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2017 (12) TMI 1059 - AT - Income TaxAssessments u/s.153A - addition on unexplained gifts - no incriminating document was found and seized during the course of search - Held that - The addition has been made u/s.153A for two gifts received during the year, however, since, it is an unabated AY and no incriminating document was found and seized during the course of search for that AY, therefore following the ratio of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ), we are inclined to hold that the issue of these two gifts was outside the scope of examination in the impugned proceedings u/s.153A. Now reverting to the contention of Ld. DR that no assessment prior to search for A.Y.2003-04 was completed u/s.143 (3), therefore the issue of these gifts can be examined in proceedings u/s.153A is without any substance. Hon ble Delhi High Court in the case of WORLD WINDOW IMPEX INDIA (P) LTD. (2016 (3) TMI 1275 - DELHI HIGH COURT) has clearly held that the ratio as laid down in this regard in the case of Kabul Chawla (Supra) also covers the situation where, prior to search, no assessment u/s.143 (3) was passed for the year under consideration. - Decided in favour of assessee.
Issues involved:
1. Validity of proceedings under section 153A of the Income-tax Act, 1961. 2. Legality of additions for gifts received. 3. Unabated assessment years. Analysis: Issue 1: Validity of proceedings under section 153A of the Income-tax Act, 1961 - The case involved appeals against an order passed by the CIT(A) for assessment years 2003-04 and 2004-05. - The ITAT remitted legal issues challenging the validity of the notice under section 153A to the CIT(A) for fresh consideration. - The CIT(A) confirmed the additions and dismissed legal grounds challenging the validity of proceedings under section 153A. - The appellant challenged the order before the ITAT, questioning the legality and validity of the proceedings under section 153A, along with challenging the additions made. Issue 2: Legality of additions for gifts received - The appellant argued that since the gifts did not stem from seized material and the assessment year was unabated, the additions of the gifts should be deleted. - The appellant contended that no incriminating material was found during the search related to the gifts in question. - The ITAT held that in the absence of incriminating material in an unabated assessment year, no additions could be made under section 153A. - Relying on legal precedents, the ITAT concluded that the additions for the gifts were outside the scope of examination in the proceedings under section 153A. Issue 3: Unabated assessment years - The ITAT found that both assessment years 2003-04 and 2004-05 were unabated. - No incriminating material was discovered during the search related to the gifts under consideration for both years. - Consequently, the ITAT allowed the appeals of the assessee, deleting the additions made for the gifts in both assessment years. This detailed analysis highlights the legal arguments presented, the authorities cited, and the reasoning behind the ITAT's decision to allow the appeals of the assessee based on the issues of validity of proceedings under section 153A, legality of additions for gifts received, and the status of unabated assessment years.
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