2024 (4) TMI 885 - AT - Income Tax

Assessment u/s 153A - Deemed dividend addition u/s 2(22)(e) - incriminating material found in the course of search or not? - HELD THAT - The issue is no longer res integra. The judgment rendered by the Hon ble Apex Court in the case of Pr.CIT vs. Abhisar Buildwell (P.) Ltd. 2023 (4) TMI 1056 - SUPREME COURT would squarely apply to the facts of the case and thus the scope of assessment under Section 153A is restricted to the incriminating material found in the course of search of the assessee owing to the fact that such assessment stood concluded / completed and thus do not get abated by operation of law. Guided by the principles laid down in the case of Abhisar Buildwell (supra) we find force in the legal plea raised on behalf of the assessee. Hence in the absence of any incriminating material found in an unabated assessment the additions made by the AO in the captioned appeal require to be quashed. Appeal of the assessee is allowed..

Summary

Issues:
The appeal concerns the correctness of taxability under Section 2(22)(e) of the Income Tax Act, 1961 for Assessment Year 2014-15.

Summary:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-IV, Kanpur, arising from the assessment order passed by the Assessing Officer under Section 143(3) r.w. Section 153A of the Income Tax Act, 1961. The main contention raised by the assessee was regarding the taxability of Rs. 4,216 under Section 2(22)(e) of the Act. The assessee argued that the additions made by the Assessing Officer were without any reference to incriminating material found during the search and seizure operation conducted at the assessee's premises. The Revenue could not refute the absence of incriminating material for making such additions.

The Tribunal carefully reviewed the orders of the lower authorities and the legal contentions presented by both parties. The assessee contended that additions under Section 2(22)(e) could not be made in the assessment under Section 153A without any reference to incriminating material found during the search. Citing the judgment of the Hon'ble Apex Court in the case of Pr.CIT vs. Abhisar Buildwell (P.) Ltd., it was established that the scope of assessment under Section 153A is limited to incriminating material found during the search. Since no such material was found in the present case, the additions made by the Assessing Officer were deemed unjustified. Therefore, the Tribunal allowed the appeal of the assessee, quashing the additions made by the Assessing Officer.

The order was pronounced in open court on 19th April, 2024.