2019 (7) TMI 1828 - AT - Income Tax

Assessment u/s.153A - HELD THAT - Following the principles laid down by the Hon ble Supreme Court in the case MEETA GUTGUTIA 2018 (7) TMI 569 - SC ORDER as no incriminating material has been found in the course of search in the case of the assessee for the assessment years under appeal the addition as made by the AO is unsustainable. Consequently the findings of the Ld.CIT(A) on this issue stands confirmed. Appeals filed by the Revenue are dismissed.

Summary

Issues involved:
- Appeals filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals) for the AYs 2009-10 to 2011-12.
- Disallowance of lease rent and interest on excess lease rental advance.
- Invocation of provisions of Sec.153A for re-opening assessments.
- Deletion of additions by the Ld.CIT(A) due to lack of incriminating material found during search.

Analysis:

Issue 1: Appeals filed by the Revenue
The Revenue filed three appeals against the consolidated Order of the Commissioner of Income Tax (Appeals) for the assessment years 2009-10 to 2011-12. The appeals were in response to the assessments completed under Sec.143(3) r.w.s.153A, which included additions related to disallowance of lease rent and interest on excess lease rental advance.

Issue 2: Disallowance of lease rent and interest
The primary issues in the appeals were related to the disallowance of lease rent paid by the assessee company to the Managing Director, and the disallowance of interest on the excess lease rental advance. The Revenue contended that these additions should be upheld, while the Ld.CIT(A) had deleted them citing the absence of incriminating material found during the search.

Issue 3: Invocation of provisions of Sec.153A
The Revenue argued for the re-opening of assessments under Sec.153A based on the search conducted at the premises of the assessee. However, the Ld.CIT(A) had ruled in favor of the assessee, highlighting that no incriminating material was discovered during the search for the assessment years under appeal.

Issue 4: Deletion of additions by Ld.CIT(A)
The Ld.CIT(A) based the deletion of additions on the decision of the Hon’ble Supreme Court in the case of Principal CIT vs. Meeta Gutgutia, emphasizing that re-assessment can only be made if incriminating material is collected during the search. The Ld.CIT(A) upheld the principles laid down by the Special Bench of the ITAT and the Supreme Court, concluding that the additions made by the AO were unsustainable due to the absence of incriminating material.

In conclusion, the ITAT Chennai dismissed the appeals filed by the Revenue, confirming the findings of the Ld.CIT(A) regarding the deletion of additions. The judgment emphasized the importance of incriminating material for re-opening assessments under Sec.153A, in line with the precedents set by the Special Bench of the ITAT and the Supreme Court.