Principal Commissioner Of Income ... vs Manoj Kumar Agarwal
2022 Latest Caselaw 12268 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 39
 

 
Case :- INCOME TAX APPEAL No. - 72 of 2022
 

 
Appellant :- Principal Commissioner Of Income Tax-I
 
Respondent :- Manoj Kumar Agarwal
 
Counsel for Appellant :- Manu Ghildyal
 
Counsel for Respondent :- Ashish Bansal
 

 
Hon'ble Mrs. Sunita Agarwal,J.

Hon'ble Mrs. Jyotsna Sharma,J.

Heard Sri Manu Ghildyal learned Advocate for the appellant-Income Tax Department, Sri Ashish Bansal learned Advocate for the respondent-assessee and perused the record.

This appeal under Section 260-A of the Income Tax Act, 1961 (In short as "the Act, 1961") has been filed challenging the order dated 5.4.2022 passed by the Income Tax Appellate Tribunal, Lucknow Bench 'B', Lucknow.

Amongst various substantial questions of law framed in the memo of appeal, learned counsel for the appellant-Income Tax Department submits that the following substantial questions of law are arising for consideration in the present appeal:-

(i) Whether assessment or re-assessment under Section 153-A of the Income Tax Act, 1961, can be framed only on the basis of incriminating material found during the course of search under Section 132 of the Act.

(ii) Whether assessment or re-assessment under Section 153-A of the Income Tax Act can be framed where no incriminating material has been found in the search under Section 132 of the Act.

Learned counsel for the appellant further submits that the aforesaid substantial questions of law have been answered by this Court in a bunch of appeals leading being Income Tax Appeal No. 51 of 2021 (Pr. Commissioner of Income Tax vs. M/s Shri Mehndipur Balaji) decided vide judgment and order dated 4.7.2022, wherein taking note of the Division Bench judgment of this Court dated 6.9.2016 in Income Tax Appeal No. 270 of 2014 (Commissioner of Income Tax Central Kanpur vs. Kesarwani Zarda Bhandar Sahson Alld.) and other connected appeals, the substantial question of law involved therein were answered in the following manner in para '26' as under:-

"26. In Income Tax Appeal No.270 of 2014 (Commissioner of Income Tax Central Kanpur vs. Kesarwani Zarda Bhandar Sahson Alld.) and other connected appeals, decided by Division of this Court on 06.09.2016, the substantial question of law involved was similar to those as involved in the present appeal and the Division Bench answered the questions as under:

"8. Appeal was admitted on following substantial questions of law:

(1) Whether the Hon'ble Income Tax Appellate Tribunal had erred in law and on facts in setting aside the assessment completed under Section 153A of the Income Tax Act, 1961 and not following the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Raj Kuamr in ITA No. 56 of 2011 wherein it is held that the Assessing Officer has the power to re-assess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of original asseessment.

(2) Whether in view of the law laid down by this Hon'ble Court in the case of CIT Vs. Raj Kumar ( supra), the Assessing Officer would be competent to re-open the assessment proceedings already made and determine the total income of the assessee ; the Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(1)(a) of the Act ?

10. As is evident Section commenced with the words notwithstanding anything contained in Section 139, 147, 148, 149, 151 and 153, meaning thereby whatever has been provided in the aforesaid provisions that will not bar Assessing Officer in proceeding with the assessment or reassessment of total income for six assessment years, immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The word 'assess' or 'reassess' not only suggest but show that power under Section 153A includes reassessment and that would be done only when assessment has already been finalized. There is inherent hint in Section 153A and there is no reason to restrict its scope. Tribunal has relied on the decision of Special Bench of Mumbai Tribunal in All Cargo Global Logistics Ltd. Vs. DCIT, 147 TTJ 513 wherein it was held that no addition can be made for any assessment year under Section 153A, the assessment which, is not pending on the date of search, unless any incriminating material is found in the course of search. Tribunal has decided the issue in favour of Assessee and deleted all the additions made in assessment orders up for consideration in various appeal for Assessment Years 2004-05 to Assessment Year 2007-08.

11. We find that this issue has now been finalized by a Division Bench of this Court in Commissioner of Income Tax Vs. Raj Kumar Arora, (2014) 367 ITR 517 ( All) wherein it has been held as under :-

"Consequently, even though an assessment order has been passed under Section 143(1) (a) or under Section 143(3) of the Act, the Assessing Officer would be required to reopen these proceedings and reassess the total income taking notice of undisclosed income even found during the search and seizure operation. The fetter imposed upon the Assessing Officer under Sections 147 and 148 of the Act have been removed by the non obstante clause under Section 153A of the Act.

Consequently, we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(1)(a) of the Act.

In the light of the aforesaid, the reasons given by the Tribunal that no material was found during the search cannot be sustained, since we have held that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment."

12. In view of above decision which squarely clinches both the substantial questions of law pressed in these appeals, we find no reason to take a different view and hence answer the above questions in favour of Revenue and against Assessee."

Further, while answering the questions in favour of the revenue, the order passed by the Tribunal has been set aside noticing the findings of fact recorded by the Assessing Officer and the CIT (A), the appeals before the Tribunal have been restored to their original numbers and direction has been issued to the Tribunal to decide the appeal afresh on merits in accordance with law.

At the outset, the learned counsel for the appellant states that the present appeal arises out of the same search and seizure operations under Section 132(1) of the Act, 1961 carried out on 27.11.2015 which was subject matter of consideration in the bunch of Income Tax Appeals decided vide judgment and order dated 4.7.2022.

Learned counsel for the respondent-assessee does not dispute the factual and legal position as stated by the learned counsel for the appellant-Income Tax Department as noted above.

In view of the aforesaid, the substantial questions of law involved in this appeal having been conclusively answered with the decision of this Court in the Income Tax Appeal No. 270 of 2014 (Commissioner of Income Tax Central Kanpur vs. Kesarwani Zarda Bhandar Sahson Alld.) alongwith the other connected appeals and the decision of this Court in the judgment and order dated 4.7.2022 in the Income Tax Appeal No. 51 of 2021 connected alongwith the other appeals (supra).

In view of the admission of the learned counsels for the parties, the present appeal is admitted on the questions of law framed above and allowed with the consent of the learned counsels for the parties in terms of the judgment and order dated 4.7.2022 in Income Tax Appeal No. 51 of 2021 (Pr. Commissioner of Income Tax vs. M/s Shri Mehndipur Balaji) alongwith other connected appeals.

The impugned order of the Income Tax Appellate Tribunal is hereby set aside and the appeal before the Tribunal is restored to its original number.

The I.T.A.T. (Income Tax Appellate Tribunal) is hereby directed to decide the appeal afresh on merits in accordance with law, after affording reasonable opportunity of hearing to the parties.

Order Date :- 7.9.2022

Brijesh