2023 (5) TMI 1318 - HC - Income Tax

Assessment u/s 153A - incriminating material found during search or not? - Addition u/s 68 - bogus LTCG - addition u/s. 69C of expenses on bogus LTCG - HELD THAT - As in ABHISAR BUILDWELL P. LTD. 2023 (4) TMI 1056 - SUPREME COURT confirmed the view taken by the Delhi High court in Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and of this Court in Saumya Construction 2016 (7) TMI 911 - GUJARAT HIGH COURT laying down the law that no addition can be made in respect of completed assessment in absence of any incriminating material will not permit making of addition by the AO and that the AO has no jurisdiction to reopen the completed assessment. Decided in favour of assessee.

Summary

Issues involved:
The issues involved in this case include the deletion of additions made under sections 68 and 69C of the Income Tax Act, 1961, the consideration of incriminating materials in assessment proceedings, and the jurisdiction of the Assessing Officer in making additions in the absence of such material.

Deletion of Additions under Sections 68 and 69C:
The case revolved around the addition of Rs. 53,16,019 under section 68 of the Act on account of alleged bogus long term capital gain, and an additional Rs. 1,44,255 under section 69C on account of expenses related to the same. The Commissioner of Income Tax (Appeals) had initially allowed the appeal of the assessee by deleting these additions, citing the absence of incriminating material during search. The Income Tax Appellate Tribunal upheld this decision, leading to the appeal.

Consideration of Incriminating Materials:
The central issue in the appeal was whether the Assessing Officer could consider all available material, including that found during a search, in making assessments. The appellant argued that the Assessing Officer should have the authority to assess 'total income' based on all available records, while the respondent contended that only incriminating material found during the search should be considered. The Supreme Court's decision in Principal Commissioner of Income Tax vs. Abhisar Buildwell P. Ltd. clarified that no additions can be made in completed assessments without incriminating material.

Jurisdiction of the Assessing Officer:
The Supreme Court's ruling in Abhisar Buildwell P. Ltd. established that the Assessing Officer's jurisdiction to make assessments is limited to incriminating material found during a search. The court confirmed the position taken by the Gujarat High Court in Saumya Construction and the Delhi High Court in Kabul Chawla, emphasizing that no additions can be made in completed assessments without such material. The purpose of Section 153A of the Act was considered in determining the scope of the Assessing Officer's authority.

Conclusion:
The Supreme Court's decision in Abhisar Buildwell P. Ltd. clarified that no substantial question of law arose in the present case, as the law regarding the consideration of incriminating material in assessments had been settled. Consequently, the appeal was dismissed based on the established legal principles outlined in the judgment.