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TMI Blog2024 (7) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2015 (9) TMI 80 - DELHI HIGH COURT] it is a settled position of law that the Revenue cannot be permitted to sustain any addition in the absence of any incriminating material for that relevant AY. Undeniably, it becomes evident from a perusal of the factual matrix of the case that all the receipts with respect to transactions with foreign entities pertain to AYs 2016-17 and 2017-18. Thus, the ITAT has rightly deleted the additions pertaining to AYs 2012-13 to 2015-16 based on the settled legal position as enunciated above. Regarding incriminating material unearthed during the course of the search operation, it is apposite to elucidate that the agreement between the assessee and CMF was already in the knowledge of the Revenue and the commission received by the assessee pursuant to that agreement was duly reflected in his ITR. Additionally, the ITAT has rightly concluded that on the conspectus of the replies furnished by the assessee and the factual matrix of the case, the Revenue was not able to show any indelible link that the payments received from the foreign entities were in relation to the agreement between CMF and the assessee for supply of banknote paper in India. The afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee had become a non-resident. 4. Thereafter, on 31.12.2019, the assessing officer [ AO ] passed an assessment order in the case of the assessee for AYs 2012-13 to 2017-18, wherein, it was observed that the assessee continued to receive commissions from CMF through other foreign entities of CMF s parent group and since CMF does not have any other agent in India for supply of currency notes, therefore, the said amount was received pursuant to that agreement only. Based on the aforementioned rationale, the AO added certain amount as undisclosed income for AYs 2012-13 to 2017-18. 5. Against the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [ CIT(A) ]. On 22.04.2021, while deciding the appeal of the assessee, the CIT(A) partly allowed the appeal and deleted the addition for AYs 2014-15 to 2017-18. However, for AYs 2012-13 and 2013-14, it upheld the decision of the AO and added a certain amount to the total income of the assessee. 6. Aggrieved by the said order, both Revenue and the assessee preferred an appeal before the ITAT, whereby, vide common order dated 09.03.2022, while deleting the additions for AYs 2012-13 and 2013-14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to iterate that as per the dictum laid down by this Court in Kabul Chawla (supra), it is a settled position of law that the Revenue cannot be permitted to sustain any addition in the absence of any incriminating material for that relevant AY. The significant observations made by this Court in Kabul Chawla (supra) on that aspect are reproduced herein for reference, wherein, the aforementioned legal position came to be summarized in the following terms:- 37. On a conspectus of section 153A (1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Kabul Chawla [CIT v. Kabul Chawla, 2015 SCC OnLine Del 11555 : (2016) 380 ITR 573] and the Gujarat High Court in Saumya Construction (P) [CIT v. Saumya Construction (P) Ltd., 2016 SCC OnLine Guj 9976 : (2016) 387 ITR 529], taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 29. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153-A in the 1961 Act and when there shall be a block assessment under Section 153-A of the 1961 Act. 30. That prior to insertion of Section 153-A in the statute, the relevant provision for block assessment was under Section 158-BA of the 1961 Act. The erstwhile scheme of block assessment under Section 158-BA envisaged assessment of undisclosed income for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime i.e. : (i) block assessment under Section 158-BA to assess the undisclosed income , and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the undisclosed income was chargeable to tax at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sub-section (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 reopen the completed/unabated assessments, unless any incriminating material is found with respect to assessment year concerned falling within last six years preceding the search. Therefore, on true interpretation of Section 153-A of the 1961 Act, in case of a search under Section 132 or requisition under Section 132-A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that all the receipts with respect to transactions with foreign entities pertain to AYs 2016-17 and 2017-18. Thus, the ITAT has rightly deleted the additions pertaining to AYs 2012-13 to 2015-16 based on the settled legal position as enunciated above. 14. Furthermore, regarding the alleged incriminating material unearthed during the course of the search operation, it is apposite to elucidate that the agreement between the assessee and CMF was already in the knowledge of the Revenue and the commission received by the assessee pursuant to that agreement was duly reflected in his ITR. Additionally, the ITAT has rightly concluded that on the conspectus of the replies furnished by the assessee and the factual matrix of the case, the Revenue was not able to show any indelible link that the payments received from the foreign entities were in relation to the agreement between CMF and the assessee for supply of banknote paper in India. The aforementioned rationale also finds mention in the ITAT order, which was impugned before us. For the sake of clarity, the relevant extracts of the impugned order are reproduced herein for reference:- 25 .Admittedly, there was no agreement post 31.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re even in terms of section 9 (1) (i) no income is taxable in the hands of assessee is upheld. 26. In fact, the ld. CIT (A) has held that post 31.12.2012, the assumption made by the AO after the period 01.01.2013 is purely based on presumption that there might be continuation of terms and conditions of this agreement which was without any basis or evidences albeit on conjectures and surmises. The alleged money received by the assessee through various dubious entities during FYs 2015-16 2016-17 as alleged by the AO that assessee might have received money on account of share of profit from CMF in connection of its Indian activities is wholly erroneous and none of these informations or material found which he has been referred to by the ld. CIT DR or by the AO even remotely point out that through these dubious entities, assessee had carried out any activities in India and accordingly, independently also, we find that no income has been taxed in India from AYs 2013-14 to 2017-18. 27. Now, coming to the additions sustained or enhanced by the ld. CIT (A) in AY 2012-13 first of all, even though ld. CIT (A) had admitted that there is no incriminating material or document or any evidence ei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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