2023 (5) TMI 1235 - HC - Income Tax

Assessment u/s 153A - incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search or not? - HELD THAT - As decided in ABHISAR BUILDWELL P. LTD. 2023 (4) TMI 1056 - SUPREME COURT no addition can be made in respect of completed/ unabated assessment in absence of any incriminating material. Also see KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT and SAUMYA CONSTRUCTION PVT. LTD. 2016 (7) TMI 911 - GUJARAT HIGH COURT - No substantial question of law.

Summary

Issues involved:
The judgment pertains to a Tax Appeal u/s 260A of the Income Tax Act, 1961 arising from an order of the Income Tax Appellate Tribunal regarding the Assessment Year 2007-2008.

Issue 1 - Scope of additions during assessment u/s 153A:
The main issue revolves around whether additions during assessment u/s 153A should be limited to incriminating material found during a search u/s 132(1) of the Act. The Tribunal's decision on this matter was challenged by the Revenue.

Issue 2 - Deletion of various expense-related additions:
The Tribunal's decision to delete additions made on account of disallowance of power & fuel expenses, ROC & stamping expenses, sale to group concern, transportation expenses, and interest u/s 36(1)(iii) during the assessment u/s 153A was questioned by the Revenue.

Judgment Details:
The Assessing Officer had made several additions during the assessment, which were subsequently deleted by the Commissioner of Income Tax (Appeals). The Income Tax Appellate Tribunal upheld the CIT(A)'s decision, leading to the appeal by the Revenue.

During the hearing, the advocate for the appellant referred to a Supreme Court decision in Principal Commissioner of Income Tax vs. Abhisar Buildwell P. Ltd., which addressed the scope of assessment under section 153A of the Act. The Supreme Court clarified that no additions can be made in completed assessments without incriminating material.

The Supreme Court's ruling in Abhisar Buildwell P. Ltd. confirmed that the Assessing Officer's jurisdiction under section 153A is limited to incriminating material found during a search. The Court cited previous decisions by High Courts supporting this view, emphasizing the importance of seized material in making assessments under section 153A.

The Court highlighted the legal position outlined in previous judgments, emphasizing the mandatory issuance of notices under section 153A and the distinction between completed and abated assessments. The Assessing Officer's authority to make additions is contingent on the presence of incriminating material.

Ultimately, the Supreme Court upheld the view that no additions can be made in completed assessments without incriminating material. The judgment in Abhisar Buildwell P. Ltd. settled the issue raised in the present appeal, leading to its dismissal by the Court.

In conclusion, the Court found no merit in the appeal as the law laid down by the Supreme Court in Abhisar Buildwell P. Ltd. addressed the substantial questions of law raised in the case, resulting in the dismissal of the appeal.