2024 (10) TMI 416 - AT - Income Tax

Assessment u/s 153A - addition u/s 69A by AO on account of difference in amount credited in bank and the sale proceeds shown in the bank in the income tax return - HELD THAT - It is settled law that no addition can be made u/s 153A otherwise than based on incriminating document. Meaning thereby that the additions made by the AO and sustained by the Hon ble CIT(A) being not based upon any document found during the course of search, would be liable to be deleted. In the present case, since no incriminating material had been found during search nor brought on record by Assessing Officer and thus, the issue is squarely covered by judgment of Abhisar Buildwell (P.) Ltd 2023 (4) TMI 1056 - SUPREME COURT Accordingly, we delete the addition made by Assessing Officer in absence of any incriminating material found during course of search under section 132 of the act. Validity of the assessment order passed by AO u/s 153A - Addition made u/s 69A by AO on account of difference in returned income and income as per certificate issued by M/s Naveen Aggarwal Associates - In the present case under appeal before us, admittedly. Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. Under the circumstances, we are of the considered view, that in the present case, assessment proceedings must be initiated under Section 153C rather than Section 153A of the Act, after the satisfaction was being arrived in the assessment proceedings of M/S Golden Tulip Hospitality Pvt. that the material found and seized during search pertain to appellant. We, therefore, hold that the assessment order passed under Section 153A by the AO is without jurisdiction and the same is as such quashed.

Summary

Issues Involved:

1. Validity of additions made under Section 69A without incriminating material.
2. Applicability of Section 153A and 153C in the context of search and seizure operations.
3. Condonation of delay in filing the appeal due to medical reasons.

Detailed Analysis:

1. Validity of Additions Made Under Section 69A Without Incriminating Material:

The primary issue was whether the additions made by the Assessing Officer (AO) under Section 69A were valid, given that no incriminating material was found during the search. The appellant argued that the additions of Rs. 454706/- and Rs. 648720/- were made based on bank statements and a CA certificate, respectively, rather than on any incriminating documents found during the search. The Tribunal noted that it is a settled law that additions under Section 153A cannot be made without incriminating documents. The Tribunal relied on precedents, including the Supreme Court judgment in Pr. CIT v. Abhisar Buildwell (P.) Ltd., which held that no additions can be made in the absence of incriminating material during search proceedings. Consequently, the Tribunal deleted the addition of Rs. 454706/- for the assessment year 2014-15, as it was not based on any incriminating material found during the search.

2. Applicability of Section 153A and 153C in the Context of Search and Seizure Operations:

Another significant issue was whether the assessment under Section 153A was valid when the material relied upon was found during a search of a third party's premises, namely M/s Golden Tulip Hospitality. The appellant contended that the proceedings should have been initiated under Section 153C, which pertains to cases where incriminating material found during a search belongs to a person other than the one searched. The Tribunal agreed with the appellant, emphasizing that the AO should have proceeded under Section 153C, as the incriminating document was discovered from a third party's premises. The Tribunal held that the assessment order under Section 153A was without jurisdiction and quashed it, thereby rendering the addition of Rs. 648720/- invalid.

3. Condonation of Delay in Filing the Appeal Due to Medical Reasons:

The appellant sought condonation of a 443-day delay in filing the appeal, citing medical reasons, including undergoing surgery and treatment at AIIMS Hospital. The Tribunal considered the affidavit and medical documents provided by the appellant, finding the reasons bona fide and constituting sufficient cause under Section 5 of the Limitation Act. The Tribunal allowed the condonation of delay, referencing supportive judgments such as Senior Bhosale Estate (HUF) v. ACIT and Shakuntala Devi Jain vs Kuntal Kumari And Ors., which emphasized the importance of condoning delays in the presence of genuine reasons.

Conclusion:

The Tribunal allowed both appeals, deleting the additions made under Section 69A due to the absence of incriminating material and quashed the assessment order under Section 153A for the assessment year 2018-19 due to jurisdictional errors. The Tribunal also condoned the delay in filing the appeal, considering the medical circumstances presented by the appellant.