2019 (4) TMI 506 - AT - Income Tax

Assessment u/s 153A - assessee had claimed deduction u/s.80IA(4) in the return of income filed u/s.139 - proof of incriminating material found in search - HELD THAT - No incriminating material was found during the course of search and seizure action carried out by the Department against the assessee for the assessment year 2005-06.In the return of income filed u/s.139 of the Act, the assessee had claimed deduction u/s.80IA(4) of the Act, hence assessment for assessment year 2005-06. The assessment under regular provisions was completed in the case of the assessee and claim of the assessee was accepted by the Assessing Officer. There was no pending assessment when search and seizure action was carried out by the Department. It is a well settled law that when there is no incriminating material, no addition can be made where original assessments have not abated. The Hon ble Jurisdictional High Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) 2015 (5) TMI 656 - BOMBAY HIGH COURT has held that no addition can be made in respect of assessments which have become final if no incriminating material is found during search. As decided in M/S. MURLI AGRO PRODUCTS LTD. 2010 (10) TMI 1052 - BOMBAY HIGH COURT once it is held that the assessment finalized has attained finality, then the deduction allowed under section 80 HHC as well as the loss computed under the assessment dated 29-12-2000 would attain finality. A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the I.T. Act could not have disturbed the assessment/ reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153 A proceedings.- Decided in favour of assessee

Summary

Issues:
1. Appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals) for the assessment year 2005-06.
2. Department's appeals against the order of Commissioner of Income Tax (Appeals) for the assessment years 2005-06, 2006-07, and 2007-08.

Issue 1: Appeal filed by the assessee for the assessment year 2005-06:
The assessee, a Civil Engineer and Mechanical Contractor, had a search and seizure action under section 132 of the Income Tax Act, 1961. During the search, cash and jewelry were found. The Directors of the company admitted unaccounted income for various assessment years, but for the assessment year 2005-06, no income was offered. The Assessing Officer disallowed a deduction claimed under section 80IA(4) for miscellaneous receipts. The Commissioner of Income Tax (Appeals) allowed the claim of the assessee and deleted the addition. The Revenue appealed, arguing that the Assessing Officer had jurisdiction under section 153A, even if the assessment was completed, and that incriminating material was not necessary for such assessments. However, the Tribunal upheld the Commissioner's order, citing precedents and the absence of incriminating material during the search.

Issue 2: Department's appeals for the assessment years 2005-06, 2006-07, and 2007-08:
The Department filed appeals against the orders of the Commissioner of Income Tax (Appeals) for these assessment years, challenging similar grounds as in the assessment year 2005-06. The Tribunal found that the facts and grounds were identical to the assessment year 2005-06. As the findings for the assessment year 2005-06 applied mutatis-mutandis to the subsequent years, the appeals by the Revenue for the assessment years 2006-07 and 2007-08 were also dismissed.

In conclusion, the appeal filed by the assessee for the assessment year 2005-06 was dismissed as withdrawn, while the Department's appeals for the assessment years 2005-06 to 2007-08 were dismissed. The Tribunal upheld the Commissioner's decision regarding the disallowance of deductions and the absence of incriminating material during the search, in line with established legal principles and precedents.