2020 (10) TMI 132 - AT - Income Tax

Assessment u/s 153A - whether there was incriminating material found in the course of search for section 153A to be invoked? - HELD THAT - If search has taken place, section 153A is triggered, and finding of incriminating material in search is not relevant. There is no categorical observation by CIT(A) regarding any incriminating material that was unearthed and seized leading to undisclosed income that was not considered. Even Ld.CIT.DR could not point out any categorical observation by authorities below wherein this issue has been addressed. Unless there is a factual observation regarding availability of incriminating material seized during course of search leading to undisclosed income in the hands of assessee for year under consideration, issue cannot be answered in accordance with law. Remand this issue back to Ld.CIT(A) to discern from assessment records of their being any incriminating material seized during course of search. Appeal of assessee allowed for statistical purposes.

Summary

Issues involved:
1. Interpretation of the requirement of incriminating material for invoking section 153A of the Income Tax Act.
2. Consideration of relevant case laws in determining the applicability of the requirement of incriminating material.
3. Review of the decision to remand the case back to the Commissioner of Income Tax (Appeals) for fresh consideration.

Analysis:

Issue 1: Interpretation of the requirement of incriminating material for invoking section 153A of the Income Tax Act:
The Hon'ble Karnataka High Court remitted the case back to the Tribunal for fresh consideration based on the incorrect application of the requirement of incriminating material for invoking section 153A. The Court emphasized that the presence of incriminating material is crucial for initiating proceedings under section 153A. The Court held that the Tribunal's reliance on a previous judgment was erroneous, leading to the remand of the case for proper consideration in accordance with the law.

Issue 2: Consideration of relevant case laws in determining the applicability of the requirement of incriminating material:
The Hon'ble High Court highlighted the importance of considering all relevant case laws in deciding the applicability of the incriminating material requirement under section 153A. It pointed out that a specific judgment related to Canara Housing Development Company was not taken into account in a previous case, emphasizing the need to review all relevant judgments before making a decision. The Court clarified that the judgment in the Lancy Constructions case was not binding and required a fresh assessment based on all applicable laws and judgments.

Issue 3: Review of the decision to remand the case back to the Commissioner of Income Tax (Appeals) for fresh consideration:
The Tribunal revisited the case and examined the arguments presented by both parties. It focused on the core issue of whether incriminating material was found during the search, which is essential for invoking section 153A. The Tribunal noted the lack of explicit observations regarding incriminating material in the previous assessments and directed the Commissioner of Income Tax (Appeals) to reassess this aspect based on the records and arguments presented. The Tribunal concluded that without clear evidence of incriminating material, the issue could not be resolved in accordance with the law, leading to the remand of the case for further examination.

In conclusion, the Tribunal allowed the appeal for statistical purposes and remanded the case back to the Commissioner of Income Tax (Appeals) for a detailed assessment of whether incriminating material was found during the search, emphasizing the importance of factual observations and adherence to legal requirements in invoking section 153A of the Income Tax Act.