2024 (9) TMI 370 - HC - Income Tax

Assessment u/s 153A - Addition made by AO without reference to any seized material - HELD THAT - Tribunal, as relying on decision on Continental Warehousing Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT held that the AO cannot make additions without incriminating material found during a search. The Court noted that the issue was also covered by the Supreme Court's decision in Abhisar Buildwell case 2023 (4) TMI 1056 - SUPREME COURT The questions of law as raised by the revenue would no longer need consideration. It is however clarified that the completed/unaudited assessments can be reopened by the Assessing Officer in exercise of powers u/s 147/148 of the Act, subject to fulfillment of conditions as envisaged under the said provisions and as may be permissible in law. All contentions of parties in that regard are expressly kept open. Decided against revenue.

Issues:
Appeals under Section 260A of the Income Tax Act, 1961 challenging the Tribunal's judgment regarding the Assessing Officer's authority to make additions in the absence of incriminating material, scope of Section 153A, reliance on previous court decisions, and consideration of the merit of the case.

Analysis:
The High Court dealt with a batch of appeals filed by the revenue challenging the Tribunal's judgment on unabated/concluded assessments for the years 2005-06 to 2007-08. The Tribunal, following the decision in Continental Warehousing Corporation case, held that the Assessing Officer cannot make additions without incriminating material found during a search. The Court noted that the issue was also covered by the Supreme Court's decision in Abhisar Buildwell case, emphasizing that completed assessments can be reopened under Sections 147/148 subject to conditions. The Court dismissed the revenue's appeals, citing the Supreme Court's conclusions on the jurisdiction of Assessing Officers in such cases.

The revenue raised several questions of law, including the correctness of the Tribunal's decision on the Assessing Officer's authority to make additions without incriminating material, the scope of Section 153A, and the reliance on previous court decisions without considering the pending matters before the Apex Court. The Court referred to its previous orders in similar cases and reiterated that Assessing Officers cannot make additions in completed/unabated assessments without incriminating material, as clarified by the Supreme Court's decision in Abhisar Buildwell case. The Court dismissed the appeals and kept the option open for Assessing Officers to reopen completed/unabated assessments under Sections 147/148.

In light of the Supreme Court's approval of the decision in Continental Warehousing Corporation case, the Court held that the revenue's questions of law did not need consideration. The Court clarified that Assessing Officers can reopen completed/unabated assessments under Sections 147/148 subject to specified conditions. The Court rejected the appeals and emphasized that all contentions regarding reopening assessments are expressly kept open for both parties.

Regarding a specific appeal, the Court agreed that it raised similar questions of law as noted in a previous case and thus rejected the appeal in line with the observations made in the earlier judgment. The Court emphasized the consistency in its decisions regarding the Assessing Officer's authority to make additions in assessments without incriminating material and the reopening of completed/unabated assessments under the relevant provisions.

In conclusion, the High Court rejected the appeals filed by the revenue, upheld the Tribunal's decision based on previous court judgments and the Supreme Court's pronouncement, and clarified the Assessing Officer's powers to reopen completed/unabated assessments under Sections 147/148. The Court emphasized the importance of incriminating material for making additions and the need to fulfill conditions for reopening assessments.

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