2019 (3) TMI 282 - AT - Income Tax

Assessment proceedings u/s 153A - additions in unabated assessments - denial of deduction u/s 80IB(10) - additions in unabated assessments without any incriminating material found during the course of search u/s 132 - time limit for issuance of notices u/s 143(2) stood expired in relation to the assessment year 2008-09 to 2010-11 much before the date of conducting the search - HELD THAT - As in the case of PCIT Vs. Desai Construction (2016 (7) TMI 1211 - GUJARAT HIGH COURT) confirmed the view taken by the Tribunal upholding the contention of the assessee that as no incriminating material was found during the course of search which could have enabled the Assessing Officer to re-examine its claim for deduction u/s 80IB which was part of the assessment prior to the search and such assessment unabated. Similarly Hon'ble High Court of Bombay in the case of Continental Warehousing Corporation and All Cargo Global Logistics Ltd (2015 (5) TMI 656 - BOMBAY HIGH COURT) dismissing the revenue s appeal holding that there was no incriminating material found during the course of search, the Tribunal was right in holding the power conferred u/s 153A being not expected to be exercised routinely, should be exercised if the search revealed any incriminating material. If that was not found then in relation to the second phase of three years, there was no warrant for making an order within the meaning of this provision . Thus no addition/disallowance was called for Assessment Year 2008-09 to 2010-11 as no incriminating material was found during the course of search at the premises of the assessee as the time limit of issuance of notice u/s 143(2) of the Act stood expired much before the date of conducting search u/s 132 - decided in favour of assessee.

Summary

Issues involved:
1. Whether additions in unabated assessments can be made without incriminating material found during a search under section 132 of the Income Tax Act.
2. Justification of disallowing exemption claimed under section 80IB(10) by the Assessing Officer.

Analysis:
1. The appeals pertained to the Assessment Years 2008-09 to 2010-11 and challenged the orders of the Ld. Commissioner of Income Tax (Appeals) arising from the order under section 153A read with section 143(3) of the Income Tax Act 1961.
2. The assessee contended that no incriminating material was found during the search, questioning the additions made by the Assessing Officer in non-abated assessments. The assessee relied on judgments favoring their stance, while the Revenue cited other judgments to support their position.
3. The Tribunal considered whether additions in unabated assessments can be made without incriminating material. It noted that no incriminating material was found during the search, and the disallowance of deduction under section 80IB(10) was based on information gathered during assessment proceedings.
4. Assessments for the years in question were non-abated as the time limit for issuing notices under section 143(2) had expired before the search. The Tribunal applied the principle that a construction favoring the assessee should be adopted when interpreting taxing provisions.
5. Relying on various judgments, including those of the High Courts of Gujarat, Bombay, and Delhi, the Tribunal concluded that no addition or disallowance was warranted for the Assessment Years 2008-09 to 2010-11 due to the absence of incriminating material during the search.
6. Consequently, the Tribunal allowed all three appeals of the assessee, emphasizing that the power under section 153A should be exercised judiciously based on the presence of incriminating material, which was lacking in this case.

This detailed analysis highlights the key legal issues, arguments presented by both parties, relevant case laws, and the Tribunal's reasoning leading to the decision in favor of the assessee.