INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - Incriminating material found during the course of search -

Assessee was engaged in the business of brokerage and commission from property dealing. A notice under section 153A was issued to the assessee to file return of income but assessee did not file the return stating that no additional income was offered in this year. AO confronted assessee with the seized documents found during the course of search and statements given under section 132(4) with regard to land deal materialised during financial year 2008-09 relevant to assessment year 2009-10. Assessee stated that for this land deal he was to receive a brokerage of Rs. 27,00,000. Out of this Rs. 27,00,000, Rs. 5,00,000 was received through cheque, Rs. 5,00,000 was further received through cheque during financial year 2009-10 and Rs. 10,00,000 was received in cash. Balance of Rs. 7,00,000 was not received till date. Though it was contended that assessee showed income on cash basis but AO was not satisfied and concluded that Rs. 17,00,000 was not offered to tax by assessee. Accordingly, income was assessed under section 153A on account of undisclosed brokerage income. Held: During the course of search itself, assessee was asked questions about the brokerage income received on the land transaction between the two parties, the proof of which was found during the course of search. It was not the case that AO had initiated fresh enquiry during the assessment proceedings carried out under section 143(3) read with section 153A. Since there was a specific reference in the assessment order of the incriminating material found during the course of search which instigated the search team to ask various questions regarding the actual income earned by the assessee, it could not be said that the alleged addition was made without referring to any incriminating material. Therefore, assessee failed to succeed on this legal ground.

Followed:National Thermal Power Company Ltd. v. CIT (1998) 229 ITR 383 (SC) : 1998 TaxPub(DT) 342 (SC). Relied:Dy. CIT v. MCS Trading Company (P) Ltd. [IT(SS) A No. 141/Ind/2016 Order, dated 9-4-2019] : 2019 TaxPub(DT) 2256 (Ind-Trib).