2021 (7) TMI 1025 - AT - Income Tax

Appeals allowed, assessments voided for lack of incriminating material in search operation

Parveen Kumar Kapoor, C/o. RRA Tax India Versus DCIT Central Circle-2 Faridabad

The Tribunal allowed the appeals in favor of the assessee, setting aside the assessment orders for the years in question. It was held that without ... Assessment u/s 153A - absence of any incriminating material found in search - HELD THAT:- Hon’ble Delhi High Court in case of CIT(A) vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] held that no additions to be made in assessment framed u/s 153A of the Act in the absence of any incriminating material, their assessment were not abated. In the present AY 2009-10, the return was filed on 12th November, 2009 and the due date of issuing of notice u/s 143(3) is 30th September, 2009 the date of search is 9/5/2012 and date of filing of return post search is 10/09/2013. It can be observed that no proceedings were pending on the date of search for Assessment Year 2010-11. The date of filing original returns u/s 139(1) was on 6/8/2010, the date of search was 9/5/2012. The return filed u/s 153A was on 10/9/2013 and due date of issuance of notice was 30th September, 2010. As the date of search is 9/5/2012. Thus, in Assessment Year 2010-11 as well no proceedings were pending as on the date of search. Applicability of decision in case of Kabul Chawla is relevant in the present case as no incriminating material was found and there is no mention in the assessment order as well as in the order of the CIT(A) relating to the reliance of any material for making specific addition in the assessment. Thus, assessment itself becomes void ab initio. In result, both the appeals of the assessee are allowed. Issues:1. Jurisdiction under section 153A of the Income Tax Act2. Addition of cash deposits as income from undisclosed sources3. Adequate opportunity of being heard during assessment proceedingsJurisdiction under section 153A of the Income Tax Act:The appeals were filed against the order passed by CIT(A)-2, Gurgaon for assessment years 2009-10 & 2010-11. The Director of income-tax (Investigation), Delhi authorized a search and seizure operation on the assessee's premises. The Assessing Officer issued a notice under section 153A(1)(a) for the assessment year 2009-10. The assessee filed the return of income, but the Assessing Officer made an addition of Rs. 1,26,00,000 for cash deposits in the bank account as income from undisclosed sources. The CIT(A) dismissed the appeal, leading to the current appeals before the Tribunal.Addition of cash deposits as income from undisclosed sources:The Assessing Officer made additions based on cash deposits in the bank account, stating that the assessee failed to provide documentary evidence for the same. The assessee contended that no incriminating material was found during the search and all documentary evidence was available. The AR relied on the decision in CIT v. Kabul Chawla, emphasizing that without incriminating documents, the assessment under section 153A is invalid. The AR argued that the assessments for the years in question were abated as they should have been completed earlier, and no pending assessments existed.Adequate opportunity of being heard during assessment proceedings:The Tribunal considered the arguments and relied on the decision in CIT(A) vs. Kabul Chawla, where it was held that no additions should be made in assessments under section 153A without incriminating material. As no such material was found, and no pending proceedings existed during the relevant assessment years, the assessment orders were deemed void ab initio. Consequently, both appeals of the assessee were allowed, and the assessments were set aside.In conclusion, the Tribunal found in favor of the assessee, emphasizing the importance of incriminating material for assessments under section 153A and the need for proper compliance with procedural requirements to maintain the validity of assessments.