2020 (1) TMI 1034 - AT - Income Tax

Assessment u/s 153A - addition of sum received from Sh. Nusrat Ikram Khan Bagga as advance against sale of shop - excess jewellery found during the course of search as undisclosed income - HELD THAT - We find that the premises of Shri Mahesh Jain was covered in the same search action and the facts as well as the legal issue involved are identical. The Tribunal in the case of brother of the assessee Shri Mahesh Jain 2017 (12) TMI 1744 - ITAT CHANDIGARH has allowed the legal ground taken wherein held that limitation for completing the assessment for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A of the Act, but there being no provision as to under which provision of law, the assessee can be called upon to furnish its return for that assessment year only under the provisions of section 139 and it is only in case of failure of the assessee to furnish the return under section 139 that the AO can call for return of income for the previous year either under section 142(1) or under section 147 of the Act, as the case may be, and if it is so, then the assessment for assessment year relevant to that previous year can be made only under section 143(1) or 143(3) or 144 or 147 of the Act but cannot be made under section 153A of the Act. Reasons stated by the CIT(A), we are of the opinion that the CIT(A) was quite justified in holding that for the assessment year under consideration, the AO had no jurisdiction to pass an order under section 153A - Decided in favour of assessee.

Summary

Issues:
1. Addition of ?1,00,000 received as advance against the sale of a shop.
2. Treatment of excess jewellery as undisclosed income.
3. Validity of assessment under section 153A for the assessment year 2007-08.

Issue 1: Addition of ?1,00,000 as advance against the sale of a shop
The assessee contested the addition of ?1,00,000 received as an advance against the sale of a shop, claiming it was unjustified. The assessee argued that the agreement with the buyer was for the sale of four shops for a total consideration of ?10,00,000, out of which ?1,00,000 was received as advance in cash. Subsequently, due to the buyer's inability to pay the remaining amount, the agreement was amended, and part of the advance was returned. The assessee contended that the amount received was reflected in subsequent returns. The counsel provided detailed explanations and supporting documents to justify the transaction, which was accepted by the Tribunal.

Issue 2: Treatment of excess jewellery as undisclosed income
The second ground of appeal involved contesting the addition on account of unexplained jewellery found during a search operation. The counsel explained that the family's total jewellery exceeded the prescribed limit but was duly explained. The legal ground was supported by a previous Tribunal decision involving a similar case where the legal issue was decided in favor of the assessee. The Tribunal accepted the explanations provided by the counsel and ruled in favor of the assessee, holding that the addition on account of excess jewellery was not justified.

Issue 3: Validity of assessment under section 153A for the assessment year 2007-08
The crucial legal issue raised in the additional ground of appeal was the validity of the assessment under section 153A for the assessment year 2007-08. The counsel argued that the assessment for the said year was not valid as it exceeded the scope allowed under the law. The counsel cited relevant legal provisions and previous decisions to support the contention that the assessment under section 153A was not justified for the assessment year in question. The Tribunal, in line with previous decisions and legal interpretations, ruled in favor of the assessee, holding the assessment to be void and ordering the deletion of consequent additions made in the assessment.

In conclusion, the Appellate Tribunal ITAT Chandigarh, in the cited judgment, addressed and ruled on three main issues involving additions made by the Assessing Officer. The Tribunal considered detailed arguments, explanations, legal provisions, and previous decisions to deliver a comprehensive judgment favoring the assessee on all three issues. The Tribunal's decision highlighted the importance of adhering to legal procedures and ensuring assessments are conducted within the prescribed scope of the law.