Sarvana Prasad Vs DCIT (ITAT Bangalore)
Bangalore ITAT : No Addition in Unabated 153A Assessments Without True ‘Incriminating Material’ – Mere Change of Head of Income Not Permissible
The Bangalore ITAT held that in respect of completed/unabated assessments, additions under section 153A can be made only on the basis of real incriminating material unearthed during search. The Tribunal observed that a mere change of opinion regarding the head of income or legal characterization of already disclosed transactions does not amount to incriminating material. Accordingly, additions made by treating multiplex lease rental income as “Income from House Property” instead of “Business Income” were deleted for AYs 2013-14 to 2016-17.
The ITAT explained that the multiplex receipts were already disclosed in regular books and consistently offered as business income. The lease agreements found during search merely evidenced existing disclosed transactions and did not reveal any undisclosed income, suppression or hidden asset. Therefore, the Tribunal held that section 153A could not be used as a tool for routine review or reclassification of completed assessments in absence of incriminating material, following the Supreme Court ruling in Abhisar Buildwell Pvt. Ltd..
On merits also, the Tribunal ruled in favour of the assessee and held that the multiplex income constituted business income and not house property income. It noted that the assessee had commercially exploited a specialized multiplex asset through structured arrangements, selective leasing of portions, maintenance and operational involvement. The ITAT distinguished the Karnataka High Court ruling in Bhoopalam Commercial Complex, observing that the present case involved a complex commercial arrangement and not mere passive letting of a building. The Tribunal emphasized that fixed periodic receipts alone do not convert commercial exploitation of a business asset into house property income.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
