2016 (11) TMI 1144 - AT - Income Tax

Addition to income on assessment u/s 153A - abatement of assessment - Held that - In the case where the assessment has abated, the Assessing Officer can make additions in the assessment, even if no incriminating has been found. But in other cases it is held that the assessment u/s. 153A can be made on the basis of the incriminating material which in the context of relevant provisions means books of account and other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during 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) expired before the date of search. Therefore, there was no assessment pending in this case and in such a case there was no assessment pending in this case and in such a case there was no question of abatement. On the other hand learned Departmental Representative could not counter or rebut the contentions raised by learned AR and learned Departmental Representative could not differentiate the Judgments cited and relied upon by learned AR. Therefore considering the factual position as well as settled legal position, we hold that the additions could be made only on the incriminating material found during search and since no incriminating material found during search therefore additions made were unsustainable in the eyes of law. Accordingly we delete the additions - Decided in favour of assessee

Summary

Issues:
Challenging the assessment order under Section 153A for A.Y. 2004-05 & 2008-09.

Analysis:
1. The appeals were filed against the orders passed by the Assessing Officer under Section 143(3) read with Section 153A. The assessee, a wife of a director in a group of companies, ran her own firm. No incriminating material related to the assessee was found during a search, yet an assessment order was passed under Section 153A read with Section 143(3) of the Income Tax Act.

2. The grounds of appeal included challenges to the legality and jurisdiction of the notice issued under Section 153A, the addition made by the Assessing Officer, and the violation of principles of natural justice. The contention was that additions could only be made based on incriminating material found during the search, as per various judicial precedents cited by the appellant.

3. The appellant relied on judgments emphasizing that in cases where assessments have abated, additions can be made even without incriminating material. However, for assessments not abated, additions must be based on such material. Since the assessment was completed under a summary scheme and no incriminating material was found during the search, the additions made were deemed unsustainable.

4. The Tribunal considered the legal positions presented by the appellant and found that the additions made by the Assessing Officer, which were confirmed by the CIT(A), were not supported by any incriminating material. As a result, the Tribunal deleted the additions and allowed the appeals filed by the assessee.

5. Grounds 2 and 3 were dismissed as technical in nature, and the appeals were allowed based on the findings of the Tribunal. The order was pronounced in open court on a specified date in 2016.

This detailed analysis of the judgment highlights the legal arguments, precedents cited, and the ultimate decision of the Tribunal in favor of the assessee based on the absence of incriminating material to support the additions made by the Assessing Officer.