Case Law Details
Vivimed Labs Limited Vs ACIT (ITAT Hyderabad)
hon’ble apex court’s landmark decision in CIT Vs. Sinhaghad Technical Educational Society (2017) 84 com 290 (SC) that no such proceedings initiated u/s 153A of the Act sustainable in law for want of incriminating material found or seized during the course of search. We make it clear that although the Revenue has vehemently argued that there indeed exists sufficient seized material in light of the annexures attached with the DRP’s directions (supra), a perusal thereof sufficiently indicates that this so called material parts already formed of the assessee’s books which had already been considered in both the corresponding scrutiny assessments pending on the date of search. This tribunal’s Special Bench’s decision in All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (ITAT-Mum) (SB) holds that incriminating material is that material which is found during the course of search and not produced in the course of original assessment and undisclosed income or property disclosed during the course of search, as the case may be. We find from a perusal of the case(s) records and more particularly in light of the DRP’s compilation of the alleged seized material it only includes the assessee’s expenses / claims or EBIDTA details etc. which could hardly be termed as anything incriminating in the foregoing terms.
Mr. Sai referred to Gopal Lal Bhadruka Vs. DCIT 346 ITR 106 (AP) that an assessing authority could also consider any other material during the search assessment. The instant plea hardly carries any substance since the question framed therein was not regarding lack of incriminating material but the Assessing Officer’s jurisdiction to take all other material into account in a search assessment which is not the issue before us. We thus accept the assessee’s instant legal ground to quash both these assessments thereby rendering all other pleadings on merits to have been become infructuous. Ordered accordingly.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
These assessee’s twin appeals for A.Ys 2012-13 and 2013-14 arise against the Asst. Commissioner of Income Tax, Central Circle – 2(3), Hyderabad’s assessments; both dt.26.03.2021, framed in furtherance to the Dispute Resolution Panel (“DRP”) – 1, Bangalore’s directions; both dt.25.02.2021 in F.Nos.121 & 122/DRP-1/BNG/2019-20; respectively, involving proceedings u/s 143(3) r.w.s. 144C(13) rws 153A of the of Income Tax Act, 1961 [in short, ‘the Act’].
2. It transpires during the course of hearing that the first and foremost issue that arises for our apt adjudication is regarding validity of the impugned assessments for want of incriminating material found or seized during the course of search herein carried out at assessee’s premises on 09.11.2016. Learned counsel has quoted CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Delhi), CIT Vs. M/s. Salasar Stock Broking Ltd. in G.A.No.1929 of 2016 dt.24.08.2016 (Cal HC), CIT Vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom) and PCIT Vs. Saumaya Constructions Pvt. Ltd (2016) 387 ITR 529 (Gujarat) that such an assessment involving lack of incriminating material found or seized during the course of search deserves to be quashed only.
3. Learned CIT-DR has strongly defended the impugned assessments. He vehemently contended that there is no provision in the Act stipulating that section 153A proceedings get attracted only in case of such incriminating material found or seized during the course of search. His case is that the scheme of the Act involving the search assessment in light of section 153A and 154C is to assess or re-assess the concerned assessee’s total income rather than that based on the mere incriminating material only. He further took us to the DRP’s directions in both these assessment years containing identical Annexure-1 indicating the list of the seized documents to buttress the point that the impugned twin assessments are indeed based on seized material only.
4. We have given our thoughtful consideration to rival pleadings and find no merit in Revenue’s stand. We first of all deem it appropriate to take note of certain basic facts. The assessee had interalia filed its section 139(1) returns dt.29.09.2012 and 30.11.2013 which followed the Transfer Pricing Officer’s “TPO” section 92CA(3) orders dt.29.01.2016 and 31.10.2016; respectively. Suffice to say, the impugned search action took place thereafter on 09.11.2016 followed by the DRP’s directions dt.20.12.2016 in A.Y. 2012-13. Both these assessments thereafter stood treated as “abated” ones in light of section 153A(1) 2nd proviso and the Assessing Officer initiated section 153A proceedings followed by yet another assessments including reference made to the TPO as well as draft assessment and objections filed before the DRP which duly stand disposed off as per law.
5. We wish to observe in light of the case laws quoted at the assessee’s behest as well as after taking into consideration the hon’ble apex court’s landmark decision in CIT Vs. Sinhaghad Technical Educational Society (2017) 84 com 290 (SC) that no such proceedings initiated u/s 153A of the Act sustainable in law for want of incriminating material found or seized during the course of search. We make it clear that although the Revenue has vehemently argued that there indeed exists sufficient seized material in light of the annexures attached with the DRP’s directions (supra), a perusal thereof sufficiently indicates that this so called material parts already formed of the assessee’s books which had already been considered in both the corresponding scrutiny assessments pending on the date of search. This tribunal’s Special Bench’s decision in All Cargo Global Logistics Ltd. Vs. DCIT (2012) 137 ITD 287 (ITAT-Mum) (SB) holds that incriminating material is that material which is found during the course of search and not produced in the course of original assessment and undisclosed income or property disclosed during the course of search, as the case may be. We find from a perusal of the case(s) records and more particularly in light of the DRP’s compilation of the alleged seized material it only includes the assessee’s expenses / claims or EBIDTA details etc. which could hardly be termed as anything incriminating in the foregoing terms.
6. Mr. Sai referred to Gopal Lal Bhadruka Vs. DCIT 346 ITR 106 (AP) that an assessing authority could also consider any other material during the search assessment. The instant plea hardly carries any substance since the question framed therein was not regarding lack of incriminating material but the Assessing Officer’s jurisdiction to take all other material into account in a search assessment which is not the issue before us. We thus accept the assessee’s instant legal ground to quash both these assessments thereby rendering all other pleadings on merits to have been become infructuous. Ordered accordingly.
7. These assessee’s twin appeals are allowed in above terms. A copy of this common order be placed in their respective case files.
Order pronounced in the Open Court on 7th April, 2022.
