2023 (4) TMI 385 - AT - Income Tax

Assessment u/s 153A - incriminating material found during the search action or not? - HELD THAT - We find that the issue is squarely covered in favour of the assessee by the decision of CIT Vs Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT followed by case of PCIT Vs RSA Digi Prints 2017 (9) TMI 530 - GUJARAT HIGH COURT as unanimous to hold that in relation to the assessments which have already been concluded, the AO is precluded from making additions on any other issue except relating or concerning to the incriminating material found during the search action. AO cannot disturb the assessment order or reassessment order which has attained finality, unless the material gathered in the course of proceedings u/s 153A of the Act establishes that relief granted under the final assessment/reassessment was contrary to the fact unearthed during the course of 153A proceedings. Contention of the ld. DR that any material, which was already in possession of the Department before search, is to be treated as incriminating material is concerned has no merits. A perusal of the assessment orders show that the Assessing Officer has not mentioned in the assessment record of any such material in the case of the assessee which may be constituted as incriminating material. Department has other/additional remedies, in case, it is of the view that there was escapement of income of the assessee so far as the transactions in question pursuant to which additions have been made, the same were fully declared by the assessee in its return of income and the AO has not referred to any incriminating material found during the search action for making the impugned addition. Decided in favour of assessee.

Summary

Issues involved:
The appeal against the orders of the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, involving additions made by the Assessing Officer in assessments framed under section 153A of the Act following a search and seizure action.

Issue 1: Addition made by Assessing Officer under section 153A of the Act
The appellant contested the additions made by the Assessing Officer in assessments framed under section 153A of the Act after a search action on the premises. The appellant argued that no incriminating material was found during the search, and therefore, no additions should be made in assessments under section 153A in the absence of such material. The appellant relied on various judicial decisions to support this argument.

Issue 2: Validity of additions in completed assessments
The Department contended that the material in possession before the search was considered incriminating, but the appellant argued that the Assessing Officer did not identify any such material as incriminating in the assessment records. The appellant cited precedents from the Delhi High Court, Gujarat High Court, Bombay High Court, and Calcutta High Court to support the position that additions cannot be made in assessments under section 153A unless they relate to incriminating material found during the search.

In the judgment, the Tribunal noted that the issue was settled in favor of the appellant by decisions of various High Courts. It was established that Assessing Officers cannot make additions in assessments under section 153A unless they are related to incriminating material found during the search. The Tribunal found no justification for the additions made by the Assessing Officer in assessments that were already concluded for the appellant. Therefore, the impugned additions were ordered to be deleted, and the appeals of the appellant were allowed.