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Issues: (i) Whether fresh claims made for the first time in the return filed in response to notice under section 153A in respect of an unabated/completed assessment (notably depreciation on goodwill and provision for doubtful debts) are admissible; (ii) Whether additions for alleged inflated capital expenditure (assessed as undisclosed income under section 69A) are supportable by incriminating material for the assessment year in dispute; (iii) Whether interest on delayed payment of TDS is allowable as business expenditure where no incriminating material pertains to that issue for the assessment year; (iv) Whether adjustments to book profit under section 115JB for (a) depreciation on intangible assets recorded post-appointment date and (b) depreciation attributable to alleged inflated capital expenditure are permissible.
Issue (i): Admissibility of fresh claims in return filed in response to notice under section 153A for an unabated/completed assessment (depreciation on goodwill; provision for doubtful debts).
Analysis: The Tribunal applied the Special Bench precedent restricting fresh claims in returns filed under section 153A where the assessment year was unabated/completed as on the date of search. The assessee made alternative pleas that the depreciation on goodwill and provision for doubtful debts were fresh claims first lodged in the 153A return and that appeals against original assessment on related issues were pending; the Revenue did not press objection to withdrawal of these grounds in light of the Special Bench ruling.
Conclusion: The Tribunal holds that fresh claims made for the first time in the return filed under section 153A in respect of an unabated/completed assessment are not admissible; the assessee is permitted to withdraw these claims and the related grounds are rendered infructuous (in favour of the assessee).
Issue (ii): Validity of addition for alleged inflated capital expenditure (undisclosed income under section 69A) based on seized WhatsApp messages and other search material.
Analysis: The Assessing Officer and CIT(A) relied on mobile communications and statements recorded during search to infer booking of inflated capital expenditure and resultant unaccounted cash. The Tribunal examined the temporal relevance of the seized digital communications and whether incriminating material specifically pertained to the assessment year under dispute; it found the WhatsApp chats relied upon were dated outside the year in question and that extrapolation to the assessment year lacked adequate basis.
Conclusion: The Tribunal finds no incriminating material specific to the assessment year to sustain the addition for inflated capital expenditure and sets aside the addition (decision in favour of the assessee on this issue).
Issue (iii): Allowability of interest on delayed payment of TDS as business expenditure where no incriminating material for that issue in the assessment year was found.
Analysis: The AO disallowed the interest as not wholly and exclusively for business; the assessee challenged the addition also on ground of absence of incriminating material in an unabated assessment. The Tribunal considered that no incriminating material pertaining to this issue for the year under consideration was relied upon by the AO.
Conclusion: The Tribunal allows the ground and disallows the AO's disallowance on the basis that no incriminating material relevant to the assessment year sustains the addition (decision in favour of the assessee).
Issue (iv): Permissibility of adjustments to book profit under the minimum alternate tax provisions for (a) depreciation on intangible assets (goodwill) recorded after appointed date and (b) depreciation attributable to alleged inflated capital expenditure.
Analysis: For depreciation on intangibles the Tribunal treated the claim as a fresh claim not reflected in the original books on which book profit was returned and therefore not admissible in 153A proceedings for an unabated year. For depreciation attributable to alleged inflated capital expenditure, the Tribunal analysed the scope of section 115JB and found no provision permitting AO's adjustment to book profit to give effect to depreciation disallowed in normal proceedings; the CIT(A)'s addition was set aside on that ground.
Conclusion: (a) Depreciation on intangibles recorded as a fresh claim is not admissible in 153A proceedings in an unabated assessment (decision in favour of the assessee on admissibility); (b) The CIT(A)'s addition of depreciation relating to inflated capital expenditure to book profit under section 115JB is set aside (decision in favour of the assessee on that aspect). However, where adjustments correctly flow from sustained additions in normal proceedings, the AO retains consequential computation rights (mixed outcomes resulting in partial allowance to the assessee).
Final Conclusion: The Tribunal partly allows the appeal by (i) rendering fresh claims in 153A proceedings for an unabated assessment infructuous and permitting their withdrawal, (ii) setting aside additions lacking incriminating material specific to the assessment year (inflated capital expenditure and interest on delayed TDS), and (iii) setting aside book-profit adjustments that are not authorised by section 115JB; other grounds that fall to be decided in original-assessment appeals remain intact. The overall effect is a partial success for the assessee.
Ratio Decidendi: In unabated/completed assessments, fresh claims first made in the return filed in response to a notice under section 153A are not admissible; additions in search-related reassessments must be supported by incriminating material that is relevant to the specific assessment year, and adjustments to book profit under the minimum alternate tax provisions may only be made to the extent authorised by the statutory scheme.
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