2018 (8) TMI 1896 - AT - Income Tax

Assessment u/s 153A - proof of incriminating materials - HELD THAT - In the absence of any incriminating materials the completed assessment can be re-iterated and in the case before us from a perusal of the aforesaid chart it is clear that on the date of search i.e. on 07.11.2013 assessments pertaining to A.Y. 2012- 13 was not pending before the AO because the last date for issuance of Section 143(2) notice for scrutiny was on 30.09.2013 for AY 2012-13 therefore it can be safely presumed that the assessment was not pending before the AO the assessment which stands concluded cannot be tinkered with fresh additions without incriminating materials seized during search. Further we note that the Ld. DR could not bring to our notice that there was any incriminating material found on the basis of which additions have been made in the re-assessment carried out under section 153A proceedings - Decided against revenue

Summary

Issues:
1. Interpretation of Section 153A of the Income-tax Act, 1961 regarding reassessment without seized material or asset.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata involved a dispute regarding the interpretation of Section 153A of the Income-tax Act, 1961. The main issue was whether the Assessing Officer (AO) has the authority to reassess income of a completed assessment without any seized material or asset. The Tribunal examined the timeline of events for the relevant assessment year, noting that the search and seizure operation took place after the original assessment was completed. Citing the legal position established by the Hon'ble Delhi High Court, the Tribunal emphasized that under Section 153A, the AO can only make additions based on incriminating material seized during the search. The Tribunal highlighted that assessments pending on the date of the search shall abate, and the AO must compute the total income for those years as a fresh exercise.

Furthermore, the Tribunal referred to a judgment by the Hon'ble jurisdictional High Court in a similar matter under Section 153C, reinforcing the requirement of incriminating material for exercising powers under the relevant sections. The Tribunal concluded that in the absence of incriminating material, the completed assessment cannot be altered without a valid basis. In this case, as no incriminating material was found, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the appeal of the revenue. The Tribunal clarified that without any such material, the AO cannot make fresh additions during reassessment proceedings under Section 153A. Consequently, the appeal was dismissed based on the legal issue, rendering other grounds moot and not requiring adjudication.

In summary, the Tribunal's decision affirmed that under Section 153A, the AO's authority to reassess income is limited to incriminating material seized during a search. Without such material, completed assessments cannot be altered arbitrarily, and any additions must be substantiated by relevant evidence. The judgment highlighted the significance of incriminating material in reassessment proceedings and upheld the principle that assessments lacking such material cannot be modified without a valid basis.