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2014 (3) TMI 321 - AT - Income TaxValidity of assessment made u/s 153A of the Act No incriminating material found during the search action u/s 132 of the Act Held that - The decision in The ACIT Cent. Cir. 33, Mumbai Versus Shri Jayendra P. Jhaveri 2014 (2) TMI 1131 - ITAT MUMBAI followed - the return was processed u/s. 143(1) of the Act but the same has attained finality due to the expiry of limitation period of twelve months from the end of the month in which the return was filed - the assessment is deemed to be completed and not pending on the date of search - no incriminating material was found from the premises of the assessee during the search u/s. 132 of the Act. In Jai Steel (India) v. ACIT 2013 (6) TMI 161 - RAJASTHAN HIGH COURT it has been held that in case nothing incriminating is found on account of search or requisition, the question of reassessment of the concluded assessment does not arise - it is not open to the assessee to seek deduction or claim expenditure which has not been claimed in the original and already concluded assessment, in the case of assessment u/s. 153A in pursuance of search action - reassessments made by the AO u/s 153A in the case in which the assessments have already been concluded, without any incriminating material being found during the search action conducted u/s 132 of the Act, are liable set aside thus, the additions made by the AO in assessments proceedings u/s 153A also set aside Decided in favour of Assessee.
Issues Involved:
1. Validity of assessment under section 153A of the Income Tax Act. 2. Confirmation of additions on substantive basis by CIT(A). 3. Reduction of quantum of additions by CIT(A). Detailed Analysis: 1. Validity of Assessment under Section 153A: The primary issue revolves around the validity of the reassessment made by the Assessing Officer (AO) under section 153A of the Income Tax Act. The assessee contended that since no incriminating material was found during the search and seizure operation, the reassessment was not valid. It was argued that for the assessment years (AY) 2003-04, 2006-07, and 2007-08, the assessments had attained finality, and there was no abatement of any pending assessment proceedings. The reassessment could only be justified if incriminating material was found. Conversely, the revenue argued that the returns for AY 2006-07 and 2007-08 were processed under section 143(1), which amounts to an intimation and not an assessment. Hence, as per section 153A, the AO is mandated to assess or reassess the income for six previous years, irrespective of the presence of incriminating material. The Tribunal, after considering the submissions, referred to the case of "The ACIT Cent. Cir. 33, Mumbai Vs. Shri Jayendra P Jhaveri," where it was held that reassessment under section 153A can only be made on the basis of incriminating material found during the search. The Tribunal also cited the Rajasthan High Court's decision in "Jai Steel (India) v. ACIT," which held that in the absence of incriminating material, reassessment of concluded assessments does not arise. Consequently, the Tribunal set aside the reassessments made by the AO under section 153A due to the absence of incriminating material. 2. Confirmation of Additions on Substantive Basis by CIT(A): The CIT(A) upheld the AO's action of passing the Assessment Order under section 153A but confirmed the additions of Rs. 500,000 for AY 2003-04, Rs. 5,258,919 for AY 2006-07, and Rs. 3,803,928 for AY 2007-08 on a substantive basis. The assessee appealed against these confirmations. Given that the Tribunal set aside the reassessments under section 153A, the consequential additions made by the AO did not survive and were ordered to be deleted. 3. Reduction of Quantum of Additions by CIT(A): The revenue appealed against the CIT(A)'s action in reducing the quantum of additions made by the AO under section 2(22)(e) of the Income Tax Act for AY 2006-07 and 2007-08. However, as the Tribunal invalidated the reassessments under section 153A, the appeals by the revenue were dismissed. Conclusion: The Tribunal concluded that the reassessments made by the AO under section 153A, without any incriminating material found during the search, were invalid. Consequently, the additions made by the AO did not survive and were ordered to be deleted. The appeals filed by the assessee were allowed, and the appeals filed by the revenue were dismissed. The order was pronounced in the open court on 26.02.2014.
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