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2021 (11) TMI 533 - AT - Income TaxValidity of Assessment u/s 153C - Addition on account of forfeited amount of customers. - HELD THAT - The undisputed fact is that return u/s 139 of the Act was filed on 15.10.2010 and notice u/s 153C of the Act was issued on 05.02.2015. This means that the assessment for A.Y 2010-11, which is the year under consideration, has attained finality and did not abate. The ratio laid down by the Hon'ble Jurisdictional High Court of Delhi in the cases of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT squarely apply which means that the addition could be made only in respect of the issue in respect of which incriminating material was found. Even if we consider the list of allottees whose bookings were cancelled as mentioned elsewhere, the date of advance received mentioned therein do not pertain to the A.Y under consideration. We are of the considered view that the decision of the Hon'ble Supreme Court in the case of Singhad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT also apply on the facts of the case wherein it has been held that if there is no incriminating material relating to a particular year, assessment of that year could not be reopened. This view has been reiterated by the Hon'ble Jurisdictional High Court in the case of PCIT Vs. SMC Power Generation Ltd. 2019 (7) TMI 1393 - DELHI HIGH COURT Assuming that there is a substantial time gap between the date of advance received and date of cancellation of the bookings, this fact may raise a strong presumption on cessation of liability, but even this presumption cannot justify the assessment u/s 153C of the Act which has to be based upon incriminating material found at the time of search as per the ration laid down by the Hon'ble Supreme Court and the Hon'ble Jurisdiction High Court of Delhi supra . We, therefore, do not find any error or infirmity to interfere with the findings of the ld. CIT(A). Ground raised by the Revenue stand dismissed.
Issues Involved:
1. Validity of jurisdiction assumed under Section 153C of the Income Tax Act. 2. Merits of the addition of ?1,99,65,000 on account of forfeited amount from customers. Issue-wise Detailed Analysis: 1. Validity of Jurisdiction Assumed under Section 153C: The Revenue's appeal contested the deletion of the addition of ?1,99,65,000 by the Commissioner of Income Tax (Appeals) [CIT(A)]. The primary contention was the jurisdiction assumed under Section 153C of the Income Tax Act, 1961. A search and seizure operation under Section 132 was conducted, and documents belonging to the assessee were found and seized. The Assessing Officer (AO) issued a notice under Section 153C on 05.02.2015, and the assessment was made accordingly. The assessee argued that the jurisdictional conditions for invoking Section 153C were not satisfied, rendering the assessment void. The CIT(A) referred to judicial decisions, including the Delhi High Court's judgment in CIT Central-Ill vs. Kabul Chawla and the Supreme Court's decision in M/s Calcutta Knitwears, which mandated that satisfaction must be recorded for reassessment under Section 153C. The CIT(A) found that no such satisfaction was recorded in this case, making the notice under Section 153C legally invalid. Hence, the reassessment was deemed ab initio void and was quashed. 2. Merits of the Addition of ?1,99,65,000: On the merits, the AO had added ?1,99,65,000 to the assessee's income, assuming this amount was forfeited from cancelled bookings. The assessee provided details of parties whose booking money was received and later cancelled, claiming the amounts were refundable and offered for bookings in other projects. The AO, however, considered the amounts forfeited and taxable. The CIT(A) quashed the reassessment but also noted that the addition was based on assumptions without any incriminating material. The AO's assumption that the amounts were forfeited lacked documentary evidence. The CIT(A) highlighted that the AO did not present any adverse material from the search indicating the amounts were forfeited. Thus, the addition was not justified as it was based on assumptions rather than concrete evidence. Tribunal's Conclusion: The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessment for AY 2010-11 had attained finality and could not be reopened without incriminating material. The Tribunal referred to the Delhi High Court's decisions in Kabul Chawla and Meeta Gutgutia, and the Supreme Court's ruling in Singhad Technical Education Society, which clarified that reassessment under Section 153C must be based on incriminating material found during the search. The Tribunal dismissed the Revenue's appeal, affirming that the addition of ?1,99,65,000 was not supported by any incriminating evidence and the jurisdiction under Section 153C was improperly assumed. Final Order: The appeal filed by the Revenue in ITA No. 5154/DEL/2016 was dismissed, and the order was pronounced in the open court on 08.11.2021.
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