2016 (4) TMI 1376 - AT - Income Tax

Assessments under section 153A quashed for all years, completed assessments cannot be revisited without incriminating material.

The Tribunal quashed the assessments framed under section 153A for all the assessment years in question, ruling that completed assessments cannot be ... Validity of the assessment order passed u/s. 153A - Addition of unexplained gifts u/s. 68 - HELD THAT:- Co-ordinate Bench of Mumbai Tribunal in the case of Gurinder Singh Bava Vs DCIT [2014 (2) TMI 731 - ITAT MUMBAI] has after relying on the decision of Special Bench of Tribunal in the case of Alcargo Global Logistics Ltd. has held that when the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search and therefore there was no assessment pending in and in such a case there was no question of abatement. In the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. The gift deeds and the copies of return of income of the donors that were found at the time of search could not be considered to be incriminating material for the purpose of addition in view of the fact that these very documents were the basis of the gifts that were considered by the assessee while crediting the capital account. In view of the aforesaid facts, we are of the view that these assessments framed u/s.153A need to be quashed. - Decided in favour of assessee. Issues Involved:1. Validity of the assessment order passed under section 153A read with Section 143(3) of the Income Tax Act, 1961.2. Addition in respect of gifts received by the assessee considered as unexplained gifts under section 68 of the Act.3. Charging of interest under sections 234A, 234B, and 234C.Detailed Analysis:1. Validity of the assessment order passed under section 153A read with Section 143(3) of the Income Tax Act, 1961:The primary issue is whether the assessments framed under section 153A are valid when no incriminating material was found during the search. The learned Authorised Representative argued that the assessments for the years in question had already attained finality as they were processed under section 143(1) and the time limit for issuing notice under section 143(2) had expired. Therefore, in the absence of any incriminating material, the completed assessments could not be interfered with under section 153A. The Tribunal agreed with this argument, citing the legal position that completed assessments can only be interfered with on the basis of incriminating material unearthed during the search. The Tribunal referenced the case of CIT vs. Kabul Chawla, which established that in the absence of incriminating material, the completed assessment can only be reiterated.2. Addition in respect of gifts received by the assessee considered as unexplained gifts under section 68 of the Act:The Assessing Officer had made additions on account of gifts received by the assessee, considering them unexplained under section 68. The learned Authorised Representative contended that the gifts had already been accounted for in the respective assessment years and were reflected in the capital account. The Tribunal noted that the gift deeds and copies of returns of income of the donors found during the search were not new material but were already part of the records. Therefore, these documents could not be considered incriminating material authorizing the Assessing Officer to make additions under section 153A. The Tribunal referenced the case of CIT vs. Ashok Dua, where it was held that in the absence of incriminating material, no addition could be made under section 153A.3. Charging of interest under sections 234A, 234B, and 234C:The assessee challenged the charging of interest under sections 234A, 234B, and 234C. However, since the Tribunal decided in favor of the assessee on the primary legal issue of the validity of the assessment under section 153A, the other grounds on the merits of the additions were rendered academic and required no adjudication.Conclusion:The Tribunal quashed the assessments framed under section 153A for all the assessment years in question. The appeals filed by the assessee were allowed, and the grounds raised in all these appeals were also allowed. The Tribunal's order emphasized that in the absence of any incriminating material found during the search, the completed assessments could not be interfered with under section 153A.