2016 (10) TMI 1033 - HC - Income Tax

Validity of addition in the Section 153A Block assessments - Held that - This court is of the opinion that the revenue s contentions are insubstantial. Unlike Section 148 which permits re-assessment for a completed previous year, in case tangible material available subsequently and which also further distinguishes between the return filed under Section 143(1) on the one hand and the scrutiny assessment on the other hand under Section 143(3), section 153A makes no such distinction. In other words, the basic premise on which Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT was decided i.e. that in the course of search and seizure proceedings there should be some new material forthcoming to permit addition in the Section 153A Block assessments, would squarely apply.

Summary

Issues: Revenue's grievance with ITAT's order deleting additions under Section 153A after search and seizure proceedings.

Analysis:
The case involved the revenue's challenge against the ITAT's decision to delete additions made following an assessment under Section 153A conducted after search and seizure proceedings. The search and seizure activities related to the assessee took place on a specific date, leading to the issuance of a notice under Section 153A by the Assessing Officer. The subsequent assessment resulted in the determination of the total income, including an add back under Section 40(A) of the Income Tax Act, amounting to ?1,10,83,618. The CIT(A) partially allowed the assessee's contentions, prompting the assessee to appeal to the ITAT.

The ITAT, in its impugned order, sided with the assessee, citing the reasoning of a Division Bench of the High Court in the case of CIT vs Kabul Chawla. The revenue's counsel argued that the principles established in Kabul Chawla were not directly applicable in the present case due to the nature of the earlier assessment completed under Section 143(1). The revenue contended that new material discovered during the search proceedings showed that the assessee had undisclosed agricultural income and made cash payments exceeding ?20,000.

However, the High Court opined that the revenue's arguments lacked merit. It distinguished the provisions of Section 153A from Section 148, emphasizing that Section 153A does not differentiate between assessments completed under Section 143(1) and those under Section 143(3) scrutiny assessments. The Court affirmed that the rationale behind the Kabul Chawla decision, requiring new material during search proceedings for additions in Section 153A Block assessments, was applicable in the present case.

Ultimately, the Court dismissed the revenue's contentions, stating that no legal question of significance arose. Consequently, the appeals were rejected, upholding the ITAT's decision to delete the additions made under Section 153A following the search and seizure proceedings.