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2020 (10) TMI 96 - HC - Income TaxAssessment u/s. 153A - Absence of any incriminating material related to the given assessment year found during search - addition as unaccounted profit in respect of land transactions as bad debts - HELD THAT - Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. Question of law as proposed by the Revenue cannot be termed as a substantial question of law. As in the case of Principal Commissioner of Income-tax-4 vs. Saumya Construction (P.) Ltd 2016 (7) TMI 911 - GUJARAT HIGH COURT as rightly pointed out by the learned counsel for the respondent, the controversy involved inthe present case stands concluded by the decision of this court in the case of Commissioner of Income-tax-1 v. Jayaben Ratilal Sorathia 2013 (7) TMI 850 - GUJARAT HIGH COURT wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the AO can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. - Decided against revenue.
Issues Involved:
1. Validity of assessment under Section 153A of the Income Tax Act, 1961. 2. Disallowance of bad debts of ?94,14,513/-. 3. Addition of ?3,83,40,000/- as unaccounted profit from land transactions. Issue-wise Detailed Analysis: 1. Validity of Assessment under Section 153A: The primary issue was whether the assessment under Section 153A of the Income Tax Act, 1961, could be made for the assessment year 2009-10 in the absence of any incriminating material found during the search. The Tribunal noted that the technical issue raised by the assessee was identical to the one in the case of Shri Rajnibhai Jivraj Desai, which had been decided in favor of the assessee. The Tribunal allowed the technical ground raised by the assessee without going into the merits of the case, holding that in the absence of incriminating material, the assessment under Section 153A could not be made for a year where the assessment had concluded and was not abated. 2. Disallowance of Bad Debts of ?94,14,513/-: During the assessment proceedings, the Assessing Officer disallowed the claim of bad debts amounting to ?94,14,513/- on the grounds that no relevant records or details were furnished, as noted by the auditor in the audit report. The Commissioner of Income Tax (A) upheld this disallowance. However, the Tribunal, while allowing the appeal of the assessee, did not specifically address this issue separately but allowed the appeal based on the technical ground regarding the validity of the assessment under Section 153A. 3. Addition of ?3,83,40,000/- as Unaccounted Profit from Land Transactions: The Assessing Officer added ?3,83,40,000/- as unaccounted profit in respect of land transactions, which was upheld by the Commissioner of Income Tax (A). The Tribunal noted the assessee's contention that the addition was made without considering the submissions and evidence produced by the assessee. The Tribunal allowed the appeal of the assessee based on the technical ground regarding the validity of the assessment under Section 153A, thus setting aside the addition made by the Assessing Officer. Conclusion: The High Court, relying on the decision in Principal Commissioner of Income-tax-4 vs. Saumya Construction (P.) Ltd, held that the Tribunal did not commit any error in passing the impugned order. The Court emphasized that any addition or disallowance under Section 153A can only be made based on incriminating material found during the search. In the absence of such material, the earlier assessment must be reiterated. Consequently, the appeal by the Revenue was dismissed, and the Tribunal's order in favor of the assessee was upheld.
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