2022 (11) TMI 915 - HC - Income Tax

Assessment u/s 153A - incriminating material gathered during the course of search - legal requirement in law that incriminating material must be found during search - HELD THAT - This Court finds that the ITAT upheld the findings of the CIT-(A) that the additions made in the present appeals were not based on any material incriminating or otherwise recovered in the course of search action. This Court in Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd 2021 (9) TMI 902 - DELHI HIGH COURT has held that where the assessment of the respondents have attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made u/s153A of the Act as the cases of the respondents were of non-abated assessment. No substantial question of law.

Summary

Issues:
1. Challenge to the Order of the Income Tax Appellate Tribunal (ITAT)
2. Addition under Section 153A of the Income Tax Act, 1961
3. Deletion of deductions under Section 80IB of the Act
4. Interpretation of legal provisions related to search and assessment

Analysis:
1. The present case involves the challenge to the Order dated 11th January, 2022 passed by the ITAT for Assessment Years 2009-10 and 2010-11. The appellant contested the ITAT's decision on various grounds, including errors in law related to additions under Section 153A of the Income Tax Act and deductions under Section 80IB. The counsel argued that the ITAT wrongly relied on a previous judgment and erred in deleting the additions made by the Assessing Officer.

2. The key contention revolved around the interpretation of Section 153A of the Act and the requirement of incriminating material for making additions during assessments post a search action. The Court observed that the ITAT's decision was based on the lack of incriminating material found during the search. The Court cited precedents to emphasize that assessments under Section 153A must be based on seized material, and in the absence of such material, completed assessments can be reiterated.

3. Regarding the deletion of deductions under Section 80IB, the appellant argued against the ITAT's decision. However, the Court found that the ITAT's conclusions were in line with legal principles and previous judgments. The Court highlighted that the Revenue cannot interfere with concluded assessments in the absence of incriminating material found during a search action.

4. The Court extensively analyzed legal provisions and precedents related to search actions, assessments under Section 153A, and the necessity of incriminating material for making additions during assessments. Citing relevant judgments, the Court emphasized that assessments under Section 153A must be grounded in seized material and any additions must have a nexus with the material found during the search. The Court also referred to judgments affirming that non-abated assessments without incriminating material found during a search cannot be subjected to additions under Section 153A.

In conclusion, the Court dismissed the appeals and applications, stating that no substantial question of law arose in the case. The decision was based on the application of legal principles, precedents, and the specific facts of the case, ultimately upholding the ITAT's findings in line with established legal interpretations.