2021 (1) TMI 668 - AT - Income Tax

Validity of initiation of proceedings u/s.153A - Addition of brand expenses - Proof of seized material found during the course of search - HELD THAT - The grounds raised by the Revenue are dismissed as infructuous, because the additions challenged by the Revenue are not based on any seized material found during the course of search. Accordingly, the Revenue s appeals are dismissed.

Summary

Issues:
1. Validity of assessment proceedings under section 153A for Assessment Years 2005-06 and 2006-07 based on seized material.
2. Applicability of judgments in CIT vs. Kabul Chawla and CIT vs. Sinhagad Technical Education Society on the assessment proceedings.

Detailed Analysis:
Issue 1: The appeals were filed by the Revenue challenging the order of the Ld. Commissioner of Income Tax (Appeals) for the quantum of assessment passed under section 153A for the Assessment Years 2005-06 and 2006-07. The Revenue raised grounds of appeal related to the disallowance of expenses. The Tribunal noted that the search and seizure action under section 132(1) was conducted, and proceedings under section 153A were initiated. However, the additions made by the Assessing Officer were not based on any incriminating or seized material found during the search. The Tribunal referred to previous judgments and observed that the additions made by the Assessing Officer cannot be sustained as they were not supported by seized material. The Tribunal allowed the grounds challenging the validity of the assessment proceedings under section 153A, citing relevant case laws.

Issue 2: The Tribunal considered the decisions of the Hon'ble Supreme Court in CIT vs. Sinhagad Technical Education Society and the Hon'ble Delhi High Court in CIT vs. Kabul Chawla and CIT vs. Meeta Gutgutia. The Tribunal held that the invoking of jurisdiction under section 153A by the Assessing Officer was unsustainable in law as no incriminating material relating to the relevant assessment years was found during the search. The Tribunal set aside the order of the CIT(A) and allowed the grounds raised by the assessee challenging the validity of the assessment proceedings under section 153A. Since the assessee succeeded on this preliminary legal issue, the other grounds raised became academic and were not adjudicated upon.

In conclusion, the Tribunal dismissed the Revenue's appeals as infructuous since the additions challenged were not supported by any seized material found during the search. The appeals of the Revenue were ultimately dismissed based on the findings and observations of the Tribunal, upholding the decisions related to the validity of assessment proceedings under section 153A.