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2018 (7) TMI 2042 - AT - Income TaxAssessment u/s 153A - initiation of search u/s 132 or making of requisition u/s 132A - proof of incriminating material evidencing any investment over and above disclosed in the financial statements - HELD THAT - Assessment has been completed u/s 153A without any reference to the incriminating material evidencing any investment over and above disclosed in the financial statements and in light of the binding precedents the addition made by the AO is not sustainable, the same is deleted. - Decided in favour of assessee.
Issues Involved:
1. Sustaining addition of ?6,86,686/- as undisclosed purchase price of a society plot. 2. Validity of additions made without incriminating material found during search. 3. Jurisdiction of Assessing Officer (AO) under Section 153A of the IT Act. Issue-wise Detailed Analysis: 1. Sustaining Addition of ?6,86,686/- as Undisclosed Purchase Price: The assessee contested the addition of ?6,86,686/- made by the AO, arguing that this amount was the value adopted by the Jaipur Development Authority (JDA) for regularization and development charges, not the purchase price or DLC rate of the plot. The assessee purchased the plot in 1997, and no incriminating material was found during the search to suggest any payment over and above the disclosed purchase price. The assessee further argued that the plot was sold in 2016 for ?3,75,000/-, and the addition was unjustified without considering cost inflation under Section 48 of the IT Act. 2. Validity of Additions Made Without Incriminating Material Found During Search: The assessee argued that no incriminating material was found during the search on 30.10.2014 that indicated any undisclosed income or investments. The assessee cited the decisions of the Hon'ble Rajasthan High Court in Jai Steel India vs. ACIT and the Hon'ble Delhi High Court in CIT v. Kabul Chawla, which held that in the absence of incriminating material, the AO cannot make additions to the income declared by the assessee. The assessee emphasized that the AO's jurisdiction under Section 153A is limited to assessing income based on incriminating material found during the search. 3. Jurisdiction of Assessing Officer (AO) under Section 153A of the IT Act: The AO reassessed the income of the assessee under Section 153A, making an addition based on the value adopted by JDA for regularization charges. The AO did not refer to any incriminating material found during the search. The tribunal noted that as per Section 153A, the AO has to reassess the total income of the assessee for six preceding years only based on incriminating material found during the search. Since the original assessment for the relevant year was completed, and no incriminating material was found, the AO had no jurisdiction to make the addition. The tribunal relied on the judgments of the Hon'ble Delhi High Court in CIT v. Kabul Chawla and the Hon'ble Rajasthan High Court in Jai Steel India v. ACIT, which clarified that completed assessments can only be disturbed based on incriminating material found during the search. Conclusion: The tribunal concluded that the addition made by the AO was not sustainable as it was not based on any incriminating material found during the search. The tribunal deleted the addition of ?6,86,686/- and allowed the appeal filed by the assessee. Order: The appeal filed by the assessee is allowed. The addition of ?6,86,686/- made by the AO is deleted.
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