2020 (7) TMI 44 - AT - Income Tax

Appeal upheld due to lack of incriminating evidence under Income Tax Act

The Ld. CIT(A) allowed the Assessee's appeal as no incriminating material was found during the search proceedings, leading to the rejection of additions ... Assessment u/s 153A - HELD THAT:- It is not in dispute that original return of income was filed by assessee for the assessment year under appeal on 28.09.2011 [PB-3]. The search has been conducted in the case of assessee on 08.07.2015 and on the date of search, the assessment under appeal was completed as the time period to issue notice under section 143(2) for this year was also expired. It is apparent from the record that no incriminating documents/material were found in the case of assessee during the search proceedings for making the assessment in this case under section 153A of the I.T. Act, 1961. No incriminating material is produced before us so as to indicate any infirmity in the Order of the Ld. CIT(A) for deleting the addition. As decided in KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] Completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Also see MEETA GUTGUTIA PROP. M/S. FERNS ‘N’ PETALS [2017 (5) TMI 1224 - DELHI HIGH COURT] Issues:1. Whether the seized documents were incriminating in nature justifying additions made by the Assessing Officer.2. Whether the quality of incriminating material found during search operations was sufficient to support additions under section 69B of the Income Tax Act, 1961.3. Whether completed assessments can be interfered with under section 153A without incriminating material.Issue 1:The Departmental Appeal and Cross Objection by the Assessee were directed against the Order of the Ld. CIT(A)-27, New Delhi, for the A.Y. 2011-2012. The Revenue contended that the seized documents clearly established the orchestrated and contrived nature of transactions, making them incriminating. However, the Ld. CIT(A) noted that no incriminating material was found during the search proceedings related to the Assessee, leading to the allowance of the Assessee's appeal.Issue 2:The Assessing Officer made an addition under section 69B of the Income Tax Act, 1961, on account of unexplained investment. The Assessee argued that the notice was vague and non-specific, citing judgments of the Delhi High Court. The A.O. rejected these arguments and made the addition. The Ld. CIT(A) accepted the Assessee's contention, emphasizing the absence of incriminating material during the search proceedings, resulting in the allowance of the Assessee's appeal.Issue 3:The Revenue challenged the assessment framed under section 153A, contending that the approval obtained under section 153D lacked proper application of mind. The Tribunal observed that no incriminating documents were found during the search proceedings related to the Assessee, aligning with the principles laid down by the Delhi High Court in the cases of Kabul Chawla and Meeta Gutgutia. As the issue was covered by existing judgments and no infirmity was identified in the Ld. CIT(A)'s order, the Revenue's appeal was dismissed.The judgment highlighted the importance of incriminating material in justifying additions under the Income Tax Act, emphasizing the need for a clear link between seized documents and the Assessee's liability. The Tribunal's decision was guided by established legal principles and previous judgments, ensuring a fair and reasoned outcome in line with the law.