2022 (6) TMI 1480 - AT - Income Tax

Assessment u/s 153A - whether seized material found during the course of search? - HELD THAT - The issue is squarely covered in favour of the assessee in the case of Shri Krishna Kumar Singhania Ors. 2018 (1) TMI 131 - ITAT KOLKATA which were covered into the same search and Co-ordinate bench has allowed the appeal in favour of the assessee by holding that no addition can be added in unabated assessment year where there is no incriminating seized material. Decided in favour of assessee.

Summary

Issues Involved:
1. Confirmation of additions made by the Assessing Officer (AO) on account of long-term capital gain and undisclosed cash income.
2. Jurisdiction of the AO to make additions in the absence of incriminating documents/seized material during the search.

Issue-wise Detailed Analysis:

1. Confirmation of Additions:
The appellant challenged the confirmation of additions amounting to Rs. 32,15,043/- for long-term capital gain and Rs. 17,50,000/- for undisclosed cash income. These additions were made by the AO under section 153A/143(3) of the Income Tax Act, 1961. The appellant contended that the additions were made without any incriminating documents or seized material found during the course of the search.

2. Jurisdiction of the AO:
The appellant argued that the AO lacked jurisdiction to make such additions as there were no incriminating documents found during the search. The search conducted under section 132 of the Act at the premises of the Cygnus group, including the appellant, yielded only one document (KKS/1) from the appellant's premises, which did not relate to the additions made.

Tribunal's Findings:
The Tribunal reviewed the facts and submissions, including the decision of the Co-ordinate Bench in the case of Shri Krishna Kumar Singhania & Ors. The Tribunal noted that the facts of the present case were similar to those in the Krishna Kumar Singhania case, where it was held that no additions could be made in the absence of incriminating material.

Legal Precedents:
The Tribunal referred to several judicial precedents, including:
- CIT vs Pinaki Misra and Sangeeta Misra: It was held that no addition could be made on the basis of evidence gathered from extraneous sources or documents received subsequent to the search.
- CIT vs Kabul Chawla: The Delhi High Court held that completed assessments could only be interfered with based on incriminating material found during the search.
- ACIT vs Kanchan Oil Industries Ltd: The Tribunal explained that no addition could be made in respect of concluded assessments unless incriminating material was found during the search.

Conclusion:
The Tribunal concluded that the additions made by the AO were without jurisdiction as they were not based on any incriminating material found during the search. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the additions. The appeals of the assessee were allowed on this ground.

Final Order:
The Tribunal pronounced the order in the open court on 27th June 2022, allowing the appeals of the assessee and directing the deletion of the additions made by the AO.