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TMI Blog2023 (8) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... criminating material was found in the course of search. It was also held that the assessment framed u/s 143(1) of the Act for the assessment year 2011-12, which was unabated/concluded assessment, deserves to be undisturbed in the absence of any incriminating material found in the course of search. As decided in Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] no addition can be made in respect of the completed assessments in absence of any incriminating material. in the facts of the present case where inference drawn from the Ledger/Books of Accounts found during the search is similar to the case of CIT v. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] is thus answered in the affirmative. It is also held that the ITAT, Guwahati Bench was justified in deleting the disallowance u/s 40(a)(ia) of the I.T. Act, by holding that the proceeding u/s 143(1) is an assessment which is concluded and unabated and it cannot be disturbed as the Ledger/Books of Accounts and the statements recorded, during the search do not constitute incriminating material. Decided in favour of assessee. - HONOURABLE THE CHIEF JUSTICE AND HONOURABLE MRS. JUSTICE SUSMITA PHUKAN KHAUND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the category of unabated assessment. It is submitted on behalf of the Appellant that during the course of search, the ledger account of sub-contractor expenditure which is also a part of the regular Books of Accounts was found and examined by the search team. Upon analysis of the Ledger Account, the Investigation Wing found entry pertaining to an account of M/s Meitei Electricals Motor Works (hereinafter referred as M/s Meitei) in the books of the assessee for the financial year 2007-08 to 2013-14 showing total credit of Rs. 19,59,14,860/-. The respondent had paid M/s Meitei Rs. 6,37,71,766/- and the balance amount of Rs. 13,21,43,094/- was outstanding as on 31.03.2014. During the course of search and investigation, it was found that the assessee failed to deduct tax at source in respect of the amount which remained outstanding as on 31.03.2014. The credit balance of Rs. 13,21,43,094/- in the account of M/s Meitei in the books of the assessee represented the credit but the same was not paid. As per Section 194C of the I.T. Act, tax is to be deducted at the time of credit of any sum to the account of the sub-contractor or at the time of payment of any sum to a sub-contractor (M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the I.T. Act, then any deduction/collection of income tax at source would be beyond the power conferred by the provisions of the I.T. Act. 7. The AO, in order to verify the correctness of submissions summoned the 8 Naga parties and the Proprietor of M/s Meitei Sri Mohendra Singh Lurembam produced four subcontractors and their statements were recorded. The Investigation Wing (AO) held that the respondent s claim that the contract work was executed by individuals belonging to the scheduled tribes and not by M/s Meitei was held to be incorrect and it was noted that the accounts claimed to be audited and certified to be true by the Auditors belies the claim of the respondent as the actual facts were different from what is apparent from the Books of Account maintained by them which proves that M/s Meitei was a sub-contractor of the assessee and not an agent. It is alleged that the claim of the actual payees that the subcontractors belong to the Naga community was an afterthought. Hence, the Assessing Officer disallowed the amount of Rs. 15,46,46,174/- u/s 40(a)(ia) of the Act and added the same to the total income of the assessee. 8. The respondent assessee had filed an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the existence of incriminating material does not have any relevance. However, in respect of unabated assessments, the legislature had conferred power on the learned AO to just follow the assessment already concluded unless incriminating material is found in the search to disturb the said concluded assessment. It was held that in the case at hand, the assessment framed u/s 143(1) of the Act of the assessment Year 2011-12 which was unabated/concluded assessment on the date of search deserves to be undisturbed in the absence of any incriminating material found in the course of search and accordingly the disallowance made u/s 40(a)(ia) of the Act requires to be deleted. Since the issue was addressed on preliminary ground, the merits of disallowance u/s 40(a)(ia) of the Act for the Assessment Year 2011-12 were not dealt with. 13. It was held by the Tribunal that the scheme of act provides for abatement of pending proceedings as on date of search. It is not in dispute that the assessment for the year 2011- 12 was originally completed u/s 143(1) of the Act and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceedings as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. lt does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are incomplete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material 14. ln view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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