Naresh Bhikhabhai Savaliya, Surat V. Asst. Commissioner of Income Tax-4, Surat

ITSSA 10/SRT/2022

AI Insights

The case involves an appeal by Nareshbhai Bhikhabhai Savaliya against the order of the Learned Commissioner of Income Tax (Appeals)-4, Surat, which confirmed the additions made by the Assessing Officer under sections 69 and 69A of the Income Tax Act, 1961. The additions were related to unexplained investments and unexplained cash deposits, respectively. The primary contention of the assessee was that the original assessment for the Assessment Year 2011-12 was completed prior to the search and seizure operation, and no incriminating material was found during the search to justify the additions. The Tribunal, referencing the Supreme Court's decision, agreed with the assessee's position, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301740 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2022
• Other Referred Cases: PCIT vs. Abhisar Buildwell P. Ltd., Kabul Chawla vs. PCIT, Saumya Construction vs. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Search and seizure; Block assessment; Reassessment proceedings; Set aside
• Section: 147; 132; 143(3); 142(1); 153A; 143(1); 69A; 139(1); 113; 13; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./IT(SS)A No.10/SRT/2022 Assessment Year: (2011-12) (Physical Hearing) Nareshbhai Bhikhabhai Savaliya, 2, Sargam Society, Katargam Singanpore Road, Katargam, Surat – 395004. Vs. The ACIT, Central Circle-4, Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AKRPS3049Q (Appellant) (Respondent) Appellant by Shri Rasesh Shah, CA Respondent by Shri Ashok B. Koli, CIT(DR) Date of Hearing 26/04/2023 Date of Pronouncement 22/05/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2011-12, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-4, Surat [in short “the ld. CIT(A)”] in Appeal No. CIT(A), Surat-4/10524/2018-19, dated 03.03.2022 which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 29.12.2018. 2. Grounds of appeal raised by the assessee are as follows: “1. That on facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the action of the learned AO in making addition u/s. 69 and 69A of the Act, without appreciating that the original assessment of the appellant already stood completed u/s. 143(1) as on the date of search and therefore, the same cannot be altered u/s 153A since, no incriminating material whatsoever has been found during the course of search in respect of the said additions. IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 2 Hence, the above action of the learned CIT(A) confirming the action of the AO in altering the completed assessment without any evidence is absolutely incorrect, erroneous and bad-in-law, requiring outright annulment. 2. Without prejudice to the aforesaid Ground of Appeal No. 1, even otherwise, on facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in partly confirming the action of the learned AO in making an addition of Rs. 3,03,103/- u/s. 69 of the Act in the hands of the appellant alleging unexplained investment made by him in the lands belonging to his partnership firm, to the extent of his l/3 rd share therein, on the basis of registered purchase deed of lands, without appreciating that the said land is not purchased by the appellant in his individual capacity but the same is purchased by his partnership firm and hence, there is no question of the appellant making any unaccounted payment for the same and even the seized document does not show any payment by the appellant for the same. 3. Without prejudice to the aforesaid Ground of Appeal No. 1 & 2, even otherwise, on facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in partly confirming the action of the learned AO in making an addition of Rs. 3,03,103/- u/s. 69 of the Act in the hands of the appellant alleging unexplained investment in lands, merely on the basis of difference in the stamp duty value and the actual purchase value of the said land, without appreciating that the provisions of section 56(2)(vii) providing for deemed addition in respect of difference in the stamp duty value and purchase value of immovable properties in the hands of the purchaser has been inserted in the statue with effect from 01-04-2014 i.e. A.Y. 2014-15 and is thus, not applicable in the year under consideration i.e. A.Y. 2011-12.Hence, the impugned addition of Rs. 3,03,103/- as made u/s. 69 of the Act as confirmed by the learned CIT(A) on deemed basis needs to be deleted as being absolutely erroneous, illegal and bad-in-law. 4. Without prejudice to the aforesaid Ground of Appeal No. 1, even otherwise, on facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in partly confirming the action of the learned AO in making an addition of Rs. 11,00,000/- u/s. 69A of the Act alleging unexplained money in respect of cash deposited in the regular bank account of the appellant as reported in the ITS details, without appreciating that the said cash as deposited in the bank account is from the regular cash book and the source thereof gets fully explained from the regular cash book. Hence, the impugned addition of Rs. 11,00,000/- as made u/s. 69A of the Act as confirmed by the learned CIT(A) without properly considering the details as filed by the appellant is absolutely erroneous, illegal and bad-in-law and needs to be deleted. 5. The appellant craves leave to add, amend, alter, substitute, modify in any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.” IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 3 3. Now, we shall take ground nos. 1 to 4 raised by the assessee, which are interconnected and mix. The ground nos. 1to 3 relate to addition sustained by the ld CIT(A) to the tune of Rs.3,03,103/- and ground no.4 relates to addition sustained by the ld CIT(A) to the tune of Rs.11,00,000/- 4. Succinct facts qua ground nos. 1, 2 and 3 are that in the assessee`s case the original return of income u/s 139(1) of the Income Tax Act, 1961 for Assessment Year 2011-12 was electronically filed on 29.02.2012, declaring total income of Rs.5,73,350/-. This return of income was duly processed u/s 143(l) of the Act. Subsequently a search and seizure action u/s 132 of the Act was conducted in the K-Star Group of cases and the assessee was also covered in that search action. A warrant of authorization u/s 132 of the Act dated 17.08.2016 was issued in the name of the assessee. The search action u/s 132 of the Act undertaken by the department was concluded by Panchnama dated 18.08.2016. The assessee is engaged in the Proprietary business of trading of embroidery machines in the name of Pearl Overseas and also partner in the firm of M/s Akshar Associates, Hariom Corporation and Platinum Developers. During the course of assessment proceedings, the assessing officer observed that assessee along with other 2 co-purchasers have purchased 4 pieces of land at Navsari during the F.Y. 2010-11. The registered sale deed obtained from the registrar does not reflect any specific share of each investor in the land and in view of the same assessee's share is considered at l/3 fd share in the land. Thus the total investment made by the assessee in the land through cheque and cash works out to Rs.21,60,000/- being l/3 rd of Rs.64,80,000/-. Since the source of above investment has not been explained by the assessee, the amount of Rs.21,60,000/- was treated as unaccounted and unexplained investment u/s 69 of the Act and added to the total income of the assessee. 5. The brief facts qua ground no.4 are that during the assessment proceedings, the assessing officer noted from the ITS details of the computer system that assessee has deposited an amount of Rs.15,00,000/- in his bank account maintained with Indian Overseas Bank, Piplod Branch, Surat. In IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 4 response to the notice issued u/s 142(1) of the Act, assessee furnished only basic details like return of income, computation of total income etc. Nothing has been furnished regarding the source of cash deposit in the bank account. Therefore, the cash amount deposited in the bank account by the assessee is nothing but his unaccounted income. In view of the above, the cash deposit in the bank account as reported in ITS at Rs.15,00,000/- was added by assessing officer in the taxable income of the assessee. 6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has partly deleted the addition made by the Assessing Officer. In respect of the addition (vide ground Nos.1 to 3 of assessee) made by the assessing officer, at Rs.21,60,000/- treating as unaccounted and unexplained investment u/s 69 of the Act, the ld CIT(A) restricted the said addition to the tune of Rs.3,03,103/-, observing as follows: “6.3 Now, I come to quantum of addition. It is pleaded that the difference between the stamp duty valuation and the purchase consideration is actually Rs.9,09,309/- which was wrongly taken as Rs.64,80,000/- by the AO. This aspect was verified by me and it was found that the AO has made a totalling mistake in arriving at the total of the last column in the table. The actual total should be Rs.9,09,309/- and 1/3 rd of the same which should be added in the hands of the appellant is Rs.3,03,103/-. The AO is directed to substitute Rs.21,60,000/- with Rs.3,03,103/-. The appellant gets relief of Rs.18,57,897/-. Ground No.1 to 3 are treated to have been partly allowed.” 7. In respect of addition pertaining to the cash deposit in the bank account as reported in ITS at Rs.15,00,000/-, the ld CIT(A) restricted the addition to Rs.11,00,000/- observing as follows: “7.1 I have gone through the assessment order and the submissions made by the AR of the appellant. As seen from the submissions, the appellant has made cash deposits on 6 occasions, which are under: Date Amount of deposits 15.07.2010 2,00,000/- 18.09.2010 1,00,000/- 13.12.2010 4,00,000/- 22.12.2010 4,00,000/- 29.12.2010 3,00,000/- 31.12.2010 1,00,000/- Total 15,00,000/- IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 5 7.2 It is submitted that the appellant had a balance of Rs.4,89,484/- as on 31.03.2010 and the same should be given credit. Further, it was submitted that, the appellant has withdrawn from M/s Hari Om Tyre Agency, a partnership firm in which the appellant is the partner. It was farther submitted that the cash withdrawal made from the same bank account and deposited in the account of the appellant, As far as the cash balance is concerned, to the extent of Rs.4,00,000/- the cash deposit made by the appellant stands explained. As far as balance Rs.11,00,000/- is concerned, I am not to accept the explanation lied by the AR as satisfactory. The AR submitted that the cash has been withdrawn from the firm and deposited in the account of the appellant in the same bank. This could, have been done by cheque as well, as it is from the same bank. No prudent person will withdraw cash and deposit in some other account in the same bank, The cash withdrawal in the firm is most likely to be for some other purpose and appellant is found taking credit for the same. The explanation for balance Rs.11,00,000/- is not satisfactorily explained and hence, the addition of Rs.11,00,000/- made by the AO is confirmed. The appellant gets relief of Rs.4.00.000/-. Ground No. 4 is partly allowed.” 8. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. 9. The Ld. Counsel for the assessee submitted that there is no incriminating material found during the course of search. In the assessee`s case the original return of income u/s 139(1) of the Income Tax Act, 1961 for Assessment Year 2011-12 was electronically filed on 29.02.2012, declaring total income of Rs.5,73,350/-. Subsequently a search and seizure action u/s 132 of the Act was conducted in the K-Star Group of cases and the assessee was also covered in that search action. A warrant of authorization u/s 132 of the Act dated 17.08.2016 was issued in the name of the assessee. The search action u/s 132 of the Act undertaken by the department was concluded by Panchnama dated 18.08.2016. Therefore, ld Counsel contended that in case of assessee, the assessment year pertain to 2011-12, whereas the search was conducted on 17.08.2016, therefore assessment year 2011-12 is unabated assessment. In case of unabated assessment, the addition should not be made without the aid of incriminating material. In the original return of income the assessee has disclosed the bank account and other property details and search team did not find any new material during the search operation, hence there is no incriminating material to make IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 6 addition in the hands of the assessee, therefore addition made by the assessing officer may be deleted. 10. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 11. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. The assessment year pertain to 2011-12, whereas the search was conducted on 17.08.2016, therefore assessment year 2011-12 is unabated assessment. In case of unabated assessment, the addition should not be made without the aid of incriminating material. We note that time limit to complete the assessment as per section 153(1) was two years from the end of the assessment year, therefore, the assessment for assessment year 2011-12 was completed before the date of search, that is before the search date 17.08.2016, hence addition cannot be made without the aid of incriminating material. Hence, we note that assessee`s ground Nos.1 to 4 are covered by the judgment of the Hon`ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. (in Civil Appeal No.6580 of 2021)(SC), order dated 24.04.2023, wherein it was held as follows: “5. We have heard learned counsel for the respective parties at length. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under Section 132 or requisition under Section 132A or not, i.e., whether any 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 132 A of the Act, 1961 or not. 6. It is the case on behalf of the Revenue that once upon the search under Section 132 or requisition under Section 132A, the assessment has to be done under Section 153A of the Act, 1961 and the AO thereafter has the jurisdiction to pass assessment orders and to assess the ‘total income’ taking into consideration other material, though no incriminating material is found during the search even in respect of completed/unabated assessments. 7. At the outset, it is required to be noted that as such various High Courts, namely, Delhi High Court, Gujarat High Court, Bombay High Court, Karnataka High Court, Orissa High Court, Calcutta High Court, Rajasthan IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 7 High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. Commissioner Of Income Tax v. Mehndipur Balaji, 2022 SCC OnLine All 444 : (2022) 447 ITR 517 has taken a contrary view. 7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of Section 153A of the Act, 1961, has summarised the legal position as under: Summary of the legal position 38. 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 AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the ‘total income’ of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six AYs “in which both the disclosed and the undisclosed income would be brought to tax”. iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.” v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 8 merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (supra) and after considering the entire scheme of block assessment under Section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 15 & 16, it is held as under: “15.On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby; it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year, falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub- section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says, that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the, six assessment years prior to the search or requisition stands abated IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 9 and the total income of the assessee is required to be determined under section 153A, of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of, the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading “Assessment in case of search or requisition”. It is well settled as held by the Supreme Court in a catena of decisions that the heading of the, section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act.” 8. For the reasons stated hereinbelow, we are in complete 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), taking the view that no addition can be made in respect of completed assessment in absence of any incriminating material. 9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 10 ‘undisclosed income’ for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA 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 special rate of 60% under section 113 whereas income other than ‘undisclosed income’ was required to be assessed under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ‘undisclosed’ income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: “153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 11 Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. (2) 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 sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153- B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.” 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment 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 concerned assessment year falling within last six years preceding the search. Therefore, on true IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 12 interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A 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 reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It 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 in complete 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. 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; IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 13 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. 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. Civil Appeal Nos.7738-7739/2021, 7736-7737/2021, 7732-7735/2021 and 7740-7743/2021 15. Insofar as the aforesaid Civil Appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 06.09.2016 passed in ITA Nos. 270/2014, 269/2014, 15/2015, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21.09.2017 passed in the review applications. It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under Section 143(1)(a) or 143(3) of the Act, 1961 and to reassess the total income taking notice of undisclosed income even found during the search and seizure operation. 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs. Civil Appeal Nos. 15617/2017, 10267/2017, 10266/2017 & 10268/2017 IT(SS)A.10/SRT/2022/AY.2011-12 Naresh Bhikhabhai Savaliya Page | 14 16. Insofar as the aforesaid appeals filed by the assessee – Dayawanti through legal heir against the impugned common judgment and order dated 27.10.2016 passed by the High Court of Delhi at New Delhi in ITA Nos. 357/2015, 358/2015, 565/2015 and 566/2015. The question before the High Court was, whether the Income Tax Appellate Tribunal was justified in upholding the addition made on the basis of the incriminating material during the course of search. 16.1 In view of the aforesaid discussion and the reasoning, all these appeals filed by the assessee – Dayawanti through legal heir fail and the same deserve to be dismissed and are accordingly dismissed. No costs.” 12. From the above judgment of the Hon`ble Supreme Court in the case of Abhisar Buildwell Pvt Ltd (supra), it is abundantly clear that no addition can be made in respect of the completed assessments in absence of any incriminating material. Therefore, respectfully following the binding precedent of the Hon`ble Supreme Court in the case of Abhisar Buildwell Pvt Ltd (supra), we allow ground Nos. 1 to 4 raised by the assessee. 13. In the result, appeal filed by the assessee is allowed Order is pronounced on 22/05/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 22/05/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat