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2023 (7) TMI 333 - AT - Income TaxAssessment u/s 153A - addition u/s 69A - incriminating material found during search or not? - HELD THAT - Admittedly, there was no incriminating document/ material found and seized against the appellant assessee, as it is further evident from the assessment order itself where addition has been made without referring to any incriminating documents. CIT(A) failed to appreciate the facts on record that there was no incriminating document seized and that the assessment was completed passed u/s 143(3)/153C whereby assessing total income after making addition u/s 69A in a routine manner in respect of unabated assessment without referring to incriminating documents is illegal and unjustified. In our view, the impugned order of the CIT(A) are perverse to the facts on record and bad in law. On similar facts, in the recent SC Judgement of Abhisar Buildwell P. Ltd. 2023 (4) TMI 1056 - SUPREME COURT had observed that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A. Also in M/s U.K Paints (OVERSEAS) LTD. 2023 (5) TMI 373 - SC ORDER had observed that as found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of matter, as such, assessments u/s 153-C of the Act are rightly set aside by the High Court. Appeal of assessee allowed.
Issues Involved:
1. Legality of the assessment orders passed under Section 153C of the Income Tax Act. 2. Validity of additions made in the absence of incriminating documents. 3. Specificity of cash deposit and investment explanations. Summary: 1. Legality of the Assessment Orders under Section 153C: The appellant challenged the legality of the assessment orders made under Section 153C of the Income Tax Act, arguing that these orders were illegal and void ab initio. The appellant contended that the additions made by the Assessing Officer (AO) were not based on any incriminating documents seized during the search operation. The Tribunal referred to the Hon'ble Supreme Court's judgment in the case of PCIT, Central-3 v/s Abhisar Buildwell Pvt. Ltd., which held that no addition can be made in respect of completed assessments in the absence of any incriminating material. The Tribunal found that the AO assumed jurisdiction without referring to any incriminating material, making the assessment order without jurisdiction and void ab initio. 2. Validity of Additions in Absence of Incriminating Documents: The appellant argued that the Ld. Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming the additions made by the AO in the absence of any incriminating documents. The Tribunal noted that the AO made additions without referring to any incriminating documents, which was evident from the assessment order itself. The Tribunal held that the issue of notice under Section 153C was unjustified in the absence of incriminating material, rendering the assessment order illegal and unjustified. The Tribunal cited the Supreme Court's judgment in the case of Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell P. Ltd., which stated that in the absence of incriminating material, the AO cannot assess or reassess completed/unabated assessments. 3. Specificity of Cash Deposit and Investment Explanations: The appellant also contested specific additions made by the AO, such as the addition of Rs. 7,40,000/- on merit, arguing that the complete source of cash deposit had been explained. Similar contentions were made for other amounts in different assessment years. The Tribunal found that the Ld. CIT(A) failed to appreciate the facts on record and that the assessment was completed in a routine manner without referring to incriminating documents. The Tribunal held that the impugned orders of the CIT(A) were perverse to the facts on record and bad in law. Conclusion: The Tribunal concluded that the assessment orders passed by the AO were without jurisdiction and void ab initio. The impugned orders of the revenue authorities were quashed, and all three appeals of the assessee were allowed. The Tribunal's observations and findings in ITA No. 161/Asr/2022 were applied mutatis mutandis to ITA No. 162/Asr/2022 and ITA No. 163/Asr/2022. The order was pronounced in the open court on 12.05.2023.
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