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2023 (10) TMI 198 - AT - Income TaxAssessment u/s 153A - Whether incriminating material having been found during the course of search? - HELD THAT - We note that the Learned CIT(A) did not controvert that the present A.Y. 2012-13 is the year where on the date of search, assessments were completed but he denied relief to the assessee by referring to the judgment of Hon ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora 2014 (10) TMI 255 - ALLAHABAD HIGH COURT and in the case of E.N. Gopakumar 2016 (11) TMI 72 - KERALA HIGH COURT - However, now the issue has been settled by Hon ble Supreme Court by rendering judgment in the case of PCIT vs. Abhisar Buildwell P. Ltd. 2023 (4) TMI 1056 - SUPREME COURT approving the proposition of jurisdictional High Court in the case of CIT vs. Kabul Chawla, 2015 (9) TMI 80 - DELHI HIGH COURT In said judgments, it was categorically held by Hon ble Supreme Court and Hon ble Jurisdictional High Court that completed assessments can be interfered with by the AO while making assessment order under Section 153A of the Act only on the basis of some incriminating material unearthed during the course of search. As we have found, as noted above that there is no incriminating material in the hands of Assessing Officer, which was found and seized during the course of a search operation held on 22.01.2018, therefore, the completed assessment for A.Y. 2012-13 cannot be interfered in absence of any incriminating material found and seized during the course of search and seizure operation. Accordingly, are allowed and AO is directed to delete the addition.
Issues involved:
The issues involved in this case are related to the addition made by the Assessing Officer in the order passed under Section 153A r.w.s 143(3) of the Act without any incriminating material found during the search, and the confirmation of the addition of Rs.33,19,010/- by restricting the cost of construction claimed by the assessee to Rs.39,44,000/- while computing the income under the head capital gains. Issue 1: Addition made without incriminating material: The appeal filed by the assessee challenged the addition made by the Assessing Officer without any incriminating material found during the search. The Learned Counsel argued that since no incriminating document was found and seized against the assessee during the search, the completed assessments cannot be interfered with by the AO while making the assessment order under Section 153A of the Act. The Counsel relied on a judgment of the Hon'ble Supreme Court to support this argument. Issue 2: Restriction of cost of construction for capital gains computation: The assessee contested the confirmation of the addition of Rs.33,19,010/- by restricting the claimed cost of construction to Rs.39,44,000/- for computing income under the head capital gains. The Learned CIT(A) reduced the addition, but denied further relief to the assessee citing previous court judgments. However, the Tribunal noted that there was no incriminating material found and seized during the search operation, which is essential for interfering with completed assessments under Section 153A of the Act. The Tribunal carefully considered the submissions and found that the Assessing Officer disallowed the cost of indexation on the property sold by the assessee during the relevant assessment year based on documentary evidences received during the search enquiry. It was observed that no incriminating material was referred to by the AO, and the disallowance was made solely on the basis of documentary evidences related to the purchase and sale of immovable properties. Regarding the restriction of the cost of construction for computing capital gains, the Tribunal noted that the Learned CIT(A) had restricted the addition to Rs.33,19,010/- without any appeal by the Department. The Tribunal referred to relevant court judgments and emphasized that completed assessments can only be interfered with if there is incriminating material found during the search operation. Since no such material was found in this case, the Tribunal allowed ground nos. 5 and 6 of the assessee, directing the AO to delete the addition. Therefore, the appeal was partly allowed by the Tribunal based on the absence of incriminating material to support the additions made by the Assessing Officer.
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