Bombay High Court
Pr. Commissioner Of Income Tax - ... vs Speciality Paper Ltd on 14 August, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:12482
Digitally
signed by
PRAJAKTA
901-ITXA [email protected]
PRAJAKTA SAGAR
SAGAR VARTAK
VARTAK Date:
2024.08.16
14:56:11
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 16 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 22 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 30 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 37 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Global Paper Impex Pvt. Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 50 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Global Paper Impex Pvt. Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 51 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
Page 1 of 8
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901-ITXA [email protected]
AND
INCOME TAX APPEAL NO. 58 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Global Paper Impex Pvt. Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 66 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 80 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Global Paper Impex Pvt. Ltd. ...Respondent
AND
INCOME TAX APPEAL NO. 666 OF 2019
Pr. Commissioner of Income Tax - Central-1 ...Appellant
Versus
Speciality Paper Ltd. ...Respondent
__________
Mr. Suresh Kumar for Appellant.
Mr. Sameer Dalal for Respondents.
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CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
DATED: 14 August 2024.
P.C.
1. This is a batch of appeals under Section 260A of the Income Tax Act,
1961 (for short, "the Act") circulated on behalf of the Revenue, which arises
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from a common judgment and order passed by the Income Tax Appellate
Tribunal, Mumbai Bench (for short, "the Tribunal") dated 21 March 2018 in a
batch of Income Tax Appeals.
2. Before the Tribunal, disputes had arisen from the order passed by the
Commissioner of Income Tax (Appeal) taking a view that in the absence of any
incriminating material found in the course of search, no additions are
permissible in the assessments made under Section 153 (C) of the Act in years,
where the original assessments do not abate, following the decision of this
Court in Commissioner of Income Tax vs. Continental Warehousing
Corporation (Nhava Sheva) Ltd.1.
3. In Commissioner of Income Tax vs. Continental Warehousing
Corporation (supra), before this Court, an issue which had fell for
consideration of this Court, was 'whether in a case where pursuant to issuance
of a notice under Section 153A assessments are abated, Assessing Officer
retains original jurisdiction as well as jurisdiction conferred on him under
Section 153A, for which assessments be made for each of six assessment years
separately'. This Court, considering the relevant provisions, held that no
addition can be made in respect of unabated assessments which have become
final, if no incriminating material was found during search. The relevant
observations as made by the Court are required to be noted which read thus:-
1 374 ITR 645 (Bom.)
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"29. We are not in agreement with Mr. Pinto that these
observations are made in passing or that they are not binding on us
because the essential controversy before the Bench was somewhat
different. He urges that was only in relation to the legality and
validity of the order of the Commissioner under section 263 of the
IT Act. Had that been the case, the Division Bench was not
required to trace out the history of section 153A of the IT Act and
the power that is conferred thereunder. When the Revenue argued
before the Division Bench that the power under section 153A can
be invoked and exercised even in cases where the second proviso
to sub-section (1) is not applicable that the Division Bench was
required to express a specific opinion. The provision deals with
those cases where assessment or reassessment, if any, relating to the
assessment years falling within the period of six assessment years
referred to in sub-section (1) of section 153A were pending. If
they were pending on the date of the initiation of the search under
section 132 or making of requisition under section 132A, as the
case may be, they abate. It is only pending proceedings that would
abate and not where there are orders made of assessment or
reassessment and which are in force on the date of initiation of the
search or making of the requisition. As that specific argument was
canvassed and dealt with by the Division Bench and that is how it
was called upon to interpret section 153A of the IT Act, then, each
of the above conclusions rendered by the Division Bench would
bind us.
30. Even otherwise, we agree with the Division Bench when it
observes as above with regard to the ambit and scope of the powers
conferred under section 153A of the Act. Since we are not
required to trace out the history and we can do nothing better than
to reproduce the observations and conclusions as above that we are
not repeating the same. Even if the exercise of power under section
153A is permissible still the provision cannot be read in the
manner suggested by Mr. Pinto. Not only the finalised assessment
cannot be touched by resorting to those provisions, but even while
exercising the power can be exercised where a search is initiated
under section 132 or books of account, other documents or any
assets are requisitioned under section 132A after 31st March,
2003. There is a mandate to issue notices under section 153(1)(a)
and assess or reassess the total income of six assessment years
immediately preceding the assessment year relevant to the
previous year in which such search is conducted or requisition is
made. Thus, the crucial words "search" and "requisition" appear in
the substantive provision and the provisos. That would throw light
on the issue of applicability of the provision. It being enacted to a
search or requisition that its construction would have to be
accordingly. That is the conclusion reached by the Division Bench
in Murli Agro (supra) with which we respectfully agree. These are
the conclusions which can be reached and upon reading of the
legal provisions in question."
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4. On the aforesaid premise and referring to the decision of this Court in
Commissioner of Income Tax vs. Continental Warehousing Corporation
(supra), the Tribunal rejected the appeals filed by the Revenue against the
orders passed by the CIT (Appeals). The relevant observations made by the
Tribunal are required to be noted which read thus:-
"2. In all the appeals, the sum and substance of the dispute
arises from the decision of the CIT(A) in holding that in the
absence of any incriminating material found in the course of
search, no additions are permissible in the assessments made u/s.
153C of the Income Tax Act, 1961 (in short 'the Act') in years
where the original assessments do not abate, following the ratio of
the judgment of the Hon'ble Bombay High Court in the case of
CIT vs. Continental Warehousing Corporation (Nhava Sheva Ltd.)
(374 ITR 645).
7. On the other hand, the learned representative for the
assessee furnished a year-wise chart of additions made and
contended that the finding of the CIT(A) that none of the
additions were based on any incriminating material found during
the course of search is fair and proper and, therefore, the ratio of
the judgment of the Hon'ble Bombay High Court in the case of
Continental Warehousing Corporation (Nhava Sheva Ltd) (supra)
has been aptly applied. Even with regard to the adoption of date of
19.11.2012, the learned representative asserted that the action of
CIT(A) is correct in law inasmuch as it was for the Assessing
Officer to demonstrate if the date was not correct.
8. We have carefully considered the rival submissions. Insofar
as the legal position is concerned, it is quite well-settled by the
judgment of the Hon'ble Bombay High Court in the case of
Continental Warehousing Corporation (Nhava Sheva Ltd.) (supra).
Presently, we are dealing with an assessee whose assessment has
been made by invoking Sec. 153C of the Act, i.e. a person other
than the person searched and referred to in Sec. 153A of the Act.
In the case of such a person, the proviso to Sec. 153C of the Act
provides as under:-
"Provided that in case of such other person, the reference to
the date of initiation of the search under section 132 or
making of requisition under section 132A in the second
proviso to sub-section (1) of section 153A shall be
construed as reference to the date of receiving the books of
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account or documents or assets seized or requisitioned by
the Assessing Officer having jurisdiction over such other
person."
Notably, second proviso to Sec. 153A(1) of the Act prescribes the
guide as to under which circumstances the original assessment or
reassessment for the prescribed six assessment years shall abate.
With respect to an assessee covered u/s. 153C of the Act, the
prescription of second proviso to Sec. 153A(1) of the Act has to be
applied taking into account the first proviso to Sec. 153C of the
Act, which we have reproduced above."
5. It is on such backdrop, the present appeals were filed raising the question
of law which is common in all these appeals, which reads thus:-
"Whether on the facts and in the circumstances of the case and in
law, the Hon'ble ITAT was justified in the finding that no
additions can be made in respect of unabated assessments when
the AO has not referred to any incriminating material seized in
search proceedings and also in not appreciating that Hon'ble
Supreme Court has admitted SLP filed by the Revenue in the case
of M/s. Continental Warehousing Corporation (Nhava Sheva) Ltd.
64 taxman, Com 34 on the similar issue?"
6. Mr. Suresh Kumar, learned counsel for the Revenue has drawn our
attention to the decision of the Supreme Court in Principal Commissioner of
Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd. 2 to submit that the issue
involving interpretation of the provisions of Section 153A read with Sections
132 and 143 had fell for consideration of the Supreme Court, which had arisen
from the decision of this Court as also from the decisions of the other High
Courts. The Supreme Court held that in respect of completed assessments/
unabated assessments, no addition can be made by Assessing Officer in absence
2 [2023] 149 taxmann.com 399(SC)
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of any incriminating material found during course of search under Section 132
or requisition under Section 132A. It is also, however, held that completed/
unabated assessments can be reopened by Assessing Officer in exercise of
powers under Section 147/148 subject to fulfillment of conditions as envisaged
under Section 147/148 and those powers were saved. The conclusions of the
Supreme Court as set out in paragraph 14 are required to be noted which read
thus:-
"14. 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 re-opened
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.
The question involved in the present set of appeals and review
petition is answered accordingly in terms of the above and the
appeals and review petition preferred by the Revenue are hereby
dismissed. No costs."
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7. Thus, the view of this Court in Commissioner of Income Tax vs.
Continental Warehousing Corporation (supra) has found approval of the
Supreme Court. In view of the authoritative pronouncement of the Supreme
Court in Principal Commissioner of Income-tax, Central-3 Vs. Abhisar
Buildwell (P.) Ltd. (supra), the question of law as raised by the revenue would
not arise for consideration. However, it is clarified that the completed/unabated
assessments can be reopened by the Assessing Officer in exercise of powers
under Section 147/148 of the Act subject to fulfillment of conditions as
envisaged under the said provisions and as may be permissible in law. All
contentions of the parties in that regard are expressly kept open.
8. The appeals are accordingly rejected. No costs.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
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