2013 (11) TMI 665 - AT - Income Tax

Addition made during the assessment u/s 153A of the Income Tax Act - Addition u/s 68 of the Income tax act No incriminating documents found during search Assessment has not been abated Held that - In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately - In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means- (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. In the present case, the assessment had been completed under summary scheme u/s 143(1) and time limit for issue of notice u/s 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement of assessment. Therefore, addition in the assessment u/s 153A could be made only on the basis of incriminating material found during search Reliance has been placed on the judgment in the case of Alcargo Global Logistic Ltd. 2012 (7) TMI 222 - ITAT MUMBAI(SB) In absence of incriminating material recovered or statement recorded during the search, showing non-genuineness of gifts was beyond jurisdiction, hence addition so made at ₹ 20,00,000/- on account of non-genuineness of the gift which was not made in the original assessment u/s 143(3) of the Act, was rightly deleted by the Ld. CIT(A) Decided in favor of Assessee.

Issues Involved:
1. Validity of addition made under Section 153A in the absence of incriminating material found during the search.
2. Jurisdiction of the Assessing Officer (AO) to make additions under Section 153A.
3. Admissibility of additional grounds raised by the assessee before the Commissioner of Income Tax (Appeals) [CIT(A)].
4. Merits of specific additions made by the AO in the assessment years under consideration.

Issue-Wise Detailed Analysis:

1. Validity of Addition Made Under Section 153A:
The primary issue revolves around whether additions can be made under Section 153A without any incriminating material found during the search. The Tribunal noted that a search operation was conducted under Section 132, and assessments were framed under Section 153A read with Section 143(3) for six preceding years. The AO made an addition of Rs. 20,00,000/- under Section 68, treating a gift as non-genuine. The CIT(A) deleted this addition, holding that in the absence of incriminating material found during the search, no addition could be made under Section 153A. This decision was based on precedents, including the Delhi High Court's judgment in the case of Anil Kumar Bhatia, which emphasized that additions under Section 153A should be based on material found during the search.

2. Jurisdiction of the AO to Make Additions Under Section 153A:
The Tribunal discussed the jurisdiction of the AO under Section 153A. It was argued that Section 153A allows the AO to reassess total income, including undisclosed income, even if assessments for the relevant years were already completed. However, it was emphasized that in cases where no incriminating material was found during the search, the AO could not make additions under Section 153A. This interpretation was supported by the Special Bench decision in Alcargo Global Logistics Ltd., which held that in the absence of abated assessments, additions under Section 153A could only be made based on incriminating material found during the search.

3. Admissibility of Additional Grounds Raised by the Assessee:
The assessee raised an additional ground before the CIT(A) challenging the validity of additions under Section 153A in the absence of incriminating material. The CIT(A) admitted this additional ground, citing the Supreme Court's decisions in Jute Corporation of India Ltd. and NTPC Ltd., which allowed raising new grounds involving legal issues that go to the root of the matter. The Tribunal upheld the CIT(A)'s decision to admit the additional ground, emphasizing that it was a legal issue that did not require fresh material outside the record.

4. Merits of Specific Additions Made by the AO:
The Tribunal examined the merits of specific additions made by the AO in various assessment years. For instance, in the assessment year 2002-03, the AO made an addition of Rs. 20,00,000/- treating a gift as non-genuine. The CIT(A) deleted this addition, and the Tribunal upheld the CIT(A)'s decision, noting that no incriminating material was found during the search to justify the addition. Similar findings were made for other assessment years, where the Tribunal concluded that in the absence of incriminating material, the AO had no jurisdiction to make additions under Section 153A.

Conclusion:
The Tribunal dismissed the revenue's appeals and allowed the assessee's appeals, holding that additions under Section 153A could not be made in the absence of incriminating material found during the search. The Tribunal emphasized that the AO's jurisdiction under Section 153A is limited to making additions based on material found during the search, and in cases where no such material is found, no additions can be made. The Tribunal also upheld the admissibility of additional grounds raised by the assessee before the CIT(A), emphasizing the legal nature of the issues involved.

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