2023 (6) TMI 526 - HC - Income Tax

High Court Upholds Decision on Deletion of Tax Additions

THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD Versus AMITA ARVINDBHAI PATEL

The High Court dismissed the appeal in a case involving the deletion of additions made under sections 68 and 69C of the Income Tax Act, 1961, on the basis ... Assessment u/s 153A - Addition u/s. 68 - Bogus LTCG - Addition u/s. 69C on account of expenses on bogus LTCG ? - HELD THAT:- Decision of Saumya Construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] held that the case of completed assessment/unabated assessment in absence of any incriminating material will not permit making of addition by the AO and that the AO has no jurisdiction to reopen the completed assessment. As decided in Abhisar Buildwell P. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] confirmed the view taken by the Delhi High court in Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and of this Court in Saumya Construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] laying down the law that no addition can be made in respect of completed assessment in absence of any incriminating material. The supreme court in laying down the proposition considered the object and purpose of insertion of section 153A of the Act. No substantial question of law. Issues:The issues involved in this case are related to the deletion of additions made under section 68 and section 69C of the Income Tax Act, 1961 on account of alleged bogus long term capital gain, and the consideration of incriminating material during the assessment process.Deletion of Additions:The case involved an assessment order under section 143(3) read with section 153A(1)(b) of the Income Tax Act, 1961, where additions were made under section 68 and section 69C of the Act on account of alleged bogus long term capital gain. The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee by deleting the additions, citing the absence of incriminating material found during the search. The Income Tax Appellate Tribunal upheld this decision, leading to the dismissal of the appeal by the High Court.Consideration of Incriminating Material:During the appeal, the learned advocate for the appellant initially raised substantial questions of law regarding the Assessing Officer's jurisdiction to consider all material available on record, including that found during a search, for making assessments of 'total income'. However, it was acknowledged that the issue had been addressed by the Supreme Court in a previous case involving the scope of assessment under section 153A of the Act. The Supreme Court's decision clarified that no addition can be made in respect of completed or unabated assessments in the absence of any incriminating material, reaffirming the position taken by the Gujarat High Court and the Delhi High Court.Supreme Court Decision:The Supreme Court's ruling in the case of Abhisar Buildwell P. Ltd. established that the Assessing Officer's jurisdiction for assessments is limited to incriminating material found during a search, and additions made without such material cannot be sustained. This decision aligned with previous judgments by various High Courts, emphasizing the importance of seized material in making assessments under section 153A of the Act. The Court highlighted the significance of the object and purpose behind the insertion of section 153A in the Act, concluding that no substantial question of law arose in the present appeal based on the precedent set by the Supreme Court.In conclusion, the High Court dismissed the appeal, as no question of law, especially no substantial question of law, was deemed to arise in light of the Supreme Court's ruling in Abhisar Buildwell P. Ltd. The judgment reiterated the principle that additions in completed assessments cannot be made without incriminating material, as established by the Supreme Court and supported by previous decisions of High Courts.