2022 (10) TMI 1162 - AT - Income Tax

Assessment u/s 153A - incriminating documents during the search or not? - HELD THAT - Both the factual additions related to deposit of cash in bank and the investment in the property and not the incriminating material of the assessee. Considering the factual aspects and the catena of judgments, in our opinion the addition u/s 153A is out of jurisdiction. The entire addition is liable to be quashed. Appeals of the assessees are allowed.

Summary

Issues:
1. Validity of additions made under section 153A of the Income Tax Act.
2. Jurisdictional challenge regarding additions on the basis of incriminating documents.
3. Consideration of additional evidence under Rule 46A of the Income Tax Rules, 1962.
4. Application of legal precedents in similar cases for jurisdictional assessment under section 153A.

Issue 1: Validity of Additions under Section 153A:
The appeals were directed against the order of the Commissioner of Income Tax (Appeals) for the assessment years 2013-14 and 2014-15. The additions were made by the Assessing Officer under section 144 r.w.s. 143(3) of the Income Tax Act, totaling Rs. 8,63,990 against the declared income of Rs. 1,68,240. The additions included Rs. 4,09,500 on account of unexplained bank deposits and Rs. 2,86,250 as unexplained property investment. The primary contention was that the additions were made under section 153A without incriminating documents. The Commissioner of Income Tax (Appeals) upheld the additions, leading to the appeal before the tribunal.

Issue 2: Jurisdictional Challenge and Consideration of Additional Evidence:
The assessee challenged the jurisdiction for the validity of the additions made under section 153A. The tribunal considered the legal issue raised by the assessee, emphasizing that additions under section 153A should be based on incriminating documents found during the search. The Commissioner of Income Tax (Appeals) considered additional evidence under Rule 46A of the Income Tax Rules, 1962. The tribunal analyzed the arguments presented during the appeal proceedings, including the reliance on various judgments of High Courts and Tribunals. Notably, the tribunal referred to the judgment of the Coordinate Bench of the ITAT, Amritsar, and other relevant legal precedents.

Issue 3: Application of Legal Precedents and Jurisdictional Assessment:
The tribunal observed that the additions related to cash deposits and property investments were not supported by incriminating material found during the search. Considering the factual aspects and legal precedents cited, the tribunal concluded that the additions made under section 153A were beyond jurisdiction. Consequently, the tribunal allowed the appeal of the assessee, quashing the entire addition. The tribunal highlighted that the factual aspect was merely academic and did not require adjudication in the appeal.

Final Decision:
The tribunal allowed the appeal of the assessee (ITA No. 434/Asr/2018) and two other related appeals, as the additions made under section 153A were deemed to be beyond jurisdiction. The tribunal pronounced the order in favor of the assessees on 20.10.2022, quashing the additions and ruling in favor of the appellants in all three appeals.