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2019 (11) TMI 583 - AT - Income TaxAssessment u/s.153A - additions without any incriminating materials found during the course of search. - HELD THAT - Once the proceeding u/s 153A is initiated which are special proceedings, the legislature provides different treatments for abated and unabated assessments. However, in respect of unabated assessments the legislature has conferred powers on the AO to just follow the assessments already concluded unless incriminating materials are found in the course of search. It is also pertinent to note that the tax can be levied as per the provision of the Act. Thus, the tax cannot be charged from the assessee merely on the ground that he agreed for certain addition during the assessment proceedings. We hold that the addition made for the Assessment years i.e. 2006-07, 2007-08, 2008-09 2008-09, which were unabated/concluded assessments as on date of search cannot be made in the search assessments in the absence of any incriminating material found in the course of search and accordingly all those additions are directed to be deleted. Since the legal issues are addressed, we refrain to give our findings on merits of additions under the provisions of the Act. Accordingly, the grounds raised by the assessee for Assessment Years 2006-07, 2007-08, 2008-09 and 2009-10 are allowed.
Issues Involved:
1. Jurisdiction of the Assessing Officer under section 153A r.w.s 143(3). 2. Addition in proceedings under section 153A without incriminating material. 3. Addition based on a conditional offer by the appellant. 4. Adoption of Annual Letting Value (ALV) by the Assessing Officer. 5. Rateable value fixed by the Municipal Corporation as the Annual Letting Value. Detailed Analysis: 1. Jurisdiction of the Assessing Officer under section 153A r.w.s 143(3) The primary issue was whether the Assessing Officer (AO) had the jurisdiction to complete the assessment under section 153A read with section 143(3) of the Income Tax Act. The appellant argued that the AO erred in making additions during the proceedings under section 153A, especially since no incriminating material was found during the course of the search, and the original assessment under section 143(3) had not abated. 2. Addition in proceedings under section 153A without incriminating material The appellant contended that the additions made by the AO for the assessment years 2006-07 to 2009-10 were based on deemed rent under section 23(1) of the Act for properties that were already disclosed in the income tax and wealth tax returns. The appellant argued that since no incriminating material was found during the search, the additions were unjustified. The Tribunal agreed with the appellant, citing the Bombay High Court's decision in CIT vs. Continental Warehousing Corporation (Nhava Shiva) Ltd. and All Cargo Global Logistics Ltd., which held that in the absence of incriminating material, the AO could not disturb the finalized assessments. 3. Addition based on a conditional offer by the appellant The appellant argued that the addition was based on a conditional offer made during the assessment, which was not accepted by the AO. The Tribunal noted that tax authorities must levy tax as per the law and not based on the income agreed upon by the assessee. The Tribunal referenced the Bombay High Court's decision in Balmukund Acharya Vs. DCIT, which emphasized that tax can only be collected as provided under the Act, and any over-assessment due to mistake or misconception should be corrected. 4. Adoption of Annual Letting Value (ALV) by the Assessing Officer The appellant challenged the ALV adopted by the AO for properties in Lonavala and Mumbai, arguing that the values were excessive and arbitrary. The Tribunal did not specifically address the merits of the ALV adopted by the AO, as the primary issue of jurisdiction and the absence of incriminating material was sufficient to decide the case in favor of the appellant. 5. Rateable value fixed by the Municipal Corporation as the Annual Letting Value The appellant requested that the AO adopt the rateable value fixed by the Municipal Corporation as the ALV. However, since the Tribunal directed the deletion of all additions due to the lack of incriminating material, this issue became moot. Conclusion The Tribunal concluded that the additions made for the assessment years 2006-07 to 2009-10, which were unabated assessments as of the date of the search, could not be made in the search assessments in the absence of any incriminating material found during the search. Consequently, all the additions were directed to be deleted, and the appeals of the assessee were partly allowed. Order Pronouncement The order was pronounced in the Court on 06/11/2019 at Mumbai, resulting in the appeals of the assessee being partly allowed.
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