ASST. COMMISSIONER OF INCOME TAX, CUTTACK V. H L INFRASTRUCTURE, SALAPADA

ITSSA 12/CTK/2024

AI Insights

The case involves appeals by the revenue against the orders of the CIT(A) which had provided relief to H L Infrastructure for multiple assessment years. The core issue revolved around the legality of the assessments made under Section 144 read with Section 153A of the Income Tax Act, following a search operation on the assessee's premises. The revenue contended that the CIT(A) erred in law by granting relief based on a legal ground that was not presented during the assessment proceedings, thus violating the principles of natural justice. The Tribunal, referencing the Supreme Court's decision in Abhisar Buildwell, affirmed that the materials used by the AO were not incriminating and thus could not form the basis for the assessments under the provisions invoked.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 30025 (ITAT-CUTTACK)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Other Referred Cases: Abhisar Buildwell (P) Ltd. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAROJ KUMAR DUBEY
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Principle of natural justice
• Section: 153A; 68

Judgement Text

" आयकर आयकर आयकर आयकर अपीलीय अपीलीय अपीलीय अपीलीय अिधकरण अिधकरण अिधकरण अिधकरण, कटक कटक कटक कटक \u0001यायपीठ \u0001यायपीठ \u0001यायपीठ \u0001यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER IT(SS)A Nos.12-16/CTK/2024 (िनधा\u0005रण िनधा\u0005रण िनधा\u0005रण िनधा\u0005रण वष\u0005 वष\u0005 वष\u0005 वष\u0005 / A.Yrs. : 2013-14, 2014-15, 2015-16, 2016-17 & 2017-18) ACIT, Central Circle, Cuttack Vs H L Infrastructure, At-Salapada, Anandpur, Ghasipura, Keonjhar-758020 PAN No. :AAFFH 5386 P (अपीलाथ\u000f अपीलाथ\u000f अपीलाथ\u000f अपीलाथ\u000f /Appellant) .. (\u0010\u0011यथ\u000f \u0010\u0011यथ\u000f \u0010\u0011यथ\u000f \u0010\u0011यथ\u000f / Respondent) राज\u0014व राज\u0014व राज\u0014व राज\u0014व क\u0016 क\u0016 क\u0016 क\u0016 ओर ओर ओर ओर से से से से /Revenue by : Shri Saroj Kumar Dubey, CIT-DR िनधा\u0005\u0017रती िनधा\u0005\u0017रती िनधा\u0005\u0017रती िनधा\u0005\u0017रती क\u0016 क\u0016 क\u0016 क\u0016 ओर ओर ओर ओर से से से से /Assessee by : None सुनवाई क\u0002 तारीख / Date of Hearing : 07/01/2025 घोषणा क\u0002 तारीख/Date of Pronouncement : 07/01/2025 आदेश आदेश आदेश आदेश / O R D E R Per Bench : These are the appeals filed by the revenue against the separate orders of the ld.CIT(A), Central Circle, Cuttack, all dated 30.10.2024, for the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017 & 2017-2018. 2. It was submitted by the ld. CIT-DR that the facts in all the cases are identical. It was the submission that there was a search on the premises of the assessee group on 27.02.2019. During the course of search, no books of accounts found maintained by the assesee and the AO has completed the assessment based on the incriminating material i.e. BT-01 to BT-06 and HLI-01 found and seized/impounded. It was submitted by the ld. CIT-DR that the assesee did not bother to represent its case during the course of assessment proceedings and the assessment was completed u/s.144 r.w.s. 153A of the Act. However, in the appellate IT(SS)A Nos.12-16/CTK/2024 2 proceedings the CIT(A) considered the legal ground raised by the assesee, which ought have raised before the AO during the assessment proceedings and the CIT(A) has granted relief on the ground of the legal issue raised by the assesee without remanding the matter to the AO to seek clarification on the new legal ground taken by the assesee, which is gross violation of principles of natural justice. It was also submitted by the ld. CIT-DR that the CIT(A) has allowed the legal ground of the assesee following the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell, reported in (2023) 149 Taxmann.com 399 (SC)/454 ITR 212 (SC), however, the ld. CIT(A) has overlooked the verdicts of the Hon’ble Supreme Court that in case of incriminating material found the AO would assume jurisdiction to assess/re-assess total income, even in the case of unabated/completed assessments. Thus, the ld. CIT-DR submitted that the CIT(A) has wrongly applied the decision of the Hon’ble Supreme Court while granting the relief to the assesee and submitted that the assessment framed by the AO deserves to be restored and that of the order passed by the CIT(A) deserves to be set aside. 3. None appeared on behalf of the assesee. 4. We have considered the rival submissions. A perusal of the assessment order for the years under consideration clearly shows that the AO has not referred to any documents found in the course of search, incriminating or otherwise. The AO has only made the addition by invoking the provisions of Section 68 of the Act on account of unexplained cash credit. The Hon’ble Supreme Court in the case of Abhisar Buildwell (P) IT(SS)A Nos.12-16/CTK/2024 3 Ltd.,(supra) has categorically and specifically used the term ‘incriminating material’ and has never used the term ‘incriminating documents’. Therefore, the claim that no incriminating materials were found in the course of search or that no incriminating materials were used in the course of assessment would no more stand to reason. This is not a case where assessment has been done exclusively on the basis of return filed by the assessee without reference to any information/evidence/document found in the course of search. As no incriminating material has been found in the course of search in the case of the assessee, no addition could be made in the assessment framed u/s.153A of the Act. The ld. CIT(A) in para 6.4 has observed that the addition made by the AO on the basis of 26AS details, partners’ capital accounts and the statement given by the partners during the course of search, which cannot be considered as incriminating material to frame the assessment u/s.153A of the Act. The relevant observations of the ld. CIT(A) in para 6.4 in its appellate order reads as under :- 6.4 In the present case, it is seen that the Assessing Officer has made additions on the basis of 26AS details, partners' capital accounts and the statement given by the partners during the course of search. The issue then arises whether the abovementioned documents can be considered incriminating material as per the Abhisar judgment (supra). The word 'incriminating' has, unfortunately, not been defined by statute or in the Abhisar judgment (supra). The Standard Black's Law Dictionary defines 'incriminating' as \"Demonstrating or indicating involvement in criminal activity\". The Standard Black's Law Dictionary, further, defines \"incriminating evidence\" as \"Evidence tending to establish guilt or from which a fact-trier can infer guilt. Since the Hon'ble Supreme Court, in the Abhisar judgment (supra), uses the phrase 'incriminating material', it may be considered to closely approximate to 'incriminating evidence', and thus, be considered to mean qua search proceedings, as material collected during the search which tend to establish guilt or from which guilt can be inferred. Such material may be material which shows tax evasion/avoidance, undeclared revenue, expenditure, etc. which have not been considered in filing return of income by the assessee. It stands to IT(SS)A Nos.12-16/CTK/2024 4 reason then, that the books of accounts, financial statements or bank statements of an assessee, if disclosed and employed in filing return of income, cannot be considered to be incriminating. If revenue loss arises because the books of accounts, financial statements or bank statements of an assessee involve transactions, practices or outcomes which are not in compliance with the provisions of the Act, then, remedy, if available, may be taken as per the provisions of section 147/148 of the Act, as held by the Hon'ble Supreme Court. It is thus, seen that the figures as per 26AS or capital accounts of the partners which forms a part of the balance sheet, on which the Assessing Officer has based his findings, cannot be considered incriminating. 5. The revenue is unable to dislodge the finding fact as established by the ld. CIT(A). It is further observed that there is no incriminating document referred to in the assessment order by the AO nor any such document was produced either before the ld. CIT(A) or before the Tribunal. Therefore, we are of the opinion that the ld. CIT(A) has rightly allowed the appeal of the assesee on legal as well as on merit of the case. Accordingly, we uphold the same and all the appeals of the revenue are dismissed. However, in view of the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra), liberty is granted to the AO to initiate reassessment proceedings u/s.147/148 of the Act in case of completed/unabated assessment, if no incriminating material found during the course of search. 6. In the result, all appeals of the revenue are dismissed. Order dictated and pronounced in the open court on 07/01/2025. Sd/- (GEORGE MATHAN) Sd/- (MANISH AGARWAL) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / JUDICIAL MEMBER लेखा सद\u0003य/ ACCOUNTANT MEMBER कटक कटक कटक कटक Cuttack; \u0003दनांक Dated 07/01/2025 Prakash Kumar Mishra, Sr.P.S. IT(SS)A Nos.12-16/CTK/2024 5 आदेश आदेश आदेश आदेश क\u0002 क\u0002 क\u0002 क\u0002 \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप \u0003ितिलिप अ ेिषत अ ेिषत अ ेिषत अ ेिषत/Copy of the Order forwarded to : आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अिधकरण, कटक/ITAT, Cuttack 1. अपीलाथ\u0007 / The Appellant- H L Infrastructure, At-Salapada, Anandpur, Ghasipura, Keonjhar-758020 2. \b यथ\u0007 / The Respondent- 3. आयकर आयु\u0006(अपील) / The CIT(A), 4. आयकर आयु / CIT 5. िवभागीय \u0010ितिनिध, आयकर अपीलीय अिधकरण, कटक कटक कटक कटक / DR, ITAT, Cuttack 6. गाड\u0010 फाईल / Guard file. स यािपत \bित //True Copy// "