2024 (6) TMI 598 - AT - Income Tax

Assessment u/s 153A/153C - seized/incriminating materials found as a result of search and seizure or not? - HELD THAT - As per the settled legal position, AO has to record satisfaction note for each assessment year, for which, he intends to initiate proceedings u/s 153C of the Act and he also has to refer to incriminating/seized materials relating to such assessment year to justify initiation of proceedings under section 153C. In the facts of the present appeals, it is not the case. In fact, on specific query, learned Departmental Representative failed to bring to our notice any seized/incriminating materials, which could have influenced the present additions. Even, the paper-books filed by the Department do not contain any seized/incriminating materials. Uncontroverted facts on record do clearly reveal that the additions made in the impugned assessment orders are not based on any incriminating/seized materials found during search and seizure operation. That being the factual position emerging on record, the ratio laid down in case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. 2023 (5) TMI 587 - SUPREME COURT would squarely apply. Pertinently, while considering identical nature of dispute in case of assessee s group concern arising out of the same search and seizure operation, the Coordinate Bench in case of M/s. Frontier Commercial Co. Ltd. 2023 (7) TMI 1160 - ITAT DELHI has deleted the additions, as, they were not based on any seized/incriminating materials found as a result of search and seizure operation. Thus, we are of the view that the disputed additions having been made without reference to any seized/incriminating material found as a result of search and seizure operation, are unsustainable. Appeal of assessee allowed.

Summary

Issues:
Validity of assessment order under section 153A/153C for assessment year 2008-09.
Sustainability of additions made in assessment orders based on incriminating material found during search and seizure operation.

Analysis:
The appeals by the assessee challenged the assessment order dated 30.01.2018 for assessment years 2008-09 to 2012-13. The assessee contended that for assessment year 2008-09, the Assessing Officer could not proceed under section 153A/153C as it was outside the block of six years. The Assessing Officer disallowed expenses towards freight charges and under section 14A in years with dividend income. The first appellate authority upheld the additions based on seized materials. The assessee argued that no incriminating material supported the additions.

The Tribunal found no search and seizure operation on the assessee, as confirmed by the absence of relevant documents. The assessment was initiated under section 153C for assessment years 2007-08 to 2012-13. The Tribunal cited a Supreme Court decision to quash the assessment for 2008-09. The additions made were not based on seized materials, as required under section 153C. The Tribunal noted the lack of specific references to incriminating materials in the assessment orders and satisfaction note.

The Assessing Officer failed to provide any seized/incriminating materials to justify the additions. The additions were based on the return of income or documents provided by the assessee, not on seized materials. The Tribunal referenced a Supreme Court ruling to support its decision to delete the additions. Citing a previous case with similar circumstances, the Tribunal concluded that the additions were unsustainable. Therefore, all additions were deleted, and the appeals were allowed.

The Tribunal's detailed analysis highlighted the lack of incriminating material supporting the additions, leading to the decision to delete all additions made in the assessment orders. The legal principles and precedents cited, along with the absence of specific references to seized materials, formed the basis for quashing the assessment for 2008-09 and deleting all disputed additions.