2013 (12) TMI 829 - AT - Income Tax

Validity of Assessment u/s 153C - assessment u/s 153C passed in the individual name of the appellant - warrant of authorization to search was issued in the joint names of several persons. - Held that - CIT(A) was not justified in confirming the action of the Assessing Officer, who treated the agricultural income shown by the assessee in the original return of income filed u/s 139(1) of the Act prior to the search conducted u/s 132 of the Act particularly when neither any document or incriminating evidence was found during the course of search to substantiate that the assessee earned any income from other sources. Therefore, the income already accepted as an agricultural income in the original return of income furnished u/s 139(1) of the Act, cannot be disturbed in the assessment framed u/s 153C read with Section 153A/143(3) of the Act. - Decided in favor of assessee.

Issues Involved:
1. Validity of assessment order under Section 143(3) read with Section 153C.
2. Sustenance of addition in agricultural income.
3. Treatment of agricultural income as income from other sources.
4. Applicability of Sections 153A/153B.
5. Charging of interest under Sections 234A, 234B, and 234C.

Detailed Analysis:

1. Validity of Assessment Order under Section 143(3) read with Section 153C:
The main grievance of the assessee was that the assessment order passed by the Assessing Officer (AO) under Section 143(3) read with Section 153C was invalid because the warrant of authorization to search was issued in the joint names of several persons. The Tribunal did not provide a finding on this legal issue as it was not argued before them.

2. Sustenance of Addition in Agricultural Income:
The assessee contended that the addition in agricultural income was unjustified as no incriminating material was found during the search. The Tribunal noted that the assessee had shown the agricultural income in the original return filed under Section 139(1) and that this income was accepted by the department. The Tribunal referred to the case of Vishal Dembla Vs. DCIT, where it was held that in the absence of any incriminating evidence found during the search, the income disclosed in the original return should not be disturbed.

3. Treatment of Agricultural Income as Income from Other Sources:
The AO treated the agricultural income shown by the assessee as "income from other sources" due to the lack of documentary evidence. The Tribunal, however, found that since the original return had already been accepted and no incriminating material was found during the search, the AO's action was not justified. The Tribunal reiterated that the income accepted in the original return could not be disturbed in the assessment under Section 153C read with Section 153A/143(3).

4. Applicability of Sections 153A/153B:
The Tribunal emphasized that Section 153A is triggered by a search under Section 132 or 132A. It was clarified that if no incriminating material is found during the search, the completed assessments should not be disturbed. The Tribunal cited the judgment in M/s Jai Steel (India) Vs. ACIT, which held that assessments or reassessments could only be made based on incriminating material found during the search.

5. Charging of Interest under Sections 234A, 234B, and 234C:
The assessee's appeal also contested the charging of interest under Sections 234A, 234B, and 234C. However, since the Tribunal decided the issue relating to quantum addition on merit, no specific finding was given on this issue.

Conclusion:
The Tribunal allowed the appeals of the assessees, holding that the agricultural income shown in the original returns filed under Section 139(1) could not be treated as "income from other sources" in the absence of any incriminating material found during the search. The addition made by the AO and sustained by the CIT(A) was deleted. The Tribunal's findings in I.T.A. No. 345/Jodh/2013 were applied mutatis mutandis to all other appeals under consideration.

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