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2017 (2) TMI 799 - AT - Income TaxValidity of assessment u/s. 153A - legal validity of additions made by AO under section 153A proceedings - Held that - AO has estimated the profit from brick business at a higher rate of profit on the basis analysing of earlier years and financial data of subsequent years of the assessee. The AO has brought no defect in the profit & loss account of the assessee. Similarly the information regarding the gift and unsecured loan was available in the return of income as capital account had been credited and balance sheet reflecting the loan. It is pertinent to note that all the details i.e ITR and some bank statements of donors are placed at page no s 24 to 41 which clearly shows that the donors i.e Smt.Radha Ghosh donated ₹ 2,00,000/- in cash to Assessee, like wise Smt Minati Ghosh donated ₹ 2,00,000/- by cheque, Brindavan Ghosh for ₹ 50,000/-, Sambhu Ghosh for ₹ 50,000/-, Ashwini Ghosh for ₹ 2,00,000/- and Sita Ghosh for ₹ 1,00,000/- and confirmed the said transactions by letter of confirmations. It is observed form the assessment order that the AO had not referred to any incriminating material found during the search based on which addition had been made. - Decided in favour of Assessee.
Issues:
Assessment validity under section 153A/144 of the Act. Analysis: 1. The appeal challenged the assessment order passed by the Commissioner of Income Tax-(Appeals) for the assessment year 2001-02. The key issue raised was the legality of the assessment completed and passed under section 153A/144 of the Act. The assessee contended that the assessment was bad in law, with the primary focus on questioning the validity of the said assessment. 2. The facts of the case revealed that a search was conducted at the assessee's premises, leading to the issuance of notices under various sections of the Act. The assessee filed the return showing a total income, but the Assessing Officer proceeded to determine the income based on available documents and records, making significant additions to the income. The first appeal challenged this assessment, citing precedents from different ITAT benches to support the contention that the assessment under section 153A was not valid. 3. During the proceedings, the assessee argued that the additions made by the Assessing Officer were not based on any incriminating material found during the search. The Assessing Officer and the CIT-A defended the assessment, leading to a dispute regarding the legal validity of the additions made under section 153A proceedings. The interpretation of the scope and application of section 153A in cases without incriminating material was a central point of contention. 4. The Special Bench in the case of Alcargo Global Logistics Ltd. clarified the operation of section 153A, emphasizing the requirement of initiating a search or requisition after a specified date. The Special Bench's decision highlighted that additions could be made even without incriminating material if the assessment had abated. However, in cases without abatement, additions could only be made based on incriminating material found during the search. 5. The Tribunal analyzed the facts of the present case, noting that the Assessing Officer had made the assessment based on information available in the return of income. The Tribunal reviewed the details of the additions made, including the estimation of business profit and information on gifts and unsecured loans. It was observed that the Assessing Officer had not referred to any incriminating material found during the search to justify the additions made under section 153A. 6. Relying on the judgment of the Hon'ble High Court of Calcutta in a relevant case, the Tribunal held that the additions made by the Assessing Officer were to be deleted. The Tribunal concluded that the additions were not in line with the provisions of section 153A, and therefore, ruled in favor of the assessee. The appeal was allowed, and the additions made by the Assessing Officer were deemed invalid. 7. In conclusion, the Tribunal's detailed analysis of the legal validity of the assessment under section 153A/144 of the Act highlighted the importance of incriminating material in making additions during such proceedings. The judgment provided clarity on the jurisdiction and requirements for assessments under section 153A, ultimately leading to the allowance of the assessee's appeal.
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