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2017 (11) TMI 1218 - AT - Income TaxAssessment u/s 153A - proof of incriminating material found in search - Held that - The financial year in which the return is furnished would end on 31st March, 2012. Therefore, no notice under section 143(2) could be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. In this case, such date would expire on 30th September, 2012. Therefore, on the date of search on 23.11.2012 no assessment was pending against the assessee and assessment had already completed under the Act. Since no incriminating material was found or recovered during the course of search so as to make addition of share application money therefore, the issue is covered in favour of the assessee by the judgment of the jurisdictional High Court in the case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) and Meeta Gutgutia (2017 (5) TMI 1224 - DELHI HIGH COURT ). Therefore, the invocation of Section 153A by the A.O. for assessment year under appeal was without any legal basis as there was no incriminating material found in respect of assessment year under appeal. - Decided in favour of assessee.
Issues:
1. Addition of unexplained share application money under section 153A of the I.T. Act. 2. Jurisdictional validity of the addition based on incriminating material found during search. 3. Interpretation of Section 153A and the requirement of incriminating documents for finalizing assessments. 4. Applicability of the judgment in the case of CIT vs. Kabul Chawla on the present case. Analysis: Issue 1: Addition of unexplained share application money under section 153A of the I.T. Act. The appeal was against the addition of ?2 crores as unexplained share application money by the Assessing Officer (A.O.) under section 153A. The assessee challenged this addition before the Ld. CIT(A), arguing that no incriminating material was found during the search to justify the addition. The Ld. CIT(A) rejected the contention and confirmed the addition, leading to the appeal by the assessee. Issue 2: Jurisdictional validity of the addition based on incriminating material found during search. The assessee contended that since no incriminating material was discovered during the search, and no pending assessment existed at the time of search, the addition of share application money lacked jurisdiction. The argument was supported by referencing the judgment in the case of CIT vs. Kabul Chawla, emphasizing the necessity of incriminating material for such additions under section 153A. Issue 3: Interpretation of Section 153A and the requirement of incriminating documents for finalizing assessments. The Ld. D.R. argued that Section 153A did not mandate the presence of incriminating documents for finalizing assessments. Citing decisions from other High Courts, the Ld. D.R. emphasized a strict interpretation of the tax statute. However, the assessee relied on the Delhi High Court's judgment in the case of Kabul Chawla to support the requirement of incriminating material for additions under section 153A. Issue 4: Applicability of the judgment in the case of CIT vs. Kabul Chawla on the present case. The Tribunal considered the precedents set by the Delhi High Court in the case of CIT vs. Kabul Chawla and Pr. CIT vs. Meeta Gutgutia. It was noted that no incriminating material was referred to in the assessment order, and the time for issuing notice under section 143(2) had expired before the search. Therefore, the Tribunal concluded that the invocation of Section 153A for the assessment year in question was without legal basis, as there was no incriminating material found during the search. The addition of ?2 crores was consequently deleted, and the appeal of the assessee was allowed. This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's decision based on the interpretation of relevant legal provisions and precedents.
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