2023 (1) TMI 885 - AT - Income Tax

Tribunal limits Assessing Officer's authority in making additions under Income Tax Act

The ACIT, Central Circle-2 Chandigarh Versus Shri Subash Goyal

The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision to delete additions made by the Assessing Officer in assessments framed under ... Assessment u/s 153A - Whether incriminating material was found during the search action and that as per the settled law in the case of completed assessment (not abated) on the date of search? - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision in the case of CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and decision of case of 'Principal CIT Vs. Meeta Gutgutia Prop M/s. Ferns 'N' Petals',[2017 (5) TMI 1224 - DELHI HIGH COURT] have been unanimous to hold that in relation to the assessments which have already been concluded, the AO is precluded from making additions on any other issue except relating or concerning to the incriminating material found during the search action. AO cannot disturb the assessment order or reassessment order which has attained finality, unless the material gathered in the course of proceedings u/s. 153A of the Act establishes that relief granted under the final assessment/reassessment was contrary to the fact unearthed during the course of 153A proceedings. Appeal of the Revenue stands dismissed. Issues:1. Appeal against deletion of additions made by AO in assessment framed under sections 143(3) and 153A of the Income Tax Act. Analysis:The appeal before the Appellate Tribunal ITAT Chandigarh was filed by the Revenue challenging the order of the Commissioner of Income Tax (Appeals), Gurgaon, which had deleted the additions made by the Assessing Officer (AO) in the assessment framed under sections 143(3) and 153A of the Income Tax Act, 1961. The crux of the matter revolved around a search and seizure conducted at the assessee's premises under section 132 of the Act, following which assessments were framed for six years prior to the search under section 153A. The CIT(A) had deleted the additions based on the absence of incriminating material found during the search action, citing established legal principles. The Revenue contended that the additions were made without any incriminating material but relied on a decision by the Allahabad High Court allowing assessments/reassessments under section 153A even in the absence of such material.The Tribunal considered the arguments presented and referred to various judicial decisions to analyze the issue at hand. It noted that the Hon'ble Delhi High Court's decision in the case of CIT vs. Kabul Chawla, along with judgments from other High Courts, established that in assessments already concluded, the AO is restricted from making additions unrelated to incriminating material found during the search action. The AO cannot disturb finalized assessment orders unless new material contradicts the previous findings. The Tribunal applied the principles from the aforementioned cases to the present situation and concluded that the AO lacked justification for the additions made in assessments that were already completed. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the impugned additions and dismissed the Revenue's appeal.In conclusion, the Tribunal's decision was based on the interpretation of legal precedents and principles governing assessments under section 153A of the Income Tax Act. The judgment emphasized the importance of incriminating material in making additions and highlighted the limitations on the AO's authority to disturb finalized assessments without new contradictory evidence. The ruling provided clarity on the scope of assessments under section 153A and upheld the principle that additions must be supported by relevant incriminating material discovered during the search action.