2020 (1) TMI 1362 - HC - Income Tax

High Court rules additions in assessment under Section 153A must be based on incriminating evidence found during search.

Pr. Commissioner of Income Tax - Central 4 Versus Anil Mahavir Gupta

The High Court of Bombay dismissed the appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax ... Assessment u/s 153A - Whether Tribunal was justified upholding that the additions made in the assessment under Section 153A r/w Section 143(3) for A.Y. 2004-05 being not based on any incriminating material found in the search, were beyond the scope and ambit contemplated u/S 153A? - HELD THAT:- In the case of Commissioner of Income-tax Vs. SKS Ispat & Power Ltd [2017 (7) TMI 813 - BOMBAY HIGH COURT]wherein this Court had dismissed the appeal of the revenue on the same question of law. Section 153A cannot be a tool to have a second inning of assessment either to the Revenue or the assessee. Even in the case of Gurinder Singh Bawa [2015 (10) TMI 1761 - BOMBAY HIGH COURT], the assessment was under Section 143(1) of the Act and the Court held that the scope of assessment after search under Section 153A would be limited to the incriminating evidence found during the search and no further. No substantial question of law arises. Issues:1. Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the assessment year 2004-05.2. Whether additions made in the assessment under Section 153A r/w Section 143(3) for A.Y. 2004-05, without any incriminating material found in the search, were beyond the scope of Section 153A.Analysis:The High Court of Bombay heard the appeal under Section 260A of the Income Tax Act, 1961, filed by the revenue against the order passed by the Income Tax Appellate Tribunal for the assessment year 2004-05. The main issue raised in the appeal was whether the additions made in the assessment under Section 153A r/w Section 143(3) for the said assessment year, without any incriminating material found during the search, were beyond the scope of Section 153A. The respondent, who was a director of a company, relied on a previous decision of the Court in the case of Commissioner of Income-tax Vs. SKS Ispat & Power Ltd, where a similar question of law was dismissed. The Court noted that Section 153A does not distinguish between assessments conducted under Section 143(1) and 143(3), emphasizing that the scope of assessment post-search under Section 153A is limited to incriminating evidence found during the search and cannot be used for a second assessment round for either the Revenue or the assessee.The Court referred to previous judgments, including the case of Gurinder Singh Bawa and Continental Warehousing Corpn. (Nhava Sheva) Ltd, to establish that Section 153A cannot be utilized for a fresh assessment beyond the incriminating evidence discovered during the search. The Court reiterated that the assessment scope under Section 153A is restricted to the material unearthed during the search, as highlighted in previous decisions. Based on the authoritative pronouncements and precedents, the Court concluded that the issue was no longer res integra and was settled by the aforementioned judgments. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's order, and no costs were awarded in the matter.