THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL V. M/S. N.M. AGROFOOD PRODUCTS PRIVATE LIMITED

ITA/25/2023

AI Insights

The case involves the Principal Commissioner of Income Tax, Central, Rajasthan as the appellant and M/s. N.M. Agrofood Products Private Limited as the respondent. The dispute centered on the addition of unexplained expenses to the income of the respondent for the assessment year 2012-13, which was initially added by the Assessing Officer (AO) but later contested and removed by the CIT (A). The main legal issue was whether the AO could make additions to completed assessments under Section 153A of the Income Tax Act without any incriminating material found during the search. The High Court of Rajasthan dismissed the appeal, agreeing with the lower authorities that no additions could be made in the absence of such material.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 719802 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 01-08-2023
• Assessment Year: misc
• Other Referred Cases: Meeta Gutgutia Vs. Pr CIT, Prateek Kothari Vs. ACIT, PCIT Vs. Meeta Gutgutia, Vijay Kumar D Agarwal V/s DCIT, Ratan Kumar Sharma vs. DCIT, Vikram Goyal vs. DCIT, Jadau Jewellers & Manufacturer PL Vs. ACIT, Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell P. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SIDDHARTH BAPNA; KRITI KALAWATIA
• Keywords: Assessment Year 2012-13; Incriminating material; Search and seizure; Unexplained expenses
• Section: 143(3); 153A

Judgement Text

"[2023:RJ-JP:16022-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 25/2023 The Principal Commissioner of Income Tax, Central, Rajasthan, 4th Floor, LIC Building, Bhawani Singh Road, Ambedkar Circle, Jaipur ----Appellant Versus M/s. N.M. Agrofood Products Private Limited, 34, 35, 36, 1st Phase, Udhyog Vihar, RIICO, Sri Ganganagar-335002. ----Respondent For Appellant(s) : Mr. Siddharth Bapna with Ms. Kriti Kalawatia HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE PRAVEER BHATNAGAR Order 01/08/2023 1. Heard. 2. This appeal is preferred against the order dated 24.08.2022 passed by Income Tax Appellate Tribunal, Jaipur Benches, “B”, Jaipur affirming the order dated 25.11.2021 passed by CIT (Appeal) in the matter of assessment of the income of the respondent, which is pertaining to assessment year 2012-13. The addition made by the Assessing Officer (AO) was successfully challenged by the assessee by filing an appeal before the CIT (A). The first ground of challenge to the order of assessment related to an addition made by the AO on account of alleged unexplained expenses. The challenge was laid mainly on the ground that addition on account of alleged unexplained expenses without any incriminating material in search for which assessment proceedings [2023:RJ-JP:16022-DB] (2 of 5) [ITA-25/2023] were not pending as on date of search was not permissible under the law. The CIT (A) in its order dated 25.11.2021 examined the provisions of law particularly provisions contained in Section 153A of the Income Tax Act (hereinafter ‘the Act’ in short) and several decisions and came to the conclusion that no addition can be made in proceedings under Section 153A of the Act in respect of the Assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. The Appellate Authority, referred to and relied upon various decisions of the Hon’ble Supreme Court and various High Courts on the issue. It was held, inter alia, as below: - “(xvi) Recently Hon’ble Supreme Court vide order dated 02-07-2018 in Meeta Gutgutia Vs. Pr CIT (96 Taxmann.com 468) have held that Invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. The head note of the judgment is as under: Section 153A of the Income-tax Act, 1961 – search and seizure (General principles) – Assessment years 2001-02 to 2003-04 and 2004-05 – High Court in impugned order held that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year – Whether SLP against said decision was to be dismissed- Held, yes [Para 2] [in favour of assessee] (xvi) Further, similar view is also taken in the following judgments, including by Hon’ble ITAT Jaipur, in many cases: Prateek Kothari Vs. ACIT (312/Jaipur/2015). [2023:RJ-JP:16022-DB] (3 of 5) [ITA-25/2023] PCIT Vs. Meeta Gutgutia 152 DTR 153 Vijay Kumar D Agarwal V/s DCIT in IT (SS) A Nos. 153, 154, 155 & 156/Ahd/2012 Ratan Kumar Sharma vs. DCIT ITA 797 & 798/Jaipur/2014 Vikram Goyal vs. DCIT ITA 174/Jaipur/2017 etc. Jadau Jewellers & Manufacturer PL Vs. ACIT (686/Jaipur/2014) (xviii) Thus the essential corollary of these decisions and also the decision relied upon by the appellant is that no addition can be made in the proceedings under Section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. (xix) The present appeal concerns AY 2012-13. On the date of the search, the said assessment already stood completed as discussed supra and the additions made by the AO u/s 143(3) r.w.s. 153A on account of share premiums and unsecured loans are without any reference to the seized material. Since no proceedings under the Income Tax Act were pending for AY 2012-13 as on the date of search, and accordingly scope of examination of issues in the assessment u/s 153A was required to be restricted to the incriminating material, if any, found as a result of search. It is observed that the addition is neither based on any single loose paper found/seized nor on any statement recorded during the course of search conducted in the case of the appellant as is evident from the order of the AO. Therefore in view of the aforesaid discussion and respectfully following the binding decision of the Hon’ble Jurisdictional High Court, decision of various other High Courts and the decision of Hon’ble Supreme Court as discussed supra, it is observed that the aforesaid addition made by the AO u/s 143(3) r.w.s. 153A for the year under consideration is legally not tenable and hence is not liable to be sustained. Accordingly, the Ground of Appeal No.1 is treated as allowed.” [2023:RJ-JP:16022-DB] (4 of 5) [ITA-25/2023] 3. Learned counsel for the revenue would fairly submit that the aforesaid issue is no longer res integra in view of authentative pronouncement of Hon’ble Supreme Court in the case of Principal Commissioner of Income Tax, Central-3 Vs. Abhisar Buildwell P. Ltd.: 2023 SCC Online SC 481. 4. In the aforesaid decision their Lordship in Supreme Court after examining the provisions contained in Section 153A of the Act concluded as below: - “23. 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. 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 reopened 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.” [2023:RJ-JP:16022-DB] (5 of 5) [ITA-25/2023] 5. In view of the aforesaid settled legal position, no case for interference is made out as no substantial question of law arises for consideration of this appeal. 6. Appeal is accordingly dismissed. (PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),J 27-/DHARMENDRA RAKHECHA "