2014 (4) TMI 474 - AT - Income Tax

Condonation of delay in filing the cross objections Assessment u/s 253A - Assessee being an NRI Absence of incriminating material - Held that - The assessee is an NRI as is apparent from the facts narrated in the file relating to appellate proceedings - in the year 2013 the Delhi Tribunal in a number of cases has held that in the absence of incriminating material found at the time of search no addition can be made in the years in which assessments were completed - The issue raised in the cross objections being legal in nature and in view of the fact that assessee is an NRI who used to visit India on few occasions only the delay in filing of cross objections is condoned - Relying upon MGF Automobiles Ltd. v. ACIT 2013 (9) TMI 439 - ITAT DELHI - no additions were to be made without any incriminating material Decided in favour of Assessee.

Summary

Issues:
1. Deletion of additions by CIT(A) based on residential status.
2. Delay in filing cross objections condonation.
3. Addition without incriminating material post search.

Analysis:
1. The appeals by the revenue challenged the deletion of additions by the CIT(A) based on the residential status of the assessee. The Assessing Officer had treated the assessee as a resident for tax purposes due to the absence of a passport. However, the CIT(A) deleted the additions after considering all facts, including the submission of a photocopy of the passport. The issue was whether the assessee was a resident or ordinarily resident. The cross objections by the assessee contended that assessments were completed on the date of search, and no additions could be made without incriminating material found during the search.

2. The delay in filing cross objections by 865 days was attributed to the assessee being a Non-Resident Indian (NRI) who visited India infrequently. The assessee argued that new decisions favored them, prompting the filing of cross objections. The revenue objected to condoning the delay, citing a Supreme Court order. The Tribunal considered the NRI status of the assessee and recent legal precedents that disallowed additions without incriminating material. The delay was condoned based on these factors and distinguishing the Supreme Court case cited by the revenue.

3. The Tribunal reviewed various case laws and decisions related to additions without incriminating material post-search. It was established that no additions could be made if assessments were completed before the search, unless incriminating material was found during the search. In this case, the search occurred in 2007, and the assessments for the relevant years were already completed. As no incriminating material was linked to the additions, following judicial pronouncements, the Tribunal allowed the cross objections by the assessee and dismissed the appeals by the revenue as academic.

In conclusion, the Tribunal allowed the cross objections by the assessee, dismissed the appeals by the revenue, and pronounced the order accordingly in April 2012.