment orders completed after the statutory time limit.

Summary:

1. Validity of Assessment Orders under Section 153A Without Incriminating Material
The Tribunal held that the assessment under section 153A could not be made without any incriminating material found during the search. The Tribunal noted that the search conducted on 08.09.2011 did not yield any incriminating material related to the alleged foreign bank accounts. The Tribunal emphasized that the assessment under section 153A should be based on material found during the search and not on information obtained from other sources.

2. Legality of Additions Based on Foreign Bank Account Information
The Tribunal found that the information regarding the foreign bank account was not authenticated and was based on photocopies without any official certification. The Tribunal noted that the burden of proof was on the Revenue to establish the connection of the alleged foreign bank account with the assessee, which was not done. The Tribunal also highlighted that the assessee had repeatedly denied having any foreign bank account and had requested authenticated information, which was not provided by the Revenue. The Tribunal cited various judicial precedents, including the Gujarat High Court's decision in Kailashben Manharlal Chokshi vs. CIT, to support the view that additions could not be made based solely on uncorroborated statements and unauthenticated documents.

3. Validity of Assessment Orders Completed After the Statutory Time Limit
The Tribunal upheld the CIT(A)'s decision that the assessment orders were barred by limitation. The Tribunal noted that the normal time limit for completing the assessment was 31.03.2014, and even with the extended period of 12 months under the amended provisions of section 153B(1), the assessment should have been completed by 22.04.2014. Since the assessment orders were passed on 17.02.2015, they were held to be time-barred and invalid in law.

Conclusion:
The Tribunal dismissed the Revenue's appeals, confirming the CIT(A)'s decision that the assessment orders were barred by limitation and that no additions could be made without incriminating material found during the search. The Tribunal also dismissed the Cross Objections filed by the assessee as infructuous.