The division bench of the Kerala High Court in a recent decision, held that under section 153(1)(a) of the Income Tax Act, 1961, it is a mandatory requirement that the assessee shall file a return in consequent to a search conducted under section 132 even if such search has not resulted in finding of any incriminatory document, material or statement etc.
Coming to the facts of the case, the assessee is an ophthalmic surgeon. In consequent to a search conducted, the Assessing Officer completed the assessments for 6 assessments yearsunder section 153A of the Income Tax Act and made some additions towards the total income. On appeal, the Commissioner of Income Tax (Appeals) has modified the said additions. Both the assessee and Revenue filed an appeal before the Appellate Tribunal, where the Appeal filed by the Revenue was dismissed and the Appeal filed by the assessee was partly allowed by the Tribunal. Therefore, the Revenue approached the High Court for relief.
One of the important questionsrose before the Court was regarding the scope of assessment made under section 153A of the Act.
The division bench comprising of Justice Antony Dominic and Justice Dama Sheshadiri Naidu found that in the impugned order, the Appellate Tribunal, based on the decisions of various co-coordinating benches expressed a view that that “the completed assessments shall not abate and only the assessments or reassessments relating to any of the six assessment years, which are pending on the date of initiation of search, shall abate. Further it has been held that the completed assessments, through automatically reopened as per the provisions of sec.153A, yet they can be disturbed only in respect of those issues for which some incriminating materials requiring such disturbance is unearthed during the course of search proceeding.” According to the Tribunal, if the AO finds out any defect on any issue in respect of the pending assessments which got abated and such kind of issues are also available in other assessments, which have already been completed and did not abate, he is entitled to examine those issues in those years also in order to find out whether similar defects exist in those years or not. In such a situation, it is not necessary to satisfy the condition that some incriminating materials concerning to those issues should have necessarily been found out in respect of those assessment years.
The Court further noticed its own decision in ITA.169/15 and connected cases in which it was held that “On a reading of Section 153A(1) it is categoric and clear that once a notice is issued and the Assessing Officer has required the assessee to furnish return for a period of six assessment years as contemplated under clause (b) then the assessee has to furnish all details with respect to each assessment year since the same is treated as a return filed under section 139. It is true that as per the first proviso, the Assessing Officer is bound to assess or reassess the total income with respect to each assessment year following the six assessment years specified in sub-clauses (a) and (b) of Section 153A. However, even if no documents are unearthed or any statement made by the assessee during the course of search under section 132 and no materials are received for the aforespecified period of six years, the assessee is bound to file a return, is the scheme of the provision. Even though the second proviso to Section 153A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under Section 153A(1)(a). This being the scheme of the provisions of the Act, the Appellate Tribunal ought to have considered the issue with specific reference to the facts involved in.”
In view of the above findings, the Court held that the order of the Appellate Tribunal is unsustainable since it has not considered the issue with specific reference to the facts of the case. Accordingly, the plea of the Revenue was accepted.
Read the full text of the Judgment below.
