2016 (5) TMI 292 - HC - Income Tax

Assessment u/s 153A - whether the ITAT was correct in concluding that there had to be incriminating material recovered during the search qua the Assessee in each of the years for the purposes of framing an assessment under Section 153A? - Held that - It is not in dispute that in respect of the Respondent Assessee for the AYs in question the initial assessment proceedings took place under Section 143(3) of the Act. Thereafter they were sought to be reopened by issuing notice under Section 147 of the Act and re-assessment orders were passed under Section 147 read with Section 143(3) of the Act. During both the aforementioned proceedings the question whether the gold and silver utensils were the capital assets or personal effects of the Assessee was examined. They were held not to be the personal effects. It has been noticed by the ITAT in the impugned order that for the AYs in question no incriminating material qua the Assessee was found. In that view of the matter, and in light of the decision of this Court in CIT v. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT the Court is of the view that the impugned order of the ITAT suffers from no legal infirmity and no substantial question of law arises for determination.

Summary

Issues:
1. Appeal against the common judgment of the Income Tax Appellate Tribunal (ITAT) for Assessment Years (AYs) 1998-99 and 1999-2000.
2. Interpretation of Section 153A of the Income Tax Act regarding the necessity of incriminating material for assessment.
3. Reopening of assessment proceedings under Section 147 of the Act.
4. Classification of gold and silver utensils as capital assets or personal effects.
5. Legal validity of the ITAT's decision in the absence of incriminating material.

The High Court of Delhi heard appeals by the Revenue against a common judgment of the ITAT for AYs 1998-99 and 1999-2000. The ITAT had dismissed the appeal of the Assessee and allowed their cross objections. The central issue was whether incriminating material was required during a search of the Assessee for framing an assessment under Section 153A of the Act. The initial assessment proceedings under Section 143(3) were reopened under Section 147, resulting in re-assessment orders. The question of whether gold and silver utensils were capital assets or personal effects was examined in these proceedings. The ITAT noted that no incriminating material was found regarding the Assessee for the relevant AYs. Citing the decision in CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi), the Court held that the ITAT's order was legally sound, and no substantial question of law arose. Consequently, the appeals were dismissed.

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