IMPORTANT POINT
An assessment under Section 153A cannot be made without incriminating material; completed assessments are not subject to reopening based solely on retracted statements.

J UDGMENT :

Vijay Bishnoi, CJ.

This appeal is preferred on behalf of the appellants being aggrieved with the order dated 07.04.2022 passed by the Income Tax Appellate Tribunal, Guwahati Bench, Guwahati (hereinafter referred to as “ITAT”) in I.T.A. No.324/GAU/2019 for the Assessment Year 2014-2015 in respect of the sole respondent.

2. This Court, vide order dated 09.10.2023, has admitted this appeal on the following substantial questions of law:

“1. Whether on facts and circumstances of the case, the Hon’ble Tribunal was justified in confirming findings of the Ld. CIT (appeal) that the assessment for A.Y. 2014-2015 is not abated ?

2. Whether on facts and circumstances of the case, the Hon’ble Tribunal was correct in law holding that the assessment for a Assessment Year is not abated when no assessment order was passed prior to passing order u/s 153A of the Income Tax Act?”

3. The brief facts of the case are that the sole respondent submitted Income Tax Returns under Section 139 (1) of the Income Tax Act, 1961 (hereinafter referred to as “the Income Tax Act”) on 31.07.2014 declaring income of Rs.2,00,080/-. However, a search and seizure operation under Section 132 of the Income Tax Act was conducted on the residential premises of the sole respondent on 02.06.2016 and thereafter, in continuation of that, on 11.07.2016 again a search was conducted. On the basis of the search results, the case was selected for scrutiny under Section 153A of the Income Tax Act and a notice was issued to the sole respondent to file Return of Income within 15 days. In compliance of the notice under Section 153A of the Income Tax Act, the respondent e-filed his return of income and thereafter, proceedings were carried out and ultimately, the Assessing Officer has issued Assessment Order dated 31.12.2018 and assessed the income of the assessee at Rs.4,25,30,080/-.

4. The relevant portions of the impugned Assessment Order dated 31.12.2018 are reproduced hereunder:

“12. As stated above, a search and seizure operation was conducted in the CMJ Group of cases on 02/06/2016. In the course of search, statement of Shri Karan Jain was recorded on oath on 02.06.2016, wherein in reply to Q. No.7 to 16, he also admitted the fact of routing the unaccounted cash of the family by way of bogus LTCG/STCG in the regular books of account. Further, Shri Rohit Jain, the chairman of the CMJ group also accepted the fact of routing unaccounted cash of the family by the way of accommodation entry of LTCG/STCG in his statement on oath u/s 132(4) of the Act dtd. 11/07/2016. In this regard, Shri Rohit Jain, Chairman of the group also disclosed Rs.14,21,00,000/- on account of pre-arranged bogus capital gain/loss in the hands of various family members in the respective years vide his disclosure petition dated 29/08/2016 as detailed below

Shri Karan Rohit Jain also accepted the disclosure of Rs.4,40,50,000/- is his hand in his sworn statement u/s 131 of the Act on 09/09/2016.

13. However on perusal of the Return of Income for the period under consideration, it is seen that the disclosed amount of Rs.4,23,30,000/- for the financial year 2013-14 relevant to the assessment year 2014-15 was neither incorporated in the Return nor offered for tax during period under consideration. As such, vide show cause notice dtd. 05/11/2018, Shri Rohit Jain, Chairman of th