2022 (5) TMI 1532 - AT - Income Tax

Assessment u/s 153A - addition/disallowance made qua unabated assessment - incriminating material as found consequent to search conducted u/s 132 or not? - HELD THAT - Respectfully following decision on the identical facts in the case of Smt. Sanjana Mittal 2019 (3) TMI 1757 - ITAT AMRITSAR , and Krishna Kumar Mittal 2021 (12) TMI 1434 - ITAT AMRITSAR we hold that in the absence of incriminating material, no addition can be made qua unabated assessment for the year under consideration in the case of both the appellant assesses - Decided in favour of assessee.

Summary

Issues involved:
Challenge to confirmation of additions in view of legality of assessment orders passed under section 153A r.w.s.143(3) of the act without incriminating material found during search under section 132.

Analysis:

1. Issue of legality of additions without incriminating material:
- The appeals were against the order of the Commissioner of Income Tax Appeals challenging the confirmation of additions without incriminating material found during the search.
- The counsel for the assessee argued that no incriminating material was found during the search, and hence the additions made were not permissible under the law.
- The Counsel relied on a decision of ITAT Amritsar bench in a similar case to support the argument.
- The CIT(DR) argued that the law does not require incriminating material for initiating proceedings under section 153A of the Act.
- The issue revolved around whether additions can be made without incriminating material for the years covered by Section 153A.

2. Assessment proceedings and abatement:
- The assessment for the relevant year was not pending at the time of the search, and thus, it was not abated.
- The counsel contended that no incriminating material was found during the search, neither at the assessee's premises nor at the companies where the assessee was a shareholder.
- A similar issue was addressed by the Amritsar bench in a previous case where it was held that no addition can be made for unabated assessment without incriminating material.

3. Judicial precedents and legal principles:
- The decision referred to the judgment of the Delhi High Court in the case of CIT vs. Kabul Chawla, emphasizing that if no incriminating material was found during the search, no addition can be made to the income already assessed.
- Another case highlighted the importance of incriminating material in determining the validity of additions in the absence of ongoing assessment proceedings.

4. Decision and outcome:
- The Tribunal analyzed the arguments, case laws, and facts presented by both parties.
- Relying on previous decisions by the Amritsar bench, the Tribunal held that in the absence of incriminating material, no additions could be made for unabated assessments.
- Consequently, the Tribunal allowed the appeals and deleted the additions made by the Assessing Officer.

In conclusion, the Tribunal's decision emphasized the necessity of incriminating material for making additions to unabated assessments under section 153A r.w.s.143(3) of the Act. The judgment relied on legal principles, judicial precedents, and factual circumstances to rule in favor of the appellants, ultimately leading to the deletion of the additions made by the Assessing Officer.