In absence of incriminating material found during search concluded assessments cannot be reopened U/s. 153A

A perusal of the common order of the ITAT shows that it first dealt with one common ground raised by the Assessee in all its appeals which concerned the jurisdictional issue of the validity of the invocation of Section 153A of the Act by the Revenue. It was contended that for the AYs 2000- 01 to 2003- 04, there was no incriminating material seized during the course of search and, therefore, the assessment order in respect of those AYs ought to be quashed. The ITAT, following the decisions of this Court in Kabul Chawla (supra) and Pr. CIT Vs. Lata Jain [2016] 384 ITR 543 (Del), accepted the above grounds urged by the Assessee and held that the assumption of jurisdiction under Section 153A for the said AYs was bad in law.

High Court upheld the view of ITAT.

Full Text of the High Court Judgment / Order is as follows:-

1. These are five appeals by the Revenue under Section 260A of the Income Tax Act 1961 (‘Act’) directed against a common order dated 13th May, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA Nos. 2409 to 2412/Del/12 and 2437/Del/12 for the Assessment Years (‘AYs’) 2000- 01 to 2004- 05.

2. The main contention of the Revenue in these appeals is that the decision of the Division Bench („DB‟) of this Court in Commissioner of Income Tax (Central- III) Vs. Kabul Chawla (2016) 380 ITR 573 (Del) (hereafter Kabul Chawla) as regards the assumption of jurisdiction under Section 153A of the Act requires reconsideration, particularly in light of a later decision of a co- ordinate Bench of this Court in Smt. Dayawanti Gupta Vs. CIT (2016) 390 ITR 496 (Del) (hereafter Dayawanti Gupta). The Revenue’s submission is that the invocation of Section 153A of the Act to re-open concluded assessments of the AYs earlier to the year of search is justified even in the absence of incriminating material found during the search qua each such earlier AY. For reasons to follow, the Court does not agree with the above submissions of the Revenue.

Please become a Premium member. If you are already a Premium member, login here to access the full content.