2016 (5) TMI 1273 - HC - Income Tax

Assessment under Section 153A - whether the ITAT was correct in concluding that there had to be incriminating material recovered during the search qua the Assessee in each of the years for the purposes of framing an assessment under Section 153A of the Act? - Held that - It is not in dispute that in respect of the Respondent Assessee for the AYs in question the initial assessment proceedings took place under Section 143(3) of the Act. Thereafter they were sought to be reopened by issuing notice under Section 147 of the Act and re-assessment orders were passed under Section 147 read with Section 143(3) of the Act. During both the aforementioned proceedings the question whether the gold and silver utensils were the capital assets or personal effects of the Assessee was examined. They were held not to be the personal effects. It has been noticed by the ITAT in the impugned order that for the AYs in question no incriminating material qua the Assessee was found. See CIT v. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT the Court is of the view that the impugned order of the ITAT suffers from no legal infirmity and no substantial question of law arises for determination.

Summary

Issues:
1. Appeal against the judgment of the Income Tax Appellate Tribunal (ITAT) under Section 260A of the Income Tax Act, 1961.
2. Interpretation of Section 153A of the Act regarding the requirement of incriminating material for assessment.
3. Examination of whether gold and silver utensils are capital assets or personal effects of the Assessee.
4. Application of legal principles from the CIT v. Kabul Chawla case.

Analysis:
1. The High Court heard appeals by the Revenue against the ITAT's judgment for Assessment Years (AYs) 1998-99 and 1999-2000. The ITAT had dismissed the appeal of the Assessee and allowed their cross objections.
2. The main issue was whether incriminating material was necessary for framing an assessment under Section 153A of the Act. It was established that no such material was found regarding the Assessee for the relevant AYs, as confirmed by the ITAT.
3. The assessment proceedings initially occurred under Section 143(3) of the Act, followed by reopening under Section 147 and re-assessment orders under Sections 147 and 143(3). The classification of gold and silver utensils as capital assets or personal effects was examined during these proceedings.
4. The High Court referred to the decision in CIT v. Kabul Chawla, emphasizing that in the absence of incriminating material, the ITAT's order was legally sound. Consequently, no substantial question of law was identified, leading to the dismissal of the appeals by the Revenue.