2024 (6) TMI 1212 - AT - Income Tax

Assessment u/s 153A - Income from undisclosed sources - incriminating material found during search or not? - addition made in respect of the entries credited by the assessee in the books of account in the form of sale of investments to two concerns/companies - HELD THAT - Addition not based on any incriminating material found at the time of search. This issue is now well settled in favour of the assessee and against the revenue by the Hon ble Supreme Court in the case of Abhisar Buildwell Private Limited 2023 (4) TMI 1056 - SUPREME COURT - Respectfully following the decision of USG BUILDWELL PVT. LTD 2021 (3) TMI 518 - ITAT DELHI and in the light of the decision of the Hon ble Supreme Court (supra) we direct the AO to delete the impugned addition. Decided in favour of assessee.

Issues:
1. Assessment order challenged as bad in law and void ab initio.
2. Addition of Rs. 50,00,000 as income from undisclosed sources disputed.
3. Violation of principles of natural justice alleged.
4. Legality of order passed under section 153A questioned.
5. Absence of incriminating material during search operation.
6. Application of legal principles regarding assessment under section 153A.
7. Decision based on settled law and Supreme Court ruling.

Analysis:
1. The appellant challenged the assessment order as bad in law and void ab initio, alleging violation of principles of natural justice and denial of the opportunity to be heard. However, the Tribunal found that the reassessment proceedings were initiated properly, and the notice under section 148 was issued after a search and seizure operation conducted at various premises. The Tribunal noted that the notice was served more than a year after the search, and based on similar facts in another case, held that the abatement of assessments was incorrect.

2. The appellant disputed the addition of Rs. 50,00,000 as income from undisclosed sources, arguing that the addition was not based on any incriminating seized document found during the search. The Tribunal, in line with previous decisions and legal principles, emphasized that assessments under section 153A must be made based on seized material. As no incriminating material was found in the present case, the Tribunal directed the Assessing Officer to delete the impugned addition, following the decision of the Hon'ble Supreme Court.

3. The appellant raised concerns about the legality of the order passed under section 153A, contending that it was bad in law and void ab initio. The Tribunal, after careful consideration of the facts and legal provisions, concluded that since no incriminating material was unearthed during the search, no additions could be made to the income already assessed. The Tribunal emphasized the importance of incriminating material in making additions during assessments under section 153A.

4. The Tribunal thoroughly analyzed the legal position regarding assessments under section 153A, citing relevant provisions and court decisions. The Tribunal highlighted that assessments under section 153A must be based on seized material, and any additions should have a nexus with the seized material. The Tribunal clarified that completed assessments can only be interfered with based on incriminating material discovered during the search, emphasizing the significance of relevant evidence in assessment proceedings.

5. The judgment underscored the absence of incriminating material during the search operation, leading to the conclusion that no additions could be made to the income already assessed. The Tribunal noted that the appellant's investments and transactions were duly supported by submissions and evidence, indicating a lack of undisclosed income or incriminating material. Consequently, the Tribunal allowed the appeal of the assessee for the assessment year in question, emphasizing the importance of incriminating material in assessment proceedings.

6. The Tribunal's decision was based on settled legal principles and a Supreme Court ruling, affirming that additions during assessments under section 153A must be supported by incriminating material. The Tribunal's direction to delete the impugned addition was in line with established legal precedents and the requirement for a nexus between seized material and additions made during assessments.

7. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the absence of incriminating material and the necessity for additions to be based on seized material. The decision, announced in open court, highlighted the adherence to legal principles and the significance of incriminating evidence in assessment proceedings under section 153A.

← Previous Next →