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2015 (12) TMI 1539 - AT - Income TaxAssessment u/s 153A - Held that - In the absence of any incriminating material found during search, additions made on the assessed income are unsustainable in law, we are of the considered opinion that the additions made in the instant case are not sustainable and accordingly, we delete the same - Decided in favour of assessee.
Issues Involved:
1. Validity of recomputing income under Section 153A without incriminating documents/evidence. 2. Legality of reassessing income under Section 143(3) read with Section 153A based on the same documents. 3. Applicability of Section 153A to completed assessments. 4. Jurisdictional High Court's decision on additions under Section 153A without incriminating material. Detailed Analysis: Issue 1: Validity of Recomputation under Section 153A The appellant argued that the CIT (A) failed to recognize that no incriminating documents or evidence were found during the search of a third party, making the recomputation of income under Section 153A invalid. The Tribunal agreed, citing the principle that additions under Section 153A must be based on incriminating material found during the search. The Tribunal referenced the case of All Cargo Global Logistics Ltd vs. DCIT [2012] 137 ITD (Mum.)(SB), which supports that in non-abated assessments, additions can only be made based on seized incriminating material. Issue 2: Legality of Reassessing under Section 143(3) read with Section 153A The appellant contended that the original assessment was completed under Section 143(3) after considering all documents and materials, and recomputing the income under Section 153A based on the same documents is unlawful. The Tribunal upheld this argument, emphasizing that reassessment under Section 153A should be supported by new incriminating evidence not previously considered. The Tribunal noted that the additions made were routine and not based on any new incriminating material found during the search. Issue 3: Applicability of Section 153A to Completed Assessments The appellant argued that only pending assessments could abate and not completed ones. The Tribunal agreed, referencing the decision in the case of Jai Steel (India) vs. ACIT, which held that reassessment of concluded assessments under Section 153A is only permissible if incriminating material is found during the search. The Tribunal reiterated that in the absence of such material, the original assessments should remain undisturbed. Issue 4: Jurisdictional High Court's Decision The appellant cited the jurisdictional High Court's ruling that no addition can be made under Section 153A without incriminating material found during a search. The Tribunal supported this view, referencing the decision in CIT vs. Kabul Chawla, which stated that completed assessments could only be interfered with based on incriminating material unearthed during the search. Conclusion: The Tribunal concluded that the additions made by the AO were not sustainable as they were not based on any incriminating material found during the search. The Tribunal deleted the additions and allowed the appeals in favor of the assessee. The legal issue raised was resolved in favor of the assessee, and the other grounds were dismissed as academic. The Tribunal's decision applied uniformly to all assessment years under consideration (AY 2005-06 to 2009-10). Order: All five appeals filed by the assessee were allowed. The order was pronounced in the open court on 31st December 2015.
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