MIHIR SUBODHBHAI SHAH,AHMEDABAD vs. THE ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD

ITSSA 46/AHD/2021Status: DisposedITAT Ahmedabad19 April 2023AY 2013-1445 pages
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What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, heard appeals and cross-appeals concerning assessment years 2011-12 and 2013-14 to 2015-16. The appeals arose from assessment orders passed under Section 143 read with Section 153A(1)(b) and 143(3) of the Income Tax Act, 1961. The core dispute involved an addition of Rs. 1,78,35,069/- made by the Assessing Officer (AO) on account of unexplained investment under Section 69. This addition was based on credit entries in the assessee's bank account. A search and seizure action under Section 132 was conducted on 'Barter Group' on December 4, 2014, and a search warrant was also issued in the assessee's name, leading to proceedings under Section 153A. The Commissioner of Income Tax (Appeals) had deleted the addition, holding that no addition could be made in Section 153A proceedings for unabated years without incriminating material found during the search.

What did the Tribunal hold?

The Tribunal held that for unabated assessment years, the Assessing Officer can make additions under Section 153A only if there is incriminating material unearthed during the search that was not produced or disclosed in the original assessment proceedings. The Tribunal agreed with the assessee and the CIT(A)'s finding that the bank entries, already reflected in the return of income, did not constitute incriminating material found during the search. The Tribunal noted that the jurisdictional High Court and Tribunal have consistently held this position, referencing the decision in CIT vs. Kabul Chawla. Therefore, the addition of Rs. 1,78,35,069/- made by the AO on account of unexplained investment was deleted. The Tribunal did not expressly leave any issue undecided.

What were the issues?

1. Whether, in assessment proceedings under Section 153A of the Income Tax Act, 1961, additions can be made only on the basis of incriminating material found during a search, particularly in unabated assessment years? (Question of law) 2. Whether the Assessing Officer erred in making an addition of Rs. 1,78,35,069/- on account of unexplained investment under Section 69, when the bank entries were already disclosed in the return of income and no incriminating material was found during the search? Assessee's Contention: The assessee argued that for unabated/completed assessment years, additions under Section 153A can only be made if there is incriminating material found during the search. The bank entries were already incorporated in the return of income and the bank statement itself was not found during the search. The assessee relied on the jurisdictional High Court and Tribunal decisions, specifically citing CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del-HC). Revenue's Contention: The Revenue contended that Section 153A does not stipulate that additions must be confined to incriminating material found during a search. It argued that the scheme of Section 153A would be rendered ineffective if no additions could be made in the absence of seized material. The Revenue cited decisions of the Delhi High Court in CIT vs. Anil Kumar Bhatia and the Kerala High Court in E.N. Gopakumar vs. Commissioner of Income-tax (Central), which held that assessments in search cases can be concluded against the assessee even without incriminating material. The Revenue also argued that the AO is duty-bound to assess the correct income, as held in Mahalaxmi Sugar Mills (SC).

Which sections of the Income-tax Act were involved?

Section 132,Section 143,Section 153A,Section 69,Section 153BI,Section 158BB,Section 132(1),Section 132(4A),Section 132(5),Section 132(11)

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Heard together (2 matters)

ITA No. 61/AHD/2021
ITA No. 86/AHD/2021

Read from the judgment's own cause title. This page is filed under one of them.

अहमदाबाद "यायपीठ "यायपीठ "यायपीठ "यायपीठ आयकर आयकर अपी आयकर आयकर अपी अपीलीय अपी लीय लीय अिधकरण लीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’C’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER आयकरअपीलसं./IT(SS)A Nos. 52 & 53/AHD/2021 िनधा"रणवष" िनधा"रणवष"/Asstt. Years: 2011-12 & 2014-15 िनधा"रणवष" िनधा"रणवष" A.C.I.T, Shri Mihir Subodhbhai Shah Central Circle-1(2), A-203, Krishna Tower, Opp. PAN: AGSPS7541N (Applicant) (Respondent) आयकरअपीलसं./IT(SS)A Nos. 46 & 47/AHD/2021 िनधा"रणवष" िनधा"रणवष"/Asstt. Years: 2013-14 & 2014-15 िनधा"रणवष" िनधा"रणवष"

Mihir Subodhbhai Shah ACIT A-203, Krishna Tower, Central Circle-1(2), PAN: AGSPS7541N (Applicant) (Respondent) आयकरअपीलसं./ITA No. 61/AHD/2021 िनधा"रणवष" िनधा"रणवष"/Asstt. Year: 2015-16 िनधा"रणवष" िनधा"रणवष"

Mihir Subodhbhai Shah ACIT A-203, Krishna Tower, Central Circle-1(2), PAN: AGSPS7541N (Applicant) (Respondent) आयकरअपीलसं./ITA No. 86/AHD/2021 िनधा"रणवष" िन

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