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2024 (1) TMI 1229 - HC - Income TaxAssessment u/s 153A - disallowance of interest u/s. 36(1)(iii) - incriminating material found during the course of search u/s. 132(1) or not? - HELD THAT - The issues arising in this Appeal is no more res integra in view of the decision of this Court in case of Principal Commissioner of Income Tax-4 v. Saumya Constructions Limited 2016 (7) TMI 911 - GUJARAT HIGH COURT wherein it is held that there cannot be any addition of regular item shown in the books of accounts until and unless certain materials of incriminating nature found during the course of search. The word incriminating has not been defined under the Act where it refers to those documents, materials, information which were collected during the search proceedings and simultaneously these documents had bearing on the total income of the assessee. The Tribunal, in the impugned order, has categorically observed that nothing was brought on record contrary to the findings of the CIT(A) and accordingly, no addition of the regular items which were disclosed by the assessee in the regular books of accounts can be made. Also decided in Abhisar Buildwell P. Ltd. 2023 (4) TMI 1056 - SUPREME COURT in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A - No substantial question of law.
Issues Involved:
The judgment addresses various issues including the interpretation of Section 153A of the Income Tax Act, 1961, the scope of additions during assessment u/s153A, computation of undisclosed income, and the deletion of certain additions made during assessments u/s153A. Issue (i): The first issue pertains to whether the Tribunal erred in upholding the order of the CIT(A) regarding the confinement of additions during assessment u/s153A to incriminating material found during a search u/s. 132(1) of the Act, despite the absence of such stipulation in Sec. 153A. Issue (ii): The second issue questions whether the Tribunal failed to appreciate that Sec. 153A necessitates the issuance of a notice to furnish the return of income for each assessment year within six years and to assess or re-assess the total income, and whether the scheme would be compromised without allowing additions in the absence of seized incriminating material. Issue (iii): The third issue concerns the Tribunal's failure to recognize that while computing undisclosed income of the block period u/s. 158BB does not rely on evidence from a search, Sec. 153A does not contain a similar provision, and Sec. 153B1 specifies that Chapter-XIV-B provisions, including Sec. 158BB, do not apply post a search initiated after a specific date. Issue (iv): The fourth issue questions the Tribunal's understanding of the possibility of assessments on non-search-related issues in any of the six years post a u/s. 132 search, emphasizing that the Tribunal's interpretation could hinder the assessment of such income in 153A proceedings. Issue (v) to (ix): The subsequent issues (v) to (ix) revolve around the Tribunal's decisions on the deletion of additions related to disallowances and depreciation during assessments u/s153A, emphasizing the need for confinement of additions to incriminating material found during a search u/s. 132(1) despite the absence of such a stipulation in Sec. 153A. The judgment discusses the case where the appellant challenged the order passed by the Income Tax Appellate Authority under Section 260A of the Income Tax Act, 1961. The appellant's primary contention was against the order of the CIT(A) and the Tribunal regarding the scope of additions during assessments u/s153A. The Tribunal upheld the CIT(A)'s decision, prompting the appellant to appeal. The Tribunal, in its order, dismissed the appeal of the revenue against the CIT(A)'s decision. The appellant contended that the assessments under Section 153A should not be limited to incriminating material found during a search u/s. 132(1) of the Act. However, the Tribunal found no infirmity in the CIT(A)'s order and upheld the same. The judgment also references a previous decision of the Court in a similar matter, emphasizing that additions cannot be made unless incriminating material is found during a search. The Court cited a Supreme Court ruling to support this stance, highlighting the conditions under which assessments can be made in the absence of incriminating material. Ultimately, the Court concluded that no substantial question of law arose from the Tribunal's order based on the legal precedents and interpretations provided. As a result, the appeal was dismissed in light of the established legal principles and lack of new legal issues raised.
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