2023 (8) TMI 866 - AT - Income Tax

Tribunal upholds CIT(A)'s decisions on tax additions, citing lack of evidence.

ACIT, Central Circle-1 Versus M/s Lord Buddha Educational Society, M/s Raipur Institute of Medical Sciences (RIMS), Raipur

The Tribunal upheld the CIT(A)'s decision to delete additions for unabated assessment years 2012-13 to 2015-16, citing lack of incriminating material. For ... Addition u/s 153A - Undisclosed investment - additions made by AO were based on an incriminating material duly scanned in the assessment order - CIT(A) deleted the addition - HELD THAT:- We are of the considered opinion that Ld CIT(A) has examined and issued in light of the factual matrix of the case and legality of the applicability of the provisions of section 153A for reopening of the assessment for unabated years or years for which assessments are already competed or for the years for which assessment in regular course is already barred by limitation, cannot be done unless some incriminating material qua each of the AY’s which were sought to be reopened is unearthed during the operations of search and seizure conducted at the premises of the assessee. Since, in the present case such condition for invoking the provisions of section 153A for AY 2012-13 to 2015-16 could not be substantiated by the revenue, assumption of jurisdiction for these years was not justified. No reason to disturb the finding of the Ld CIT(A) on this ground. Whether rejection of books of account is mandatory or not for making a reference to DVO u/s 142A? - This has been discussed, deliberated and decided by the Ld CIT(A) without leaving room for any ambiguity, we therefor of the view that, ratio of law emanated by the order of ITAT Jabalpur in the case of Price Rai [2021 (7) TMI 1421 - ITAT JABALPUR] could not be applied in the present case, so the contentions of the revenue to restore the matter back to AO for fresh adjudication is not acceptable on this ground. Addition on the basis of DVO report - revenue contention that the Ld AO has validly invoked the provisions of section 142A of the act and therefore the additions made based on the report of the DVO by the Ld AO reduced by the Ld CIT(A) was an error and same needs to be corrected by setting aside the order of Ld CIT(A) and restoring back the order of the Ld AO - HELD THAT:- CIT(A) has decided the issues with a finding that the there were discrepancies in the report of DVO with respect to rates adopted by the DVO on a higher side and therefore a well thought relief of 30% on the valuation given by the DVO was granted to the assessee. The relief granted was based on the foundation of comparative figures of investment by the assessee and the estimate by the DVO where a margin of 30% has been considered on higher side, 25% on account of difference in CPWD and PWD rates and 5% for self- supervision. The decision of the Ld CIT(A) was duly guided by various judicial pronouncements by High Courts and coordinate benches of the ITAT, thus, in our considered opinion the same is on right footing. We therefore do not see any convincing reason to interfere with the findings of the CIT(A). Consequently, the appeals of the revenue dismissed. Issues Involved:1. Deletion of additions for unabated assessment years (AY 2012-13 to 2015-16) based on alleged incriminating material.2. Legality and validity of reference to the Departmental Valuation Officer (DVO) without rejecting books of accounts for abated assessment years (AY 2016-17 and 2017-18).3. Validity of assessment orders based on DVO reports submitted beyond the statutory time period.Summary:Issue 1: Deletion of Additions for Unabated Assessment Years (AY 2012-13 to 2015-16)The Tribunal upheld the CIT(A)'s decision to delete the additions made by the Assessing Officer (AO) for the assessment years 2012-13 to 2015-16. The Tribunal agreed with the CIT(A) that no incriminating material was found during the search and seizure operations, and the additions were based on material already available on record. The Tribunal cited the legal principle established in CIT v. Kabul Chawla, which states that in the absence of incriminating material, completed assessments cannot be reopened or reassessed under Section 153A. The Tribunal dismissed the department's appeals for these years, concluding that the assumption of jurisdiction for these years was not justified.Issue 2: Legality and Validity of Reference to DVO for Abated Assessment Years (AY 2016-17 and 2017-18)The Tribunal upheld the CIT(A)'s partial deletion of additions for the assessment years 2016-17 and 2017-18. The CIT(A) had allowed a 30% margin for discrepancies in the DVO's report, reducing the additions made by the AO. The Tribunal agreed with the CIT(A) that the AO had not provided sufficient time for the assessee to respond to the DVO's report and had not considered the technical discrepancies pointed out by the assessee. The Tribunal also noted that the DVO had adopted higher CPWD rates instead of local PWD rates, leading to an inflated valuation. The Tribunal found that the AO had not brought any positive material evidence to establish unaccounted investment and had relied solely on the DVO's report, which is not binding. The Tribunal dismissed the department's appeals for these years, sustaining the CIT(A)'s order.Issue 3: Validity of Assessment Orders Based on DVO Reports Submitted Beyond Statutory Time PeriodThe Tribunal did not specifically address this issue as it found the assessments invalid on other grounds. The Tribunal noted that the CIT(A) had already considered the legal objections regarding the DVO's report and had provided relief to the assessee by allowing a 30% margin for discrepancies.Conclusion:The Tribunal dismissed the appeals of the revenue and the cross objections and appeals of the assessee, upholding the CIT(A)'s orders for both unabated and abated assessment years. The additions made by the AO were found to be unjustified and not sustainable based on the principles of law and the facts of the case.