ACIT, CENTRAL CIRCLE-1, RANCHI, RANCHI V. VIBHAVATI DISTRIBUTORS PRIVATE LIMITED, RANCHI

ITSSA 36/RAN/2023

AI Insights

The case involves two appeals by the ACIT, Central Circle-1, Ranchi against Vibhvati Distributors Pvt. Ltd., concerning the assessment years 2014-15. The appeals were based on the orders passed by the CIT(A) which partly allowed the assessee's appeal, deleting the additions made under section 68 of the Income Tax Act. The primary contention from the revenue was the alleged error in the CIT(A)'s decision to delete the additions and the validity of the notice under section 148 issued after the search operation. The Tribunal referenced the Supreme Court's decision in Pr. CIT vs. Abhisar Buildwell P. Ltd, which clarified that no assessment or reassessment can be made in the absence of incriminating material found during the search.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668832 (ITAT-RANCHI)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Other Referred Cases: Pr. CIT vs. Abhisar Buildwell P. Ltd, ACIT vs. G. Koteshwara Rao & others
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Reassessment proceedings; Block assessment; Tangible material
• Section: 147; 148; 143(3); 132; 153A; 68; 139; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “RANCHI” BENCH, RANCHI VIRTUAL HEARING AT KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Ratnesh Nandan Sahay, Accountant Member I.T(SS).A. No.36/Ran/2023 Assessment Year: 2014-15 ACIT, Central Circle-1, Ranchi................…................................……….……Appellant vs. Vibhvati Distributors Pvt. Ltd....…..….…..….........……...........……...…..…..Respondent Unit No.2, Ground Floor, Shri Radhe Krishna Garden, Bariyatu Road, Jharkhand-834001. [PAN: AADCV5386L] I.T(SS).A. No.102/Ran/2023 Assessment Year: 2014-15 ACIT, Central Circle-1, Ranchi................…................................……….……Appellant vs. Vibhvati Distributors Pvt. Ltd....…..….…..….........……...........……...…..…..Respondent Unit No.2, Ground Floor, Shri Radhe Krishna Garden, Bariyatu Road, Jharkhand-834001. [PAN: AADCV5386L] Appearances by: Shri Devesh Poddar, AR and R. R Mittal, AR appeared on behalf of the appellant. Md. Shadab Ahmed, Sr. CIT, DR, appeared on behalf of the Respondent. Date of concluding the hearing : June 25, 2025 Date of pronouncing the order : June 26, 2025 ORDER Per Sonjoy Sarma, Judicial Member: Both the appeals filed by the revenue against two separate orders passed by the Commissioner of Income Tax (Appeals)-3, Patna [hereinafter referred to as ‘CIT(A)’] dated 30.05.2023 & 29.09.2023. As the issues involved in both appeals are similar and pertain to the same assessee, therefore, they were heard together and are being disposed of by this common order. For the sake of convenience, we first take up ITA No.36/Ran/2023. I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 2 2. ITA No.36/Ran/2023 – Brief facts of the case are that in the case of the assessee, a search was conducted on 09.02.2019 and assessment was completed on 22.04.2021 u/s 153A r.w.s. 143(3) of the Act determining total income of Rs.13,64,00,340/-. 3. Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A) where the ld. CIT(A) partly allowed the appeal of the assessee on the issue of addition made u/s 153A of the Act where no incriminating material was found during the search operation in following manner: “I have considered the entire gamut of the issue. There is no dispute that the assessment in the case was not abated at time of initiation of search. Further to the Assessing Officer has failed to bring on record any incriminating document found during the course of search which could have been made the basis of addition. To arrive at any conclusion, I would like to refer to the recent judgement of Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell P. Ltd. (2023) 149 taxmann.com 399(SC) wherein it has been held that the AO cannot assess or reassess in the case where no incriminating documents has been unearthed during the course of search. The operating part of the decision of the Hon'ble Supreme Court is reproduced below: “14. In 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 case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns, and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments..(Emphasis supplied) I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 3 Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.\" In view of the above, it is clear that where no incriminating material was found, the AO completed cannot take into consideration the other material in respect of assessment/unabated assessments. I find that the case of appellant is squarely covered by the decision of Hon'ble Supreme Court in case of Pr. CIT vs. Abhishar Buildwell P. Ltd (2023) 149 taxmann.com 399(SC) delivered on 24.04.2023. Respectfully following the said decision the addition of Rs.13,64,00,000/- made u/s 68 of the Act is deleted and the grounds taken in this regard are accordingly allowed. It is observed that the return filed u/s 139 was subjected to scrutiny wherein addition/disallowance of Rs. 3,41,250/- u/s 14A was made in the order passed u/s 143(3) of the Act on 30.03.2015. As the said addition apparently has not been disputed in appeal, the Assessing Officer should have repeated the said disallowance in this assessment order passed u/s 153A for the A.Y 2012-13 which was not abated. The Assessing Officer is directed to start the computation from income determined u/s 143(3) dated 30.03.2016 at Rs.3,41,590/-.” 4. Dissatisfied with the above order, the revenue approached before this Tribunal raising various grounds. However, the primary contention of the revenue is that the ld. CIT(A) erred in deleting the addition holding that no incriminating material was found during the search by relying on the decision of the Pr. CIT vs. Abhishar Buildwell P. Ltd (supra) where it has been held that the Assessing Officer cannot assess or reassess in case where there is no incriminating material has been unearthed during the search. The revenue has also challenged that the ld. CIT(A) ought to have obtained a remand report from the Assessing Officer for verification of I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 4 whether any incriminating material was considered by the Assessing Officer for making assessment u/s 153A of the Act and in the present case no such report was called for from the Assessing Officer, therefore, the order of the ld. CIT(A) is bad in law and liable to be set aside. 5. On the other hand, the ld. AR vehemently objected the above ground of the revenue stating that the instant issue is fully covered in favour of the assessee as per decision of the Hon’ble Supreme Court as in the case of Pr. CIT vs. Abhishar Buildwell P. Ltd (supra) where it was held that the Assessing Officer cannot assess or reassess in case where there is no incriminating material has been unearthed during the search. He further stated that from the assessment order it was no where stated that any incriminating material was found in the search operation hence the addition made by the Assessing Officer is not sustainable and when the Assessing Officer could not bring any incriminating material so there is no question to call any remand report from the Assessing Officer therefore the ld. CIT(A) rightly passed the order in favour of assessee, he therefore supported the decision of the ld. CIT(A). 6. We, after hearing both the parties and perusing the materials available on record, find that while passing of the impugned order, the ld. CIT(A) elaborately discussed the facts of the case and relied on the decision of Hon’ble Supreme Court as in the case of Pr. CIT vs. Abhishar Buildwell P. Ltd (supra) where it was held that the Assessing Officer cannot assess or reassess in case where there is no incriminating material has been unearthed during the search. Since, proceedings drawn u/s 153A of the Act and no incriminating material was found during the search proceedings, therefore, the alleged addition made by the Assessing Officer is bad in law and accordingly we upheld the order of the ld. CIT(A) and dismissed the appeal of the revenue. I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 5 7. ITA No.102/Ran/2023 – Similarly, in this appeal, search operation was conducted on 09.02.2019 and notice u/s 148 of the Act was issued to the assessee on 30.03.2019 on the basis of information received from ADIT(Inv.) Unit in consequent to the search operation dated 09.02.19 and it is not disputed fact that the alleged notice u/s 148 was issued after the date of initiation of search in the case of the assessee and on the basis of very same material that had already been considered and adjudicated upon during the assessment proceedings u/s 153A of the Act by making additions u/s 68 of the Act were made amounting to Rs.13,64,00,000/- as in the 153A read with 143(3) order dated 22.04.2021. 8. Aggrieved by the above order, the assessee went in appeal before the ld. CIT(A) where the ld. CIT(A) allowed the appeal of the assessee holding as under: “The admitted facts in this case are that search was conducted in the case of appellate company and its directors on 09.02.2019 and the notice u/s 148 was issue on 30.03.2019 on the basis of information received from the ADIT (Inv.) Unit-1. Ranchi gathered in consequence to search. There is no dispute that the notice u/s 148 have been issued after the date of initiation of search in this case. It is abundantly clear that the provisions relating to search assessment has under gone a change by insertion of sections 153A, 153B & 153C of the Act w.e.f. 01.06.2003. Under these amended provisions, in relation to search assessment, after the initiation of search the Ld. AO having jurisdiction over the case, has to mandatory issue notice u/s 153A for six assessment years immediately preceding the assessment year relating to the previous year in which the search was initiated. The period of six is years extendable to ten years under certain set of circumstances. Under the new scheme of search assessment, all the assessment which have attained finality will remain unabated while the pending assessment and the assessment in which the time is still available the notice u/s 143(2) will abate. It means that the unabated assessment cannot be disturbed unless some incriminating evidences have been found during the course of search relating to these assessments. If the incriminating evidences is available reassessments will be carried out wherein the effect of incriminating evidences would be taken into account in such reassessments. In case there is no such incriminating evidence the contents of already finalized assessments would be repeated in the fresh assessments. I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 6 All such assessments would be completed u/s 153A, no assessment can be passed u/s 147 as the new provisions start with a non-obstante clause in suppression of the incongruent provisions u/s 139, 147, 148, 149, 151 & 153 of the Act. The new provisions envisage single assessment for each of the assessment years contained in the block of six years/ten years. In case of abated assessment, the AO has complete freedom which he has under normal scrutiny assessments. It is very clear from the above discussion that once search has been initiated in case of an assessee, it is mandatory for the jurisdictional Ld. AO to issue notices u/s 153A in case of such persons and notice u/s 153C in respect of other person separately for each of the said six assessment years. The assessment or reassessment have to be completed and a separate order has to be passed for each of the six assessment years. The AO is barred from initiating any reassessment proceedings u/s 147 and issued notices u/s 148 in respect of any of the six assessment years. Under the facts in the case of the appellant company, the Ld. AO has acquired jurisdiction u/s 147 and issue notice u/s 148 which is in contravention of the provisions contained u/s 153A, 153B & 153C of the Act. The provisions contained u/s 153A, 153B & 153C are clear and ambitious. However, such instances have occurred earlier as well which has been subject matter of judicial scrutiny before the various Tribunals. It would be relevant to quote from the decision in case of ACIT vs. G. Koteshwara Rao & others decided by Hon'ble ITAT, Visakhapatnam in ITA No. 400/Viz/2014. \"From the plain reading of the assessment order it is established that the Income Tax Department has noticed the purchase of lands by the assessee and six others in Singavaram Village consequent to search operations conducted in the case of N Suryanaraya Reddy and the office premises of Sai Lakshmi Township Pvt. Ltd., Visakhapatnam and the department has seized the incriminating material evidencing the purchase of lands. Further, as per the report of the DDIT(Inv.), Unit-III(2), Visakhapatnam, it was established that the incriminating material was found and seized marked as Annexure-A/SLT/39 (page 1 to 55). Therefore, from the above, it is clear that the initiation of proceedings u/s 147 was due to the incriminating material found during the course of search and the material indicating the excess payment or purchase of lands was found and seized during the course of search. Therefore, this Tribunal rightly held that the assessment should have been made u/s 153C but not u/s 147 of the Act. On perusal of the entire material and orders of this Tribunal it is evident that this Tribunal has considered the entire material and orders of this Tribunal it is evident that this Tribunal has considered the entire material and the arguments placed by the Ld. AR and DR and has taken a conscious decision to hold that the assessment made u/s 147 r.w.s. 143 is bad in law.\" (Emphasis supplied) I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 7 In view of the above discussion and on considering the background facts and the applicable law in the case, I hold that assumption of jurisdiction by the Ld. AO u/s 147 in the case is bad in law and hence, cannot be sustained. I, therefore, quash the notice u/s 148 which is without jurisdiction. Accordingly, the assessment made u/s 147 r.w.s. 143(3) is declared ab initio null & void. As I have quashed the assessment passed u/s 147r.w.s. 143(3), I do not consider it necessary to adjudicate on merits of the case. Accordingly, the appeal of the appellant is allowed.” 9. Dissatisfied with the above order, the revenue approached before this Tribunal raising various grounds. However, the primary contention of the revenue is that the ld. CIT(A) erred in deleting the addition since the ld. CIT(A) while passing the impugned order did not appreciate the fact that the Assessing Officer had rightly issued notice u/s 148 of the Act as per provisions of section 153A was not applicable in the case for the assessment year 2012-13 and the order passed by the ld. CIT(A) is erroneous and liable to be set aside. 10. On the other hand, the ld. AR stated that notice u/s 148 of the Act was issued on 30.03.2019 immediately after the search was over i.e. on 09.02.2019, therefore, both the proceedings u/s 153A and 147 cannot be instituted separately on the same assessee for the same assessment year. He relied on the decision in case of ACIT vs. G. Koteshwara Rao & others decided by Coordinate Bench of ITAT, Visakhapatnam in ITA No. 400/Viz/2014 where it was held that assessment should have been made u/s 153A of the Act but not u/s 147 of the Act and the same is bad in law. 11. We, after hearing both the parties and perusing the materials available on record, find that notice u/s 148 of the Act was issued on 30.03.2019 which was immediately after the search was over on 09.02.2019, therefore, both the proceedings u/s 153A and 147 cannot be instituted separately on the same issue for the same assessment year and I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 8 as when the assessment order was also passed u/s 153A on 20.04.2021. It is settled principle of law that once an assessment has been completed u/s 153A following a search and where no new tangible material has come to light thereafter, a notice u/s 148 of the Act cannot be validly issued on the same facts and issue. The ld. DR could not controvert the above facts. On this issue which was held as in the case of ACIT vs. G. Koteshwara Rao & others decided by Coordinate Bench of ITAT, Visakhapatnam in ITA No. 400/Viz/2014. We, therefore, following the decision of the Coordinate Bench find that the ld. CIT(A) rightly quashed the reassessment order that assumption of jurisdiction u/s 147 of the Act and issuing notice u/s 148 of the Act which was in contravention of provision of section 153A, 153B and 153C of the Act. Accordingly, the instant appeal filed by the revenue is hereby dismissed. 12. In the result, both the appeals of the revenue are dismissed. Kolkata, the 26th June, 2025. Sd/- Sd/- [Ratnesh Nandan Sahay] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 26.06.2025. RS Copy of the order forwarded to: 1. Appellant 2. Respondent 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches I.T(SS).A. No.36&102/Ran/2023 Vibhvati Distributors Pvt. Ltd 9 "