2017 (6) TMI 547 - AT - Income Tax

Assessment u/s 153A - deemed dividend u/s 2(22)(e) - Held that - Search was taken place on 24.7.2008. As on the date of search, the assessments for the assessment years 2004-05 & 2005-06 are already concluded and there is no pending proceeding for those assessment years. The time limit for issue of notice u/s 143(2) for the assessment years 2004-05 & 2005-06 has been expired. The A.O. made additions towards deemed dividend u/s 2(22)(e) of the Act without any incriminating materials and also based on the books of accounts and financial statements, which were already part of regular return of income filed by the assessee u/s 139(1) for those assessment years. Therefore, respectfully following the decision of coordinate bench of ITAT, Visakhapatnam in the case of Sri Hari Prasad Bhararia Vs. DCIT (2016 (11) TMI 1296 - ITAT VISAKHAPATNAM), we are of the view that the A.O. has no jurisdiction to make additions in respect of concluded assessments in the absence of any incriminating materials found during the course of search. - Decided in favour of assessee.

Issues Involved:
1. Condonation of delay in filing appeals.
2. Jurisdiction of the Assessing Officer (A.O.) to make additions under Section 153A of the Income Tax Act, 1961.
3. Additions towards deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The assessee filed an appeal with a delay of one day due to transport issues. The delay was not opposed by the Departmental Representative (D.R.). The Tribunal, after considering the reasons provided, found them to be beyond the control of the assessee and condoned the delay, admitting the appeal for adjudication.

2. Jurisdiction of the Assessing Officer (A.O.) to Make Additions under Section 153A:
The Tribunal examined whether the A.O. had the jurisdiction to make additions for assessment years 2004-05 and 2005-06, where the assessments were concluded and no proceedings were pending as of the date of the search. The Tribunal referred to the decision of the ITAT, Visakhapatnam bench in the case of Sri Hari Prasad Bhararia, which held that the A.O. cannot make additions in the absence of incriminating materials for concluded assessments. The Tribunal noted that the assessments for the years in question were already concluded, and the time limit for issuing notice under Section 143(2) had expired. Therefore, the A.O. was precluded from making additions without any seized materials.

3. Additions Towards Deemed Dividend under Section 2(22)(e):
The A.O. made additions towards deemed dividend based on the financial statements and ledger accounts of the assessee, which were part of the regular return of income. The assessee argued that these additions were not based on any seized documents and should not have been made in the absence of incriminating material. The Tribunal upheld this argument, referencing multiple decisions, including the ITAT Special Bench in the case of All Cargo Global Logistics Ltd., which stated that in the case of concluded assessments, additions could only be made based on incriminating material found during the search. Consequently, the Tribunal directed the A.O. to delete the additions made towards deemed dividend for the assessment years 2004-05 and 2005-06.

Conclusion:
The appeals filed by the assessee for the assessment years 2004-05 and 2005-06 were allowed, and the appeal filed by the revenue for the assessment year 2004-05 was dismissed. The Tribunal concluded that the A.O. had no jurisdiction to make additions in the absence of any incriminating materials for the concluded assessments. The order was pronounced in the open court on June 9, 2017.

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