No assessment u/s 153A in absence of Incriminating Material for passing an order u/s 153A

PCIT Vs PGF LTD (Delhi High Court)

Conclusion: Where appellant-Revenue did not reveal that the statements recorded under Section 132(4) disclose some incriminating material on the basis of which orders under Section 153A had been passed then, no assessment under Section 153A should be made.

Held: An appeal had been filed by the Revenue, challenging the consolidated order passed by Tribunal whereby Tribunal had upheld order passed by CIT (Appeals) quashing the assessment order passed under Section 153A for the respective Assessment Years pursuant to the search carried out at the premises of the assessee under Section 132. Both the appellate authorities, CIT(Appeal) and the ITAT had returned concurrent findings of fact that no incriminating material was found during the search conducted, warranting assessment under Section 153A of Income Tax Act, 1961. Revenue submitted that it was not necessary that incriminating material was found during search under Section 132 for an order under Section 153A to be passed even where original assessments had attained finality and had not abated. It was held that given the fact that AO had not even referred to the judgment of the Punjab & Haryana High Court nor had he relied upon the conclusions of the High Court and that the SEBI Order, High Court judgment and the Special Audit report were made before the date of search, it could be concluded that assessment had not been framed on the basis of incriminating material culled from the decision of the High Court or found during search. Further, the judgment of the Supreme Court which was rendered on 12^th March, 2013 could not be said to incriminating material found during search conducted on in 2005 and, therefore, could not form the basis of the assessment order passed in 2007. The Supreme Court in the said decision had only directed the Income tax Department to examine any wrong doings by the respondent. At best, such directions could constitute material for initiating proceedings under Section 148 provided some material was found as a result of the enquiry conducted by the Income Tax Department pursuant to the decision of the Supreme Court. However, such findings of the Supreme Court in 2013 could not constitute incriminating material found during search in 2005 which would validate assessment order under Section 1 53A passed in 2007. The issue did not arise for consideration unless it could be demonstrated by the Appellant-Revenue that the statements recorded under Section 132(4) disclose some incriminating material on the basis of which orders under Section 153A had been passed.”  Consequently, given the facts and circumstances of the present cases, no substantial question of law arose for consideration of this Court.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. The aforesaid appeals have been filed by the Appellant-Revenue, challenging the consolidated order dated 29^th June, 2018 passed by the Income Tax Appellate Tribunal (for short ‘ITAT’) in ITA Nos.2131- 2134/Del/2010 for the Assessment Years 2000-01 to 2003-04, whereby the ITAT has upheld separate Orders dated 10^th February, 2010 passed by the Commissioner of Income Tax (Appeals)-III, New Delhi (for short CIT(A) quashing the assessment order(s) dated 28^th December, 2007 passed under Section 153A of the Income Tax Act, 1961 (for short ‘the Act, 1961’) for the respective Assessment Years pursuant to the search carried out on 22^nd September, 2005 at the premises of the Respondent-Assessee under Section 132 of the Act, 1961.

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