2019 (1) TMI 1964 - HC - Income Tax

High Court Limits Abatement Criteria for Completed Assessments Under Income Tax Act

Pr. Commissioner of Income Tax, Central-3. Versus M/s. Caprihans India Ltd.

The High Court ruled that completed assessments could only be abated if incriminating evidence of undisclosed income or assets was found during a search, ... Assessment u/s 153A - Whether ITAT was correct in holding that completed assessment could not be abated unless some incriminating evidence or material was found during search qua the additions made by the AO? - HELD THAT:- It is an undisputed position that the issue is covered by the judgment in case of Commissioner of Income Tax Vs. Continental Warehouisng Corporation (Nhava Sheva) Ltd. and anr. [2015 (5) TMI 656 - BOMBAY HIGH COURT]. In such judgment the view of the High Court was that only undisclosed income and undisclosed assets detected during search could be brought to tax in relation to these years for which the notice under section 153A of the Income Tax Act, 1961 has been issued. Under the circumstances, tax appeals are dismissed. Issues Involved:Interpretation of tax law regarding abatement of completed assessment without incriminating evidence found during search.Analysis:The judgment delivered by the High Court addressed the issue of whether completed assessment could be abated without the discovery of incriminating evidence during a search. The court referred to a previous decision in the case of Commissioner of IncomeTax Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd., which established that only undisclosed income and assets detected during a search could be subject to taxation under section 153A of the Income Tax Act, 1961. The court noted that the issue at hand was already covered by this precedent, thereby leading to the dismissal of the tax appeals filed by the revenue. The judgment emphasized the importance of incriminating evidence in abating completed assessments and clarified the scope of taxation in cases involving search operations under the Income Tax Act.This case highlights the significance of incriminating evidence in the abatement of completed assessments under tax law. The court's reference to a previous decision established a clear precedent regarding the taxation of undisclosed income and assets discovered during search operations. The judgment underscores the necessity of linking detected undisclosed income and assets to the tax liability, emphasizing the legal limitations on bringing such items to tax without the presence of incriminating evidence. By dismissing the tax appeals, the court reaffirmed the principles outlined in the earlier decision, providing clarity on the scope of assessment and taxation in cases involving search operations under the Income Tax Act.