2015 (10) TMI 1761 - HC - Income Tax

Gifts received from family members - Could not be proved to be genuine by the Assessee - whether income related to incriminating documents found during the search u/s 132 could be assessed u/s 153A even though the provisions of Section 153A mandate that the Assessing Officer assess or reassess the Total Income of the Assessee searched u/s 132? - ITAT deleted the addition - Held that - On issue of jurisdiction itself the issue stands concluded against the revenue by the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT ). In the appeal before us, the revenue has made no grievance with regard to the impugned order of the Tribunal holding that in law the proceedings under Section 153A of the Act are without jurisdiction. This in view of the fact that no assessment were pending, so as to abate nor any incriminating evidence was found. Once it is not disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic. No substantial question of law. - Decided against revenue.

Summary

Issues:
1. Jurisdiction of the Tribunal under Section 153A of the Income Tax Act, 1961
2. Addition of unexplained gifts and deemed dividend in the assessment

Jurisdiction of the Tribunal under Section 153A:
The High Court addressed the challenge to the Tribunal's jurisdiction under Section 153A of the Income Tax Act, 1961. The respondent-assessee's assessment for A.Y. 2005-06 was under scrutiny due to a search conducted under Section 132 of the Act. The Assessing Officer added amounts declared as gifts and deemed dividend, leading to a total income determination of &8377; 1.47 crores. The CIT(A) deleted the deemed dividend addition but upheld the unexplained gifts addition. The Tribunal, however, accepted the respondent's argument that no incriminating material was found during the search, rendering the Section 153A proceedings invalid. The Tribunal ruled in favor of the respondent-assessee on the jurisdictional issue, citing the AlCargo Global Logistics Ltd. decision. The High Court concurred, emphasizing that without pending assessments or incriminating evidence, Section 153A proceedings lack jurisdiction.

Addition of Unexplained Gifts and Deemed Dividend:
Regarding the additions made by the Assessing Officer, the CIT(A) deleted the deemed dividend addition due to lack of accumulated profits in the lending company. However, the unexplained gifts addition was upheld. The Tribunal's decision on the jurisdictional issue rendered the questions on the merits of the additions academic. The High Court noted that the revenue did not challenge the Tribunal's jurisdiction finding, as it aligned with the Continental Warehousing Corporation (Nhava Sheva) Ltd. decision. Since no assessments were pending and no incriminating evidence was found, the High Court dismissed the appeal, stating that the questions raised on the merits were academic and did not present substantial legal issues. The appeal was consequently dismissed with no order as to costs.