2017 (9) TMI 1290 - AT - Income Tax

Appeals Allowed for 2008-09 and 2009-10, Dismissed for 2010-11

Sh. Ravinder Kumar Versus The DCIT, Central Circle – 4, New Delhi

The appeals for assessment years 2008-09 and 2009-10 were allowed as no additions could be made under section 153A due to the absence of incriminating ... Assessment u/s 153A - proof of incriminating material found in search - Held that:- In the facts and circumstances of the present case which are identical to the assessment years 2007-08 and 2010-11 no assessment was pending has not been disputed by the ld. CIT-DR and the only dispute is with regard to the incriminating material and no addition in respect of unexplained jewellery has been made during the year and addition so made has already been deleted by the Tribunal for assessment year 2011-12 and accordingly, following the decision of the Hon'ble Delhi High Court in the case Kabul Chawla Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT ] no addition could have been made in the year under consideration. - Decided in favour of assessee. Issues Involved:1. Jurisdiction and validity of additions under section 153A for assessment years 2008-09 and 2009-10.2. Merits of additions to salary income for assessment years 2008-09, 2009-10, and 2010-11.3. Charging of interest under sections 234A, 234B, 234D, and 244A for assessment years 2008-09, 2009-10, and 2010-11.Detailed Analysis:1. Jurisdiction and Validity of Additions under Section 153A for Assessment Years 2008-09 and 2009-10:The assessee contended that the additions made under section 153A were invalid as the assessments were already completed and no incriminating material was found during the search. The Tribunal referred to the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla, which stated that in the absence of any incriminating material, no additions could be made in completed assessments under section 153A. It was observed that no assessment was pending, and no incriminating material was found during the search. Consequently, the Tribunal held that no additions could have been made for the assessment years 2008-09 and 2009-10, and the legal ground of the assessee was allowed.2. Merits of Additions to Salary Income for Assessment Years 2008-09, 2009-10, and 2010-11:For assessment years 2008-09 and 2009-10, since the legal ground was decided in favor of the assessee, the other grounds became infructuous. For assessment year 2010-11, the issue was whether certain deductions from salary (federal pension, social security charges, etc.) were diversions at source or applications of income. The Tribunal upheld the CIT(A)'s decision, which distinguished between deductions that directly benefit the employee (e.g., pension) and those that do not (e.g., cantonal tax). The CIT(A) directed the AO to examine the nature of these deductions. The Tribunal found no error in this approach and dismissed the assessee’s appeal for assessment year 2010-11.3. Charging of Interest under Sections 234A, 234B, 234D, and 244A:For assessment years 2008-09 and 2009-10, since no additions were upheld, the grounds related to interest became infructuous. For assessment year 2010-11, the Tribunal upheld the CIT(A)’s decision to charge interest under section 234B based on the revised income after giving effect to the order. The CIT(A) had correctly interpreted that interest under section 234B(1) is chargeable from the first day of April following the financial year, and the assessment under section 153A should be treated as a regular assessment for this purpose.Conclusion:- Appeals for assessment years 2008-09 and 2009-10 were allowed on the ground that no additions could be made under section 153A in the absence of incriminating material.- The appeal for assessment year 2010-11 was dismissed, upholding the additions to salary income and the charging of interest under section 234B.