2012 (7) TMI 950 - AT - Income Tax

Assessments under section 153A - capital gain tax - Held that - Rejecting the claim of the assessee for not offering for tax capital gains which was hitherto offered for taxation in the original return filed under section 139(1) of the Act.

Summary

Issues:
1. Dispute over addition of capital gain to income returned under section 153A of the Income-tax Act, 1961.
2. Interpretation of provisions of section 153A regarding fresh claims in assessment proceedings.
3. Whether new claims for deduction or allowance can be entertained in completed assessments under section 153A.
4. Scope of assessment under section 153A based on incriminating material found during search.

Issue 1:
The dispute revolved around the addition of a capital gain of Rs. 6,00,069 to the income returned by the assessee under section 153A of the Income-tax Act, 1961. The assessee argued that the capital gain arose from the sale of agricultural land, which did not qualify as a 'capital asset' under section 2(14) of the Act. However, the Assessing Officer contended that the amount was liable to be taxed as it was offered for taxation in the original return filed under section 139(1) of the Act.

Issue 2:
The interpretation of the provisions of section 153A regarding fresh claims in assessment proceedings was a key point of contention. The Commissioner of Income-tax (Appeals) upheld the addition, stating that section 153A was introduced to make assessments/reassessments in cases where search actions were conducted. The Commissioner emphasized that the provisions of section 153A did not allow for new claims to be made in assessments that had achieved finality.

Issue 3:
The question of whether new claims for deduction or allowance could be entertained in completed assessments under section 153A was extensively discussed. The Tribunal cited precedents and held that new claims could not be made in assessments that had been completed, as the assessments under section 153A were related to undisclosed income. The Tribunal emphasized that such claims could not be entertained in reassessment proceedings under section 153A.

Issue 4:
The scope of assessment under section 153A based on incriminating material found during search was a crucial aspect of the judgment. The Special Bench clarified that assessments under section 153A would be made on the basis of incriminating material, including books of account and undisclosed income discovered during the search. The Tribunal emphasized that assessments under section 153A were to be based on such material and not on new claims or deductions.

In conclusion, the appeal of the assessee was dismissed, affirming the decision of the authorities below to reject the claim regarding the capital gains. The judgment highlighted the limitations on making fresh claims in assessments under section 153A, emphasizing the significance of incriminating material found during search in determining the scope of such assessments.