2018 (2) TMI 427 - AT - Income Tax

Validity of proceedings u/s 153A - proof of incriminating material/document/evidence - Held that - As decided in assessee s own case there is no denial that no incriminating material was found at the time of search proceedings. It is also an undisputed fact that prior to the date of search, the assessee had filed Wealth Tax returns. The only evidence which came to the notice of the search party were the Wealth Tax Returns filed by the assessee. In our considered opinion, the Wealth Tax Returns of the group, by any stretch of imagination, cannot be considered as incriminating material in the hands of the assessee. Except for this, there is nothing on record to suggest any incriminating material/document/evidence - Decided in favour of assessee.

Summary

Issues: Jurisdiction of proceedings under section 153A of the Income Tax Act, 1961; Addition of unaccounted jewellery

Jurisdiction of proceedings under section 153A of the Income Tax Act, 1961:
The appeal was filed against the order of CIT(A) pertaining to the assessment year 2009-10. The assessee contended that the CIT(A) erred in law by not quashing the Assessing Officer's order, claiming that the proceedings under section 153A were without jurisdiction. The CIT(A) also confirmed the addition of ?5,17,556 of alleged unaccounted jewellery. However, the Tribunal noted that no incriminating material was found during the search proceedings, and the only evidence was the Wealth Tax Returns filed by the assessee before the search. The Tribunal held that Wealth Tax Returns cannot be considered incriminating material and concluded that assessments made without any incriminating material are illegal and bad in law. Citing lack of distinguishing decisions brought by the Revenue and finding similarity in facts, the Tribunal allowed the appeal, following the findings of a co-ordinate bench and quashed the impugned additions.

Addition of unaccounted jewellery:
The Tribunal's decision was based on the absence of incriminating material during the search proceedings and the reliance on Wealth Tax Returns, which were deemed insufficient to justify the addition of unaccounted jewellery. The Tribunal emphasized that assessments made without incriminating material are illegal and directed the Assessing Officer to delete the impugned additions. The Tribunal highlighted the importance of incriminating evidence in making additions during assessments and concluded that the CIT(A) erred in confirming the addition of alleged unaccounted jewellery. By following the findings of the co-ordinate bench and considering the lack of distinguishing decisions provided by the Revenue, the Tribunal allowed the appeal filed by the assessee, ultimately leading to the quashing of the additions made by the Assessing Officer.

In summary, the judgment focused on the jurisdiction of proceedings under section 153A of the Income Tax Act, 1961, and the addition of unaccounted jewellery. The Tribunal emphasized the necessity of incriminating material for making additions during assessments and concluded that assessments made without such material are illegal and bad in law. By considering the lack of incriminating evidence and the reliance on Wealth Tax Returns, the Tribunal allowed the appeal and directed the deletion of the impugned additions, ultimately ruling in favor of the assessee.