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2021 (11) TMI 208 - AT - Income TaxAssessment u/s 153A - Whether any incriminating material found during the course of search? - statements recorded u/s.132(4) whether constitute incriminating material or not ? - HELD THAT - DR could not produce any material to suggest that the assessment made u/s.153A for the year under consideration and the consequent additions were based on any seized material revealing undisclosed income of the assessee. He has simply relied upon the orders of the lower authorities and contended that the findings unearthed during the course of search constitute incriminating material for justifying the assessment u/s.153A of the Act. We are unable to appreciate the above argument since there is nothing even apparent to prove anything incriminating against the assessee except for statements of third parties alone. We find merit in the contention of the Ld. Counsel that transactions duly recorded in the regular books of account do not constitute incriminating material. In the instant case, the advance and loan obtained from Gulmohar Towers Pvt. Ltd. M/s.Rowland Trexim Pvt. Ltd. respectively have been duly recorded in the books of account based on which return of income was filed and the same can by no stretch of imagination be construed as incriminating material found during the course of search. In this regard, support is drawn to the decision of the Hon ble Delhi High Court in the case of CIT v. RRJ Securities Ltd. 2015 (11) TMI 19 - DELHI HIGH COURT We once again reiterate that the scope and ambit of section 153A of the Act is to restrict to only incriminating material in case of unabated years. Since the assessment for the year under consideration is an unabated one which is undisputed and that we find no existence of any such incriminating material which is the pre-requisite to make assessment u/s.153A of the Act, the consequent additions made by the Revenue are without jurisdiction and will not survive - Decided against revenue.
Issues Involved:
1. Jurisdiction of the Assessing Officer under Section 153A of the Income Tax Act in the absence of incriminating material. 2. Validity of additions made based on statements recorded during search and survey operations. 3. Whether statements recorded during search constitute "incriminating material." 4. Applicability of Section 68 and Section 69C of the Income Tax Act concerning the additions made. Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer under Section 153A of the Income Tax Act in the absence of incriminating material: The assessee contested the addition of ?38,98,15,150 made by the Assessing Officer (AO) under Section 153A, arguing that the addition was made without any incriminating material found during the search. The Tribunal noted that the assessment for the year under consideration (A.Y. 2011-12) was already completed under Section 143(3) before the search. Therefore, any addition under Section 153A should be based solely on incriminating material found during the search. The Tribunal emphasized that the purpose of Section 153A is to assess undisclosed income discovered during the search, not to reassess completed assessments without new incriminating evidence. 2. Validity of additions made based on statements recorded during search and survey operations: The AO relied heavily on statements recorded during the search and survey operations, including those of various third parties and alleged entry operators, to justify the additions. The Tribunal observed that these statements alone, without any corroborative material, do not constitute incriminating evidence sufficient to justify additions under Section 153A. The Tribunal referred to several judicial precedents, including CIT v. Harjeev Aggarwal and CIT v. Best Infrastructure Pvt Ltd, which held that statements recorded during search or survey do not, by themselves, constitute incriminating material. 3. Whether statements recorded during search constitute "incriminating material": The Tribunal held that statements recorded during the search or survey cannot be considered incriminating material unless they are corroborated by other evidence found during the search. The Tribunal cited the case of CIT v. Harjeev Aggarwal, where it was held that statements recorded under Section 132(4) can be used as evidence only if they relate to incriminating material found during the search. The Tribunal also noted that statements recorded during the survey under Section 133A do not have evidentiary value, as held by the Supreme Court in CIT v. S. Khader Khan Son. 4. Applicability of Section 68 and Section 69C of the Income Tax Act concerning the additions made: The AO made additions under Section 68 for unexplained cash credits and under Section 69C for unexplained expenditure based on loans and advances received by the assessee from certain companies alleged to be paper entities. The Tribunal found that these transactions were duly recorded in the regular books of account and could not be construed as incriminating material. The Tribunal reiterated that additions under Section 153A for unabated years must be based on incriminating material found during the search, which was not the case here. Conclusion: The Tribunal concluded that the additions made by the AO under Section 153A were without jurisdiction as they were not based on any incriminating material found during the search. Consequently, the cross-objection filed by the assessee was allowed, and the appeals filed by the Revenue were dismissed. The Tribunal's decision applied mutatis mutandis to the assessment year 2012-13, which was also an unabated year.
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