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Facts
A search and seizure operation under Section 132 of the Income Tax Act, 1961, was conducted on Smt. Kusum Lata (assessee) and her husband, revealing various incriminating documents and unaccounted cash/jewellery. The Assessing Officer (AO) concluded that the assessee, a housewife, acquired agricultural lands and other properties using undisclosed funds, leading to additions for unexplained investments under Section 69, denial of Section 54F deduction, and unexplained investment in shares and immovable property.
Held
The Tribunal, relying on the Supreme Court's decision in Abhisar Buildwell (P.) Ltd., held that additions in unabated assessment years are unsustainable if no incriminating material was found during the search. While acknowledging some information regarding land purchase emerged post-search, the assessee demonstrated sources for these investments. Consequently, Ground 3 (unexplained investment in land) was partly allowed with a direction to the AO for adjustment, and Grounds 4 to 7 (denial of S.54F, unexplained investment in shares and house construction) were fully allowed as they lacked incriminating material from the search.
Key Issues
The key legal issue was whether additions made by the AO in unabated assessment years, based on information collected post-search or submitted by the assessee, are valid if no incriminating material relevant to those additions was found during the initial search operation.
Sections Cited
153A, 143(3), 132, 69, 54F, 143(2), 142(1), 147, 148
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
per registered documents and circle rates as per the respective lands. In our considered view, as discussed above, the assessee has demonstrated that she has sources to make the investment and she is eligible to get the investment made in the agricultural land to the extent of declared sources. It is fact on record that the assessee has withdrawn the cash and made the payment to the farmers, to the extent of cash withdrawn by her from the bank for which she has sufficient fund available in the bank. Therefore, we are directing the AO to adjust the payments made from withdrawing from the bank account. The other part of the addition after making the addition may be sustained. In this regard, we are inclined to partly allow the ground no 3 raised by the assessee.
Coming to the other additions made by the Assessing Officer, we observed that all these information collected in post search proceedings and there is no evidence to show that the additions made by the assessing officer has bearing from the material found during the search. As held in the case of Abhisar Buildwell P. Ltd (supra), the Hon’ble Supreme Court held as under:
“11………… Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.”
With the above observation, we are inclined to direct the Assessing Officer to delete above mentioned additions made by him in the assessment order. Accordingly, ground Nos 4 to 7 raised by the assessee are allowed.
With regard to Ground no 8 is dismissed as not pressed as no submissions were made during the hearing. Similarly, the ground no 9 also dismissed as general.
In the result, the appeal filed by the assessee is partly allowed.
With regard to other appeals filed by the assessee relating to Asst. Years. 2010-11, 2011-12, 2012-13 and 2013-14. The facts in the above said appeals are exactly similar to the facts in the Asst.
Year 2009-10, the findings in Asst. Year 2009-10 (ITA No.873/Del/2018) applicable mutatis mutandis to the appeal in the above said Assessment Years. Accordingly, the appeals filed by the assessee are partly allowed as indicated in Asst. Year 2009-10.
In the result, all the appeals filed by the assessee are partly allowed.
Order pronounced in open Court on 30th April, 2024.