2014 (2) TMI 1162 - AT - Income Tax

Undisclosed income - Receipt of gift disclosed during search proceedings - Held that - Admittedly no proceeding is pending before the Assessing Officer or any other authority for these assessment years. The Assessing Officer has a right to issue a notice u/s 148 or a notice u/s 143(2) in every case, if the period of limitation permits him to do so, and if the other conditions specified in the Act, are satisfied. Just because an authority has a right of initiating certain proceedings, it does not follow that assessment proceedings are open and are pending as on the date of search. In our view, when the Assessing Officer has not issued a notice u/s 143(2) as on the date of search, it follows that no proceeding is pending. - As no assessment was pending in the impugned assessment years, there is no abatement. Admittedly, there is no material found during the course of search, much less incriminating material. Under these circumstances, we uphold the order of the first appellate authority who followeds the order of the ITAT in the case of Kusum Gupta (2013 (11) TMI 665 - ITAT DELHI) and held that the addition made by the Assessing Officer is erroneous. - Decided in favour of assessee.

Summary

Issues Involved:
Assessment year 2005-06, Jurisdiction under section 153A of the Income Tax Act, 1961, Addition of gifts as income from undisclosed sources, Abatement of assessment, Burden of proof under section 68 of the Income Tax Act, 1961.

Analysis:

Assessment Year 2005-06:
The appeals were filed by the Revenue against the separate order of the Commissioner of Income Tax (Appeals)-IV, New Delhi dated 10.05.2013 for the assessment year 2005-06. The appeals pertained to two different assessees, but as they were related and the facts were the same, they were heard together and disposed of by a common order.

Jurisdiction under Section 153A:
The key issue revolved around the jurisdiction under section 153A of the Income Tax Act, 1961. The Ld. CIT (A) held that there was no warrant of search in the name of the assessee and no incriminating material was found during the search. It was argued that as no notice was issued under section 143(2) or any other section, there was no pending case for the assessment year, and hence, no abatement. The Tribunal concurred, emphasizing that no proceeding was pending, and therefore, the assessment proceedings were not open and pending as on the date of the search.

Addition of Gifts as Income from Undisclosed Sources:
The Assessing Officer made additions of gifts as undisclosed income after the assessee failed to produce the donors before him. However, the Ld. CIT (A) considered the additional grounds raised by the assessee and held that no addition could be made as no incriminating material was found during the search. The Tribunal upheld this decision, citing precedents and emphasizing that without any pending assessment, the additions were erroneous.

Abatement of Assessment:
The Ld. Departmental Representative argued that as the assessment had not abated, all issues, both disclosed and undisclosed, were open for assessment. However, the Tribunal disagreed, stating that since no assessment was pending in the impugned assessment years and no incriminating material was found during the search, the additions made by the Assessing Officer were erroneous.

Burden of Proof under Section 68:
The Assessing Officer asked the assessee to discharge the burden of proof under section 68 of the Income Tax Act, 1961 regarding the gifts received. The assessee provided bank statements of the donors, gift deeds, and balance sheets of the donors. However, as the donors were not produced before the Assessing Officer, additions were made. The Tribunal, considering the lack of pending assessment and absence of incriminating material, upheld the Ld. CIT (A)'s decision that no additions could be made.

In conclusion, the appeals filed by the Revenue were dismissed, and the cross objections filed by the assessee were disposed of accordingly. The Tribunal's decision was based on the absence of pending assessments, lack of incriminating material, and adherence to legal precedents in similar cases.