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2022 (4) TMI 1523 - AT - Income TaxAssessments u/s 153A - addition u/s 68 - Whether incriminating material found during the course of search relating to these two assessment years? - HELD THAT - AO has made reference to unsecured loan from different entities. These unsecured loans are already shown as part of the accounts. These were subject to scrutiny in the scrutiny assessments passed in AY 2013-14 and 2014-15 respectively. We failed to note, which is the specific material available with the AO in these two years authorizing him to undertake assessment proceedings in these years u/s 153A of the Act. Therefore, in view of the position of law discussed above on the strength of decision in the case of CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT , Saumya Construction 2016 (7) TMI 911 - GUJARAT HIGH COURT and on the basis of various decisions of the Hon ble Jurisdictional High Court namely PCIT vs. Rashmi Infrastructure Pvt. Ltd. 2020 (2) TMI 1463 - CALCUTTA HIGH COURT , CIT vs. Veerprabhu Marketing Ltd. 2016 (8) TMI 813 - CALCUTTA HIGH COURT , PCIT vs. Salasar Stock Broking Ltd. 2016 (8) TMI 1131 - CALCUTTA HIGH COURT we are of the view that additions are not sustainable. We allow these grounds of appeal and delete the additions because they are added without any seized material available pertaining to these assessment years. Decided in favour of assessee.
Issues Involved:
1. Whether additions can be made in assessments passed under Section 153A without any incriminating material found during the course of search relating to the relevant assessment years. Issue-wise Detailed Analysis: 1. Whether additions can be made in assessments passed under Section 153A without any incriminating material found during the course of search relating to the relevant assessment years: The primary issue in both assessment years (AYs 2013-14 and 2014-15) is whether additions can be made in assessments passed under Section 153A of the Income Tax Act, 1961, without any incriminating material found during the course of search. The assessee filed returns declaring total income at Rs. 38,11,850/- and Rs. 6,30,000/- for AYs 2013-14 and 2014-15, respectively. Scrutiny assessments were passed on 28.03.2016 and 26.12.2016. A search under Section 132 was conducted on 12.09.2017 in the GPT Group of cases, leading to the issuance of notices under Section 153A. The Assessing Officer (AO) determined the taxable income at Rs. 3,41,07,970/- and Rs. 60,65,410/- for AYs 2013-14 and 2014-15, respectively. The assessee's counsel argued that the AO did not reference any seized material and investigated unsecured loan transactions as if passing a regular assessment order under Sections 143(3) or 147. The counsel contended that this is not a searched year, and additions should not be made in this manner, relying on various judicial decisions. The CITDR argued that numerous documents were found and seized during the search, and the AO followed correct procedures by investigating specific points from these documents. The Tribunal considered rival contentions and the record, emphasizing the legal position on Section 153A as established in various authoritative judgments. The Tribunal referred to the Delhi High Court's decision in CIT Vs. Kabul Chawla, which summarized the legal position: i. Notice under Section 153A(1) must be issued mandatorily after a search, requiring returns for six AYs preceding the search year. ii. Pending assessments on the search date shall abate, and total income for such AYs must be recomputed afresh. iii. The AO can assess and reassess the total income for the six years preceding the search year in separate orders. iv. Although Section 153A does not mandate additions strictly based on search evidence, assessments must have relevance or nexus with seized material. v. In the absence of incriminating material, completed assessments can be reiterated, and abated assessments or reassessments can be made. vi. Only one assessment shall be made for each AY based on search findings and other material on record. vii. Completed assessments can be interfered with under Section 153A only based on incriminating material found during the search. The Tribunal also referred to other judicial decisions, including the ITAT Delhi Bench's decision in DIT Vs. Smt. Shivali Mahajan and others, which held that assessment under Section 153A must be based on seized material. Material recovered from another person's premises cannot be used for the searched person's assessment; instead, Section 153C or 147 should be invoked. In the present case, the AO made references to unsecured loans from different entities, which were already part of the accounts and subject to scrutiny in previous assessments. The Tribunal found no specific material authorizing the AO to undertake assessment proceedings under Section 153A for these years. Therefore, the Tribunal concluded that the additions were not sustainable, relying on the legal position established in various judicial decisions. Consequently, the Tribunal allowed the assessee's appeals and deleted the additions made without any seized material available for the relevant assessment years. Order pronounced in the open court on 18th April, 2022.
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