2017 (7) TMI 1411 - HC - Income Tax

Assessment u/s 153A - proof of existence of any incriminating documents found or seized during the search action under Section 132 -disallowance of the assessee's claim of LTCG and treating the same as business income - HELD THAT - Tribunal has dismissed the Revenue's appeal by following the decision of this Court in CIT Vs All Cargo Logistic Ltd Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT Where no assessment has been completed under Section 143(1) and only processing of returns is done, the AO is competent to invoke the jurisdiction under Section 153A/153C of the Act and complete the assessments following the procedure laid down under Section 143(3) of the Act, even in the absence of incriminating documents - The impugned order has dismissed the Revenue's appeal by following the decision of this Court in CIT Vs Gurinder Singh Bawa 2015 (10) TMI 1761 - BOMBAY HIGH COURT . As the impugned order of the Tribunal has merely followed the orders of this Court, no fault can be found with the same.

Summary

Issues involved:
1. Interpretation of provisions under Section 153A of the Income Tax Act, 1961 regarding additions in assessment without incriminating documents.
2. Determination of whether Long Term Capital Gains should be treated as business income under Section 153A(1)(b) of the Act.
3. Consideration of Pune ITAT decision in relation to the completion of assessments under Section 143(3) without incriminating documents.

Analysis:

1. Issue A - Section 153A Interpretation:
The primary issue in this case pertains to the interpretation of Section 153A of the Income Tax Act, specifically regarding the Assessing Officer's authority to make additions in assessments under Section 153A r.w.s. 143(3) without the presence of incriminating documents. The Revenue contended that the ITAT erred in deciding that the AO cannot make such additions without incriminating documents, citing the pending SLP against the decision of All Cargo Logistics Ltd. The High Court upheld the ITAT's decision, following the precedent set by the Court in the All Cargo Logistics Ltd. case.

2. Issue B - Treatment of Long Term Capital Gains:
The second issue raised was whether Long Term Capital Gains (LTCG) amounting to a specific sum should be treated as business income under Section 153A(1)(b) of the Act. The ITAT did not delve into the merits of this issue, leading to a challenge by the Revenue. However, the High Court dismissed the appeal, stating that the ITAT's decision was in line with the Court's ruling in CIT Vs Gurinder Singh Bawa, thereby upholding the treatment of LTCG as per the existing legal framework.

3. Issue C - Pune ITAT Decision Consideration:
Lastly, the case involved the consideration of a decision by the Pune ITAT regarding the completion of assessments under Section 143(3) without incriminating documents. The ITAT did not consider the Pune ITAT decision in the case of Kranti Realtors P. Ltd., leading to a challenge by the Revenue. However, the High Court upheld the ITAT's decision, stating that as the ITAT merely followed the Court's orders in previous cases, no fault could be found with their approach.

In conclusion, the High Court dismissed the appeal, emphasizing that the proposed questions of law did not give rise to any substantial legal issues. The decision was based on the alignment of the ITAT's rulings with established judicial precedents, thereby maintaining consistency in the interpretation and application of the Income Tax Act.