2022 (7) TMI 1552 - AT - Income Tax

Assessment u/s 153A - Validity of additions made in the absence of incriminating material in concluded assessment proceedings - HELD THAT - The decisions of the Hon ble Jurisdictional High Court are squarely applicable to the facts and circumstances of the case as no assessment was pending on the date of search and the addition has been made merely on the basis of the book entries already disclosed to the department. Reliance is also placed on the decision of the Hon ble Jurisdictional High Court in the case of PCIT Vs. Subhash Khattar 2017 (7) TMI 1091 - DELHI HIGH COURT Hence, keeping in view, the entire factum of the case, we hold that the addition made vide the assessment u/s 153A in the absence of any incriminating material is not sustainable - Decided against revenue.

Summary

Issues:
1. Whether additions can be made in the absence of incriminating material in concluded assessment proceedings.
2. Interpretation of Section 153A of the Income Tax Act, 1961.

Analysis:
The Appellate Tribunal ITAT Delhi heard appeals by the Revenue against orders of the CIT(A)-24, New Delhi. The appeals pertained to Assessment Years 2013-14 and 2014-15. The search & seizure action under section 132 of the Income Tax Act was conducted on 15.11.2017. The assessment for A.Y. 2013-14 was completed before the date of search, and for A.Y. 2014-15, the time limit for issuing notice under section 143(2) had expired before the search. The assessment under section 153A was concluded without any incriminating material. The core issue was whether additions could be made without incriminating material in concluded assessments. The Revenue argued for a literal interpretation of the law, while the Assessee relied on the CIT(A) order.

The Revenue contended that the Assessing Officer has the power to assess or reassess the total income of the assessee under section 153A, irrespective of the presence of incriminating material. They cited legislative history and circulars to support their argument. The Revenue relied on various judgments, including the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla. They argued that the Assessing Officer is not restricted to making additions based only on incriminating documents.

The Tribunal considered judgments of the Hon'ble Jurisdictional High Court, including the case of CIT vs. Kabul Chawla, which emphasized the need for incriminating material for interference in completed assessments under section 153A. The Tribunal also referred to the decision in the case of Pr. CIT vs. Meeta Gutgutia, highlighting the importance of incriminating material for making additions. The Tribunal concluded that the additions made under section 153A without incriminating material were not sustainable. The appeals of the Revenue were dismissed based on the legal interpretations and precedents cited.

In summary, the Tribunal's decision focused on the interpretation of Section 153A and the requirement of incriminating material for making additions in concluded assessments. The Tribunal relied on legal principles and judgments to support the conclusion that additions without incriminating material were not justified in this case.