2017 (2) TMI 862 - HC - Income Tax

High Court Upholds Tribunal Decision on Income Tax Act Section 153(A) Assessments

The Gujarat High Court upheld the decision of the Income Tax Appellate Tribunal to delete additions made under section 153(A) of the Income Tax Act for ... Validity of assessment orders passed under section 153(A) - Held that:- We have perused and considered the assessment orders passed under section 153(A) of the Act as well as the order passed by the learned CIT(A) as well as the impugned judgement and order passed by the learned tribunal. The learned tribunal has deleted the additions made under section 153(A) of the Act, made on the basis of incriminating material found during the search, on the ground that under section 153(A) of the Act in respect of undisclosed income and undisclosed assets detected during the search could be brought to tax. See Commissioner of Income Tax (Central) -III Versus Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] wherein held since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. - Decided in favour of the Assessee Issues:Interpretation of section 153(A) of the Income Tax Act for assessing undisclosed income and assets detected during a search operation.Analysis:The judgment by the Gujarat High Court involved a group of appeals concerning the interpretation of section 153(A) of the Income Tax Act for assessing undisclosed income and assets detected during a search operation. The appeals were between the same parties but for different assessment years. The Income Tax Appellate Tribunal had partly allowed the appeals by deleting the additions made by the Assessing Officer under section 153(A) for the assessment years 2000-2001 to 2004-2005. The Revenue challenged this decision by raising questions of law regarding the scope of assessment under section 153(A) in relation to incriminating material found during the search operation.The facts leading to the appeals included a search operation conducted under section 132(1) of the Act, followed by assessments under section 153(A) for the relevant assessment years. The Assessing Officer made additions based on incriminating materials found during the search, leading to appeals by the assessee. The Income Tax Appellate Tribunal, relying on the decision of the Delhi High Court in the case of Kabul Chawla, allowed the appeals and deleted the additions made under section 153(A) for the assessment years in question.The High Court, in its analysis, referred to previous decisions by the Division Bench regarding the interpretation of section 153(A). The court emphasized that the purpose of section 153(A) is to assess undisclosed income found during a search or requisition. The court highlighted that any addition or disallowance can be made based only on material collected during the search or requisition. If no incriminating material is found for a particular assessment year, no addition can be made for that year under section 153(A). The court also cited other relevant judgments to support its interpretation of the section.Ultimately, the High Court found no error in the decision of the Income Tax Appellate Tribunal to delete the additions made under section 153(A) for the assessment years in question. The court concluded that no substantial question of law arose in the appeals based on the binding decisions of the court and the interpretation of section 153(A) provided in previous judgments. Therefore, the court dismissed all the appeals, upholding the decision of the Income Tax Appellate Tribunal.