2021 (10) TMI 1240 - AT - Income Tax

Assessment u/s 153A - Challenging addition contending that the year under appeal is non-abated assessment year and no incriminating material was referred while making addition - HELD THAT - We find that the year under appeal is A.Y. 2006-07. Time limit of issuance of notice u/s 143(2) of the Act for selecting assessee s case for scrutiny expires on 30th September 2007. Search was conducted on 13.11.2007. Except registered sale deed no other incriminating material was found. Consideration mentioned in the registered sale deed is duly accounted for. Other evidences are gathered by the Ld. AO by issuing notice u/s 131 of the Act and statement of the sellers were recorded during the course of assessment proceedings. The year under appeal is a non-abated assessment year. Addition in such non-abated assessment years can be made only on the basis of incriminating material found during the course of search. Our this proposition is supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and in the case of Pr. CIT vs. Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT Unaccounted receipts - As purchase consideration paid by the assessee is not below the guideline rate applicable for calculating stamp duty. Both the sellers namely Mr. Arvind Kumar and Mr. Laxmi Narayan have signed the registered deed in the presence of the Sub-Registrar for registering the documents. Further, the assessee has not been provided any opportunity to cross examine alleged sellers nor the Ld. AO has initiated any proceedings against the sellers for making additions in their hands for unaccounted receipts. Under the given facts and circumstances of the case, are of the considered view that Ld. AO was not justified in making the addition - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of alleged on-money payments for the purchase of land.
2. Legality of the assessment in a non-abated assessment year.
3. Levy of interest under sections 234A, 234B, and 234C.

Issue 1: Addition of Alleged On-Money Payments for the Purchase of Land:
The appeal was filed against an order making an addition to the income of the assessee for the Assessment Year 2006-07. The assessee was connected to certain groups and their premises were searched under section 132 of the Income Tax Act. The assessing officer made additions based on the sale deeds of agricultural lands purchased by the assessee, where discrepancies were found between the sale consideration in the deeds and the amounts stated by the sellers. The AO concluded the assessment by adding an amount to the income of the assessee. The CIT(A) upheld the addition, leading to the appeal before the Tribunal.

Issue 2: Legality of the Assessment in a Non-Abated Assessment Year:
The key argument raised by the assessee was that the addition made in a non-abated assessment year should be based on incriminating material found during the search. The Tribunal analyzed the timeline of events, noting that the search was conducted after the expiry of the time limit for issuing a notice under section 143(2) of the Act. It was observed that no incriminating material was found during the search, and the consideration mentioned in the registered sale deed was duly accounted for. Relying on judicial precedents, including the cases of CIT vs. Kabul Chawla and Pr. CIT vs. Meeta Gutgutia, the Tribunal held that additions in non-abated assessment years must be supported by incriminating material. As such, the Tribunal allowed the legal ground raised by the assessee and deleted the impugned addition.

Issue 3: Levy of Interest under Sections 234A, 234B, and 234C:
The Tribunal did not delve into the specifics of this ground raised by the assessee, deeming it as general in nature and not requiring adjudication. Therefore, no detailed analysis or discussion was provided regarding the levy of interest under sections 234A, 234B, and 234C in the judgment.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the additions made to the income and deleting the impugned addition. The judgment provided a detailed analysis of the issues involved, emphasizing the importance of incriminating material in non-abated assessment years and ensuring that additions are made based on concrete evidence.