2015 (3) TMI 442 - AT - Income Tax

Validity of assessment framed under sec. 153A read with sec. 143(3) - absence of any incriminating material belonging to the assessee being found during the course of search - Held that - Decision of the Hon ble Jurisdictional Delhi High Court in the case of Anil Kr. Bhatia (2012 (8) TMI 368 - DELHI HIGH COURT) supports the case of the assessee that in absence of incriminating material found during the course of search an addition u/s 153A of the Act cannot be made in the assessment framed thereunder. In absence of rebuttal of this material fact by the Revenue in the present case before us that no incriminating material was found during the course of search relating to the assessee for the assessment year under consideration to justify the additions made in these years by the Assessing Officer and assessment based on the original return of income filed under sec. 139 of the Act was pending as on the date of search, we following the cited decisions by the learned AR hold that the assessments framed under sec. 153A read with sec. 143(3) of the Income-tax Act, 1961 for the assessment years under consideration are not valid and the same are accordingly held as null and void. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of assessment framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.
2. Validity of notice issued under Section 153A as time-barred.
3. Validity of assessment framed without issuance of valid notice under Section 143(2).
4. Validity of addition on account of income from house property.
5. Action of the CIT(A) in restricting the exemption claimed under Section 54.

Detailed Analysis:

1. Validity of Assessment under Section 153A read with Section 143(3):
The assessee challenged the validity of the assessment framed under Section 153A read with Section 143(3) on the grounds that no incriminating material was found during the search. The Tribunal noted that the assessee's original return of income was processed under Section 143(1) and no statutory notice under Section 143(2) was issued within the prescribed time limit. The Tribunal relied on various judicial precedents, including the Special Bench decision in Al-Cargo Global Logistic Ltd. vs. ACIT, which held that in cases where no assessment was pending, the assessment under Section 153A should be made based on incriminating material found during the search. The Tribunal concluded that in the absence of incriminating material, the assessment framed under Section 153A was invalid and declared it null and void.

2. Validity of Notice Issued under Section 153A as Time-Barred:
In the assessment year 2007-08, the assessee also questioned the validity of the notice issued under Section 153A as time-barred. However, this ground was not pressed by the assessee and was accordingly rejected.

3. Validity of Assessment without Issuance of Valid Notice under Section 143(2):
The assessee questioned the validity of the assessment framed under Section 153A read with Section 143(2) without the issuance of a valid notice under Section 143(2) in the assessment year 2007-08. This ground was also not pressed by the assessee and was rejected.

4. Validity of Addition on Account of Income from House Property:
The assessee contested the addition made on account of income from house property, arguing that the provisions of Section 23(1)(a) read with Section 23(4) were applicable. The Tribunal noted that the Assessing Officer made the addition by rejecting the assessee's contentions. However, since the primary issue of the validity of the assessment under Section 153A was decided in favor of the assessee, the Tribunal did not adjudicate this ground separately.

5. Action of CIT(A) in Restricting Exemption under Section 54:
In the assessment year 2009-10, the assessee raised an issue regarding the action of the CIT(A) in confirming the Assessing Officer's decision to restrict the exemption claimed under Section 54 to Rs. 10,16,700 against the claimed amount of Rs. 28,81,000. Similar to the previous issue, this ground became infructuous due to the Tribunal's decision on the primary issue of the validity of the assessment under Section 153A.

Conclusion:
The Tribunal held that the assessments framed under Section 153A read with Section 143(3) were invalid in the absence of incriminating material found during the course of the search. Consequently, the assessments were declared null and void. As a result, the other issues raised by the assessee became academic and did not require separate adjudication. The appeals were allowed, and the decision was pronounced in the open court on 17.02.2015.