2023 (12) TMI 415 - HC - Income Tax

Validity of Assessment u/s 153A - fresh material/information received after the date of search - HELD THAT - Supreme Court in the case of Abhisar Buildwell 2023 (4) TMI 1056 - SUPREME COURT approved of the view taken by this court in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT as held no addition can be made in respect of the completed assessments in absence of any incriminating material. Admittedly, the assessment for the Assessment Year 2011-12 was finalized on 20.01.2012 and no notice under Section 143(2) of the Act was issued, as such no assessment was pending on the date of search action i.e. 29.10.2013. Also admittedly, in the present case, during the search action against the respondent/assessee no incriminating material was found and the material in the form of statement of Shri B.P. Singh now sought to be relied upon by the appellant/revenue was recorded subsequent to the search action. Therefore, the proposed question of law cannot be admitted as substantial question of law.

Summary

Issues:
The issues involved in the judgment are whether the scope of assessment under section 153A extends to income unearthed based on statements recorded during post-search proceedings and whether a fresh material received after the date of search is sufficient to reopen the assessment under section 153A.

Summary:
The appellant/revenue challenged the order of the Income Tax Appellate Tribunal, which dismissed the appeal against the assessee pertaining to the Assessment Year 2011-12. The respondent/assessee, engaged in developing a Special Economic Zone for IT services, filed its return of income, which was processed under Section 143(1) of the Act. Subsequently, a search and seizure action was conducted, leading to the issuance of a notice under Section 153A of the Act. The Assessing Officer disallowed a deduction claimed under Section 80IAB of the Act, leading to penalty proceedings. The respondent challenged the order before the Commissioner of Income Tax (Appeals) and raised the issue of the legality of invoking Section 153A without incriminating material. The CIT(A) partly allowed the appeal, leading to the current appeal before the High Court.

The appellant/revenue contended that a statement recorded in post-search proceedings formed the basis for disallowance of the deduction claimed under Section 80IAB of the Act. The legal position regarding the consideration of material found during a search for assessment purposes was discussed, with different High Courts taking divergent views. The High Court's decision in the case of Kabul Chawla was upheld by the Supreme Court, emphasizing the importance of incriminating material for making additions in assessments.

The High Court examined the legal principles laid down in previous cases and concluded that the statement of Shri B.P. Singh, recorded after the search action, cannot be the basis for initiating proceedings under Section 153A. The Court found no substantial question of law for consideration under Section 260A of the Act and dismissed the appeal.

In conclusion, the High Court dismissed the appeal as it found no substantial question of law for consideration under Section 260A of the Income Tax Act.