2018 (3) TMI 1178 - AT - Income Tax

Validity of assessment u/s 153A - Rejection of new claim of deduction in the returns of income filed u/s 153A in respect of assessment years for which assessment proceedings have not abated - Held that - In the facts of the present case also, admittedly, no incriminating document was found, on the basis of which additions were made. In view thereof and following the ratio laid down by the Hon ble Bombay High Court in CIT Vs. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. All Cargo Global Logistics Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) and in CIT Vs. Shri Deepak Kumar Agarwal 2017 (9) TMI 850 - BOMBAY HIGH COURT , we find that in the absence of any incriminating document, no addition is warranted in the hands of assessee in the respective years which are non-abated assessment years. Accordingly, we direct the Assessing Officer to delete all the additions made in the respective years from assessment years 2004-05 to 2008-09. Also the assessee is also not entitled to any fresh claim on account of depreciation on Motor Car and loss on trading of shares - Decided partly in favour of assessee

Summary

Issues Involved:
1. Validity of additions made under Section 153A when no incriminating material was found during the search.
2. Validity of search and seizure actions under Section 132.
3. Fresh claims made by the assessee in returns filed under Section 153A.
4. Specific additions made by the Assessing Officer, including agricultural income, deemed dividend, interest payments, and depreciation claims.
5. Condonation of delay in filing appeals.

Issue-wise Detailed Analysis:

1. Validity of Additions under Section 153A:
The assessee contended that the additions were not based on any material seized during the search, especially when no assessment was pending on the date of search. The Tribunal referenced the judgments in *Parivar Properties (P) Ltd. v. Dy. CIT* and *Atul Barot v. Dy. CIT*, concluding that for non-abated assessment years, no additions could be made in the absence of incriminating material found during the search. The Tribunal held that the assessee is not entitled to make any fresh claims in such returns, reaffirming the principles laid down by the Hon’ble Bombay High Court in *CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd.* and *All Cargo Global Logistics Ltd.*

2. Validity of Search and Seizure Actions under Section 132:
The assessee challenged the validity of the search and seizure action, arguing that the conditions under Section 132(1) were not met. The Tribunal did not find merit in these arguments, implying that the search was conducted based on valid authorization and information in possession of the authorities.

3. Fresh Claims in Returns Filed under Section 153A:
The Tribunal held that the assessee is not entitled to make fresh claims of deductions in the returns filed under Section 153A for non-abated assessment years. This includes claims for depreciation on Motor Car and losses suffered in trading of shares. The Tribunal referenced the decision in *Shri Gajendra D. Pawar Vs. DCIT*, reiterating that only undisclosed income and assets detected during the search could be brought to tax in non-abated proceedings.

4. Specific Additions Made by Assessing Officer:
- Agricultural Income: The Tribunal upheld the addition made by the Assessing Officer on account of agricultural income.
- Deemed Dividend under Section 2(22)(e): Additions for deemed dividend were made for assessment years 2004-05 and 2005-06 and were upheld by the Tribunal.
- Interest Payments to Ravi Cooperative Bank: The Tribunal upheld the additions made on account of interest payments.
- Depreciation Claims: The Tribunal rejected the fresh claims of depreciation on Motor Car for assessment years 2004-05 and 2005-06.
- Loss on Trading of Shares: The Tribunal also rejected the new claim of losses suffered in trading of shares for assessment year 2006-07.

5. Condonation of Delay:
The appeals were filed after a delay of seven days. The Tribunal found merit in the assessee’s explanation for the delay, which included calculation errors and weekend days, and condoned the delay, allowing the appeals to be heard.

Conclusion:
The Tribunal concluded that in the absence of any incriminating material found during the search, no additions were warranted for the non-abated assessment years. Consequently, all additions made by the Assessing Officer for these years were directed to be deleted. However, the assessee was not entitled to any fresh claims of deductions in the returns filed under Section 153A. The appeals were partly allowed.