2020 (1) TMI 1486 - AT - Income Tax

Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT - In the instant case also both the CIT(A) as well as the ITAT have held that the addition is not based on any incriminating material found during the course of search and the assessment was not pending on the date of search. In the proceedings before the CIT(A) as well as the ITAT the Revenue has not made any attempt as to disclose the incriminating material. The view taken by the tax authorities based on the decision of CIT Vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT cannot be held to be perverse. The questions of law proposed by the Revenue are squarely covered by the aforesaid judgment.

Summary

Issues:
- Jurisdiction to make additions without incriminating evidence found during search
- Interpretation of completed assessments in absence of incriminating material
- Application of the decision in CIT Vs. Kabul Chawla case
- Dismissal of appeals based on absence of incriminating material

Analysis:
1. Jurisdiction to make additions without incriminating evidence found during search:
The appeals involved a dispute regarding the jurisdiction of the Assessing Officer (AO) to make additions in the absence of incriminating material found during the search. The ld. CIT (Appeals) partly allowed the appeal, holding that the AO lacked jurisdiction to pass the order and make the addition without any incriminating evidence. The Revenue contended that incriminating material was not necessary for non-abated assessments, which was challenged by the assessee.

2. Interpretation of completed assessments in absence of incriminating material:
The Tribunal analyzed the contention that assessments should be based on incriminating material found during the search. The ld. CIT (Appeals) emphasized that the assessments were concluded assessments and should only be altered based on incriminating material. The Tribunal noted that the Revenue failed to provide any such incriminating material for the additions made, thereby upholding the decision of the ld. CIT (Appeals).

3. Application of the decision in CIT Vs. Kabul Chawla case:
The parties referenced the decision in CIT Vs. Kabul Chawla case, where the Hon'ble Delhi High Court ruled that completed assessments can only be revisited with incriminating material discovered during the search. The ld. CIT (Appeals) followed this precedent and deleted the additions as no incriminating material was found. The Tribunal concurred with this interpretation, dismissing the Revenue's appeal against the decision based on the cited case law.

4. Dismissal of appeals based on absence of incriminating material:
Ultimately, the Tribunal dismissed all four appeals filed by the Revenue for assessment years 2007-08, 2008-09, 2009-10, and 2010-11. The decisions were based on the absence of any incriminating material supporting the additions made by the AO. The Tribunal upheld the orders of the ld. CIT (Appeals) for all years, confirming the deletion of additions due to the lack of such material.

In conclusion, the judgment focused on the necessity of incriminating material for altering concluded assessments, as per the decision in the CIT Vs. Kabul Chawla case. The Tribunal emphasized the importance of such evidence and dismissed the appeals due to the absence of incriminating material supporting the additions made by the Revenue.