INCOME TAX ACT, 1961

Section 153A Section 147 Section 148

Search and seizure - Assessment under section 153A - Validity - Addition made in abated assessment without incriminating material

Consequent to search, notice under section 153A was issued calling for return of income for the year under consideration. In response, the assessee had filed return of income on 9-9-2011 declaring total income representing short-term capital gains with current year loss which was same as shown in the revised return of income filed on 15-9-2008 under section 139. The case was selected for scrutiny and the assessment had been completed under section 143(3) read with section 153A. The AR contended that additions were made by the AO in the assessment framed under section 153A, but nowhere, the AO had referred to incriminating material found as a result of search. Therefore, the assessment order passed by the AO making various additions was bad in law and liable to be quashed. Held: The assessment for the impugned assessment year was abated as on the date of search, because before search and seizure action conducted on 13-10-2010, the AO had reopened the assessment under section 147, by issuing notice under section 148 on 26-2-2010. Further, once the assessment was reopened, then the AO shall have time limit for completion of assessment one year from the end of the relevant assessment year in which notice under section 148 is issued. In this case since notice under section 148 was issued on 26-12-2010, the AO will have time limit for completion of reassessment up to 31-3-2011, which was much later than the date of search i.e., on 13-10-2010. Consequently, assessment for the impugned assessment year was abated and the AO shall have the power to assess or re-assess total income, including undisclosed, if any, found as a result of search. There was, therefore, no merit in the ground taken by the assessee challenging validity of assessment proceedings passed under section 143(3) read with section 153A, and consequently, ground taken by the assessee was thus, rejected.

Distinguished:CIT v. Smt. Shaila Agarwal (2012) 204 Taxman 276 (All.) : 2012 TaxPub(DT) 0018 (All-HC), All Cargo Global Logistics Ltd. v. Dy. CIT (2012) 137 ITD 287 (Mum) (SB) : 2012 TaxPub(DT) 2464 (Mum-Trib), CIT v. Anil Kumar Bhatia (2013) 24 Taxman.com 98 (Del.) : 2013 TaxPub(DT) 0245 (Del-HC), CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 Taxmann.com 78 (Bom.) : 2015 TaxPub(DT) 2182 (Bom-HC), Jai Steel (India) v. ACIT (2013) 36 taxmann.com 523 (Raj) : 2013 TaxPub(DT) 1647 (Raj-HC) and Gurinder Singh Bawa v. DCI (2014) 28 Taxmann.com 328 (Mum-Trib.) : 2014 TaxPub(DT) 2776 (Mum-Trib).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2007-08

INCOME TAX ACT, 1961

Section 32(1)(iia)

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