PCIT vs. BEST INFRASTRUCTURE (INDIA) PVT. LTD.
Question of law decided : “Whether having regard to the materials seized in the course of search under Section 132 and the statements made on behalf of the assessee, additions made by the Assessing Officer under Section 153A, were not justified as held by the ITAT?some notes and significant findings and judgements
1- Judicially it has been held that statement under Section 132(4) is an important evidence collected as a result of search and seizure operation,
2- Reference was made by the CIT (A) to the decision of this Court in CIT v. Anil Kumar Bhatia (2013) 352 ITR 493 (Del) where it was held that the AO had the jurisdiction under Section 153A of the Act to make assessment for all the six years and compute the total income of the Assessee, including the undisclosed income, notwithstanding that the Assessee filed returns before the date of search which stood processed under Section 143 (1) of the Act
3- Commissioner of Income Tax v. Harjeev Aggarwal (2016) 290 CTR 263 and submitted that mere statements made during the course of the search, under Section 132 (4) of the Act, cannot be considered to be incriminating material,
4- High Court in Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj)- It was further held in the said decision that “If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated,
5- Commissioner of Income Tax (Central-III) v. Kabul Chawla - "Very important case notes"
a) Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place,
b) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
c) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the. aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax"
d) Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.
e) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO
f) Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment
6) One of the assessee who was examined under section 132(4) was not provided a copy of the statement so recorded,
7) To ensure that the party with whom a statement under section 132(4) was taken should be cross examined and onus to do this will be on AO,
8) Learned court also noted that it is not sufficient by AO to just sit back and ask all details from the assessee in search and once he exhausted with all proofs, AO can not simply take an action based on his own suspicious or assumptions,
To read full text of the judgement please refer the link https://www.taxpundit.org/phocadownload/Taxpundit_Reporter/Taxpundit_Reporter_2017/August_2017/817Taxpundit9.pdf
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