The Tax Publishers2020 TaxPub(DT) 4568 (Ctk-Trib)


Section 153A Section 132(1)

Without referring any incriminating material by the AO in the assessment order for the years under consideration, stated to be unearthed during the course of search, framing of assessment under section 153A was, therefore, void ab initio.

Search and seizure - Assessment under section 153A - No incriminating material found during search -

In response to the notice, assessee filed its return of income for the assessment years under consideration electronically on 8-8-2014 showing total income of Rs. 2,06,900 from hotel business. During the course of assessment proceedings, the AO asked the assessee to furnish the basis with documentary evidence regarding the net profit arrived at and disclosed in its return of income filed in response to notice under section 153A. The assessee was also asked to produce relevant books of account in support of the financial particulars/statements filed during the course of assessment proceedings. Finally, after detailed discussion, in absence of any evidence regarding the source of investment and regular books of account such as cash book and ledger, the AO concluded that the assessee-firm had invested the amount of Rs. 13,63,378 as determined/estimated by the DVO, out of its own income earned from undisclosed sources. CIT(A) after considering the submissions of the assessee had rejected the plea of the assessee with regard to legal ground that no addition can be made without having any incriminating material found during the course of search in the assessment framed under section 153A. Held: There was no whisper in the assessment order that there was any undisclosed materials discovered by the search team. Also, the assessee had filed return of income under section 139(1) for both the assessment years prior to the search, therefore, these two assessment years will become unabated. Therefore, it would be presumed that these two assessment years were completed assessments, which can be interfered only when there would be any incriminating material found during the course of search. However, the CIT(A) had held that even if there was no incriminating material, the AO is empowered to make additions in an assessment framed under section 153A. Therefore, the addition made by the taxing authorities were without correlating to any incriminating material found during the course of search, cannot, therefore, be sustained. Completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The AO had not referred to any incriminating material found during the course of search in the assessment order. Nothing was found contrary to the stated position of the assessee, therefore, the assessment framed under section 153A was not sustainable. Accordingly, impugned orders of both the authorities below were quashed and held that the legal ground raised by the assessee in the appeals for assessment years 2008-09 & 2009-10 was thus, allowed.

Relied:CIT v. Kabul Chawla (2015) 281 CTR (Del-HC) 45 : 2015 TaxPub(DT) 3486 (Del-HC), Distinguished:E.N. Gopakumar v. CIT (2016) 75 215 (Ker-HC) : 2016 TaxPub(DT) 4661 (Ker-HC).


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