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2019 (7) TMI 1393 - HC - Income TaxAssessment u/s 153A - Whether there is no incriminating material found qua the addition made on account of share application money in the course of the search? - HELD THAT - Revenue itself is not disputing that in respect of the share capital no incriminating documents were found in the search proceedings. The Court s attention has been drawn to the decision of the Supreme Court in CIT v. Singhad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT where in the context of Section 153C of the Act it was held that the incriminating material which was seized had to pertain to the AY in question. It is further held that documents seized had to establish a co-relation documents wise with the assessment years for which the addition was sought to be made. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153C but in relation to Section 153A of the Act as well. Consequently, this Court does not find any error having been committed by the ITAT in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the share capital. Therefore, the jurisdictional requirement of Section 153 A of the Act was not satisfied.
Issues involved:
1. Condonation of delay in re-filing the appeal. 2. Justification of quashing assessment order under Section 153A of the Income Tax Act. 3. Interpretation of incriminating material in relation to share application money. 4. Application of legal principles from previous court decisions. Issue 1: Condonation of delay in re-filing the appeal The High Court condoned a delay of 63 days in re-filing the appeal, allowing the application. The delay was explained in the application, leading to its condonation. Issue 2: Justification of quashing assessment order under Section 153A of the Income Tax Act The Revenue appealed against the ITAT's order quashing the assessment order under Section 153A for the AY 2006-07. The main question was whether the ITAT was justified in quashing the assessment order due to the lack of incriminating material regarding the addition made on account of share application money during the search operation. The ITAT's decision was based on the absence of incriminating material related to the share capital, leading to the addition being deemed unjustified. Issue 3: Interpretation of incriminating material in relation to share application money The search operation under Section 132 of the Act led to the assessment order where an addition was made to the Assessee's income due to share application money. The Assessee's appeal was allowed by the CIT (A) based on the lack of evidence to support a different view. The ITAT accepted the Assessee's plea that no incriminating document related to the addition on share capital was found during the search, satisfying the jurisdictional requirement of Section 153A of the Act. Issue 4: Application of legal principles from previous court decisions The Revenue challenged the ITAT's decision based on the judgment in CIT v. Kabul Chawla, emphasizing the need for incriminating material to justify additions. The Supreme Court's dismissal of the Revenue's appeal against the Kabul Chawla decision was noted. The Court referred to the decision in CIT v. Singhad Technical Education Society, highlighting the requirement for seized material to have a direct correlation with the assessment years in question. The Court upheld the ITAT's decision, stating that the absence of incriminating material related to the addition on share capital rendered the addition unjustified, in line with the jurisdictional requirements of Section 153A of the Act. In conclusion, the High Court dismissed the appeal as no substantial question of law arose, affirming the ITAT's decision regarding the quashing of the assessment order under Section 153A of the Income Tax Act for the AY 2006-07.
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