2017 (8) TMI 1652 - HC - Income Tax

Assessment u/s 153A - Proof of incriminating material found during the search - HELD THAT - Tribunal noted that the return filed by the assessee in the ordinary course was accepted without a scrutiny and the time limit for scrutiny assessment was over. Essentially therefore what the Assessing Officer had done was to realign the income from capital gain to business income. Since this was without the aid of any material unearthed during the search the Tribunal reversed the assessment order as confirmed by the Commissioner of Income Tax (Appeals). As per the settled law the approach before the Tribunal cannot be faulted particularly when the Revenue is unable to dispute the factual findings of the Tribunal. We notice that there are additional questions raised by the Revenue which pertained to the actual additions. However when we hold the main issue against the Revenue it is not necessary to enter into the subsidiary questions.

Summary

Issues:
Appeal against ITAT judgment on assessment under section 153A for AY 2007-08 with additions to business income based on search operation.

Analysis:
The High Court heard an appeal by the Revenue against the ITAT judgment regarding the assessment under section 153A of the Income Tax Act for the assessment year 2007-08, where certain additions to business income were made following a search operation at the assessee's premises. The Tribunal had set aside the assessment, stating that no incriminating material was found during the search to justify the additions made by the Assessing Officer. The Tribunal highlighted that the Assessing Officer had realigned the income from capital gains to business income without any material discovered during the search, leading to the reversal of the assessment order. The High Court acknowledged the settled law that supported the Tribunal's approach, especially when the Revenue failed to dispute the factual findings. The Court noted additional questions raised by the Revenue regarding the actual additions but deemed it unnecessary to address them since the main issue was decided against the Revenue. Ultimately, the Tax Appeal was dismissed by the High Court, upholding the Tribunal's decision.