PCIT Vs Speciality Paper Ltd. (Bombay High Court)
The Bombay High Court rejected a batch of appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961, arising from a common order of the Mumbai Bench of the Income Tax Appellate Tribunal dated 21.03.2018. The dispute concerned assessments made under Section 153C in cases where the original assessments had not abated and where no incriminating material was referred to by the Assessing Officer as having been found during the search. The Tribunal had followed the Bombay High Court’s decision in Commissioner of Income Tax vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. and held that additions could not be made in unabated assessments in the absence of incriminating material.
Before the High Court, the Revenue raised a common question of law as to whether the Tribunal was justified in holding that no additions could be made in respect of unabated assessments when the Assessing Officer had not referred to any incriminating material seized during the search. The Revenue also pointed out that the Supreme Court had admitted the Revenue’s Special Leave Petition concerning Continental Warehousing Corporation (Nhava Sheva) Ltd.
The Revenue relied upon the Supreme Court’s decision in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd., which considered the interpretation of Sections 153A, 132 and 143. The Supreme Court held that, in cases of completed or unabated assessments, the Assessing Officer could not make an addition in the absence of incriminating material found during a search under Section 132 or requisition under Section 132A. Where incriminating material was found, the Assessing Officer could assess or reassess total income by taking into consideration such material and other material available with the Assessing Officer.
