2016 (8) TMI 1131 - HC - Income Tax

Assessment u/s 153A - Held that - Identical view was taken by this Bench in CIT vs. Veerprabhu Marketing Ltd. 2016 (8) TMI 813 - CALCUTTA HIGH COURT incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. Assessing Officer had no jurisdiction under Section 153A of the Income Tax Act to reopen the concluded cases when the search and seizure did not disclose any incriminating material.

Summary

Issues:
1. Jurisdiction of Assessing Officer under Section 153A of the Income Tax Act to reopen cases without incriminating material.
2. Interpretation of the requirement of incriminating material for exercising power under Section 153C read with Section 153A.

Analysis:
1. The High Court examined the jurisdiction of the Assessing Officer under Section 153A of the Income Tax Act to reopen cases without incriminating material. The Tribunal had dismissed an appeal by the Revenue, stating that the Assessing Officer lacked jurisdiction to reopen cases when no incriminating material was found during search and seizure. The Tribunal relied on a judgment of the Delhi High Court in the case of CIT[A] vs. Kabul Chawla. The High Court noted the Tribunal's reasoning and upheld the decision, leading to the dismissal of the appeal by the Revenue.

2. The Court also considered the interpretation of the requirement of incriminating material for exercising power under Section 153C read with Section 153A. The Advocate for the assessee referenced a previous judgment by the Bench in a similar matter. The Court highlighted that incriminating material is a prerequisite for exercising power under these sections. In the case under review, the Assessing Officer had disallowed expenditures that were already disclosed, which did not align with the provisions of Section 153C read with Section 153A. The Tribunal had deleted these disallowances made by the Assessing Officer, a decision that was upheld by the CIT(A). Consequently, the Court dismissed the appeal by the Revenue, affirming the Tribunal's decision.

Overall, the High Court's judgment emphasized the importance of incriminating material as a prerequisite for the Assessing Officer to exercise jurisdiction under Section 153A of the Income Tax Act. The decision also clarified the interpretation of this requirement in conjunction with Section 153C, highlighting the need for adherence to statutory provisions in assessing and disallowing expenditures.