2023 (5) TMI 1102 - AT - Income Tax

Revenue's Appeals Dismissed, Section 153A Requirements Upheld

The Tribunal dismissed the Revenue's appeals, ruling that no additions can be made under section 153A without incriminating material for completed ... Assessment u/s 153A - incriminating material found in search or not? - HELD THAT:- As settled position of law says that in search cases no incriminating material is unearthed during the search, AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. No error having been committed by the ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the capital gain so arising on account of compulsory acquisition, the land is already accepted and reflected in the return of income filed by the assessee in the all the past years and even the assessee is doing so consistently. Therefore, the jurisdictional requirement of Section 153A of the Act was not satisfied in this case. Decided against revenue. Issues Involved:1. Whether additions can be made u/s 153A for completed assessments without incriminating material.2. Whether the land in question is agricultural and thus exempt from capital gains tax.3. Whether the CIT(A) erred in not adjudicating the grounds on merit.4. Whether the transfer of land was completed in the assessment year 2014-15 or 2016-17.Summary:1. Additions u/s 153A for Completed Assessments:The Tribunal examined whether additions can be made u/s 153A of the Income Tax Act, 1961, in respect of assessments completed prior to the date of search without any incriminating material found during the search. It was noted that the assessment year 2016-17 was not pending on the date of search, and no incriminating material was found. The Tribunal upheld the CIT(A)'s view that no additions can be made in such cases, relying on the Supreme Court's judgment in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell P. Ltd., which held that in the absence of incriminating material, the AO cannot reassess completed assessments.2. Nature of Land and Capital Gains Tax:The assessee contended that the land in question was agricultural and situated beyond 8 km from the municipal limits as per the notification dated 06.01.1994, and thus not a capital asset u/s 2(14) of the Act. The Tribunal noted that the land was indeed agricultural as per revenue records and was used for agricultural purposes until its acquisition. The Tribunal found merit in the assessee's argument that the distance should be measured as per the municipal limits existing on the date of the notification and not as per the expanded limits at the time of acquisition.3. Adjudication on Merits:The Revenue argued that the CIT(A) should have adjudicated the grounds on merit rather than dismissing them on technical grounds. However, the Tribunal found that the CIT(A)'s decision was based on the settled legal position regarding the necessity of incriminating material for making additions in completed assessments u/s 153A. The Tribunal upheld the CIT(A)'s decision, finding no error in the approach.4. Year of Transfer:The Tribunal examined whether the transfer of land was completed in the assessment year 2014-15 or 2016-17. It was noted that the assessee had surrendered its rights in the land in favor of JDA on 19.02.2014, which falls in the assessment year 2014-15. The Tribunal agreed with the CIT(A) that the transaction should have been taxed in the assessment year 2014-15, not 2016-17, as the demand notice for payment was issued on 18.06.2015.Conclusion:The Tribunal dismissed the Revenue's appeals, holding that no additions can be made u/s 153A in the absence of incriminating material for completed assessments. The cross objections filed by the assessee were allowed for statistical purposes, acknowledging the agricultural nature of the land and the correct assessment year for the transaction.