Occupancy Certificates and JDAs Disclosed Prior to Income Tax Search Do Not Constitute Incriminating Material: ITAT [Read Order]
ITAT held that occupancy certificates and Joint Development Agreements already disclosed to the Income Tax Department prior to search proceedings cannot be treated as incriminating material for invoking Section 153A of the Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, held that occupancy certificates and Joint DevelopmentAgreements (JDAs) disclosed by the assessee prior to the search proceedings could not be regarded as incriminating material for making additions under Section 153A of the Income Tax Act.
The assessee, Shri Lakkanna Durgappa, was subjected to search proceedings under Section 132 of the Income Tax Act, 1961. During the search, it was found that the assessee and his spouse had entered into a JDA with SJR Prime Corporation Pvt. Ltd. for development of residential property and occupancy certificates had also been issued in respect of the developed flats.
Based on the occupancy certificates, JDAs and statements recorded during the search, the Assessing Officer made additions towards capital gains and construction expenses for Assessment Years 2017-18 to 2019-20 under Section 153A of the Income Tax Act.
Before the CIT(A), the assessee contended that the occupancy certificates and JDAs had already been voluntarily disclosed before the Income Tax Department during proceedings prior to the search. It was argued that the documents were either public records or already available with the Department and therefore could not constitute incriminating material discovered during search proceedings.
Relying upon the earlier Bangalore Bench ruling in Smt. Shantha Alias Shanthamma v. DCIT, involving the assessee’s spouse, the CIT(A) held that no fresh incriminating material was found during the search and accordingly deleted the additions made.
Aggrieved, the Revenue filed an appeal before the Tribunal contending that the seized occupancy certificates, sworn statements and details relating to built-up area and capital gains constituted incriminating material sufficient to sustain additions under Section 153A of the Act.
The Tribunal comprising Prashant Maharishi (Vice-President) and Keshav Dubey (Judicial Member) observed that the JDAs and occupancy certificates relied upon by the Assessing Officer had already been disclosed by the assessee during proceedings prior to the date of search and that no fresh material was found during the search.
Relying upon the SC ruling in PCIT v. Abhisar Buildwell Pvt. Ltd., the Tribunal held that in the absence of incriminating material discovered during the course of search, additions under Section 153A could not be sustained for concluded assessment years and therefore deleted the additions made by the Assessing Officer.
The Revenue’s appeals were dismissed.
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