2023 (6) TMI 1306 - AT - Income Tax

Revision u/s 263 - Having issued notice u/s 153A and considered the return of income filed in response AO completed the assessment u/s 143(3) r.w.s.153A by making addition denying the claim of exemption u/s 10(38) - whether any interference could be made with the concluded assessments while assessing the income under section 153A of the Act, when no incriminating material was found? - HELD THAT - As decided in ABHISAR BUILDWELL P. LTD. 2023 (4) TMI 1056 - SUPREME COURT in complete agreement with KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT no addition can be made in respect of the completed assessments in absence of any incriminating material. Thus we hold that since no incriminating material found in the case of assessee for the assessment year 2013-14, the concluded assessment cannot be disturbed and the addition made by Assessing Officer and sustained by the learned CIT(A) cannot be upheld. We accordingly allow the appeal of assessee.

Summary

Issues Involved:
The issues involved in the judgment are related to the assessment year 2013-14, specifically concerning the addition of income under section 10(38) of the Income Tax Act, 1961, based on a search and seizure operation conducted under section 132 of the Act. The main contention revolves around whether the concluded assessments can be disturbed and additions made by the Assessing Officer can be upheld in the absence of any incriminating material found during the search.

Assessment Year 2013-14:
The case involved an individual assessee deriving income from various sources. The assessee filed a return of income for the assessment year 2013-14, declaring income and claiming Long Term Capital Gain on the sale of shares. Subsequently, a search and seizure operation was conducted, leading to the addition of income by the Assessing Officer under section 143(3) read with section 153A of the Act.

Contentions and Decision:
The assessee contended that no incriminating material was found during the search, and therefore, the concluded assessment should not be disturbed. The CIT(A) disagreed, stating that section 153A of the Act mandates assessment based on seized material and other information. The Appellate Tribunal, referring to the Supreme Court decision in PCIT vs. Abhisar Buildwell P. Ltd., held that in the absence of incriminating material, no additions can be made to completed assessments under section 153A. Consequently, the appeal of the assessee was allowed.

Assessment Year 2013-14 - Separate Judgement for Smt. Nirmala Agarwal:
In a separate appeal by Smt. Nirmala Agarwal, the Assessing Officer did not make any addition during the assessment under section 143(3) read with section 153A of the Act. However, the Principal Commissioner of Income Tax (PCIT) revised the assessment order under section 263, challenging the exemption claimed under section 10(38) of the Act. The Tribunal held that in the absence of incriminating material, the Assessing Officer had no jurisdiction to make any addition, and thus, the exercise of jurisdiction under section 263 by the PCIT was impermissible. Consequently, the order under section 263 was quashed, and the appeal of the assessee was allowed.

Conclusion:
In conclusion, all the appeals of the assessees, including the lead case of Prerana Agarwal, were allowed by the Appellate Tribunal. The Tribunal emphasized the importance of incriminating material in assessments under section 153A of the Income Tax Act, 1961, and upheld that additions cannot be made to completed assessments in the absence of such material found during a search or seizure operation.