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2017 (7) TMI 1043 - AT - Income TaxValidity of assessment u/s 153A - addition on account of gift - Held that - In absence of any incriminating material found during the course of search qua the gifts disclosed in the original return of income, no addition can be made in the assessment made u/s 153A. Similarly, in the appeal for the AY 2005-06 admittedly the return of income filed originally had attained finality and in terms of section 153A read with second proviso, hence the assessment for the AY 2005-06 was unabated at the time of search conducted on 28.02.2007. For the said gift also nothing incriminating was unearthed during the search and therefore, in absence of any incriminating material relating to gift found during the course of search, we hold that such an addition cannot be roped in while completing the reassessment u/s 153A. Above finding given in the AY 2004-05 will apply mutatis mutandis and accordingly, appeal for assessment year 2005-06 is allowed in favour of assessee. In the appeal for the AY 2001-02, the addition relates to opening balance as on 01.04.2001 as reflected in Balance Sheet. For this addition also, from the perusal of the assessment order, it is quite apparent that no incriminating material has been found during the course of search that the opening balance as shown in the balance sheet as on 31.03.2001 in the form of cash in hand or bank balance of ₹ 3,03,309/- is an undisclosed income which has been unearthed on the basis of any incriminating material found during the course of search. Moreover, the amount of opening balance cannot be added unless something incriminating is found qua the same amount of closing balance as reflected in the balance sheet of the earlier year. Thus, this addition cannot be made while making reassessment under the provisions of section 153A.
Issues:
Appeal against common order for Assessment Years 2004-05, 2005-06, and 2001-02 under Income-tax Act, 1961. Analysis: The appeals were filed against orders for Assessment Years 2004-05, 2005-06, and 2001-02, passed by Ld. CIT (Appeals)-I, New Delhi under section 143(3) r.w.s.153A of the Income-tax Act, 1961. The Tribunal heard the appeals together due to common issues arising from identical facts. The key issue in the appeal for the Assessment Year 2004-05 was the legality of the assessment order under section 153A without any incriminating material found during the search. The assessee contended that the assessment was invalid as no incriminating material was discovered during the search. The Tribunal referred to previous decisions and the principle laid down by the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla to support the assessee's argument. The Tribunal emphasized that without incriminating material, no addition can be made in the assessment under section 153A. In the appeal for the Assessment Year 2005-06, a similar issue arose regarding a gift disclosed in the original return of income without any incriminating material found during the search. The Tribunal applied the same reasoning as in the previous year and allowed the appeal. For the Assessment Year 2001-02, the addition related to the opening balance as reflected in the Balance Sheet. The Tribunal found that no incriminating material was discovered during the search to justify the addition of the opening balance as undisclosed income. The Tribunal concluded that the addition made by the AO and sustained by the CIT (A) should be deleted. In summary, all the appeals of the assessee were allowed based on the absence of incriminating material found during the search, in line with the legal principles established by previous judgments and the provisions of section 153A of the Income-tax Act, 1961.
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