Hon'ble Supreme Court in the case of PCIT vs Abhisar Build well P. Ltd. [Civil Appeal No. 6580 of 2021] dated 24.04.2023 upheld the ratio of Hon'ble Delhi High Court's ruling in Kabul Chawla [(2016) 380 ITR 573] and Hon'ble Gujarat High Court's ruling in Saumya Construction [(2016) 387 ITR 529] that for completed or unabated assessments, the Revenue has no jurisdiction under Section 153A/153C in the absence of any 'incriminating material' found during a search under Section 132 or requisition under Section 132A. However, the Hon'ble Supreme Court holds that the Revenue cannot be left without a remedy in such cases, therefore, the Revenue can initiate the reassessment proceedings under Sections 147/148 subject to fulfilment of the conditions contained therein. Accordingly, exercising powers under section 119, the CBDT issued the instruction 1 of 2023 dated 23rd Aug 2023 for AOs for implementing the above judgment while framing assessments. The AOs are directed to divide the cases impacted by the judgment into two broad categories - Pending/abated and completed/unabated assessments. In this regard, it may be stated that on the date of search, the assessment is required to be framed U/s 153A of the preceding six years of search. In the cases where the time limit for issuance of notice under section 143(2) of the Act stood expired at the time of search or when the earlier assessment order included in such block has already been framed, such assessment years are referred as "completed/unabated". Diagonally, in the cases where the time limit for issuance of notice under section 143(2) of the Act is not expired at the time of search in such cases the earlier assessment could not have been framed, such assessment years are referred as "pending/abated". The procedure in both the cases would be as follows -
I. Pending / Abated assessments
In such cases, if any proceedings initiated or any order of assessment or reassessment has been annulled in appeal or in any other legal proceedings, the same shall stand revived from the date of receipt of the order of annulment as per the provisions of section 153A(2). The AO would need to take necessary action as per the provisions of section 153A(2) read with section 153(8), in respect of such pending/abated assessments.
Section 153A(2) specifies that If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the 6[Principal Commissioner or] Commissioner:
Provided that such revival shall cease to have effect, if such order of annulment is set aside
Section 153(8) specifies that notwithstanding anything contained in the foregoing provisions of this section, sub-section (2) of section 153A or sub-section (1) of section 153B, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later.
II. Completed/unabated assessments
In respect of assessments that were unabated/completed at the time of issue of notices under section 153A/153C, the following scenarios will emerge:
a) Lead and all the tagged cases: AO will be required to reopen the cases following the procedure prescribed under section 148A in accordance with the law laid down by the Hon'ble Supreme Court. In view of the specific provisions of section 153(6), all the cases reopened under section 147/148 will be required to be completed by 30th April 2024.
b) Cases where an appeal is pending (filed either by the Department or the assessee or both) before:
CIT(A): The said judgment is required to be brought to the notice of CIT(A).
ITAT: The departmental representative should bring the said judgment to the notice of the ITAT in the cases covered by the judgment. High Court: The Standing Counsel should bring the said judgment to the notice of the High Court in the cases covered by the judgment.
c) Cases where the decisions of appellate authorities rendered after the Supreme Court judgment are inconsistent with the same: Necessary action may be taken to file Miscellaneous Application (MA) and Notice of Motion (NoM) to the ITAT and High Court, respectively, requesting the review of the decision in line with the Abhisar judgment, with a prayer for condonation of delay, wherever necessary.
The time limit for filing a Miscellaneous Application before the ITAT is 6 months from the end of the month in which the order is passed by the ITAT, as per section 254. On receipt of the decision of the Hon'ble ITAT/High Court, as the case may be, necessary action as per law and extant instructions should be taken. The literal interpretation of the same is that where the Appellate Authority prescribed under the Income Tax Act, 1961 i.e., CIT(A) and ITAT has given any decision which is not in consonance of the ratio of Abhisar Build well, corrective actions is required to be taken in such cases. This means that the said decisions should specifically include that in case of completed/ unabated assessment, if "other materials" are available then the reassessment provisions under section 147/ 148 shall stand to be taken.
It is thus clear that CBDT is of the view that the corrective action is to be taken only in the matters which are pending before Appellate Authorities or are tagged with the lead matter or in which the orders have been passed in contravention to the ratio of Abhisar Build well Pvt. Ltd. By giving the present instruction, the CBDT has given a respite in a number of cases which stands settled and are not pending. However, the cases which are pending at various appellate forums shall feel the heat of the said judgment in view of the specific directions of the CBDT given under the instruction.
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