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2017 (10) TMI 167 - AT - Income TaxLegally u/s.153A/153C - Held that - Assessments have become final and there were no pending proceedings, therefore the assessments are unabated as no incriminating material was found. In such cases no addition could be made legally u/s.153A/153C of the Act unless there was some incriminating material found during the course of search. As observed by us in the above paras there is nothing on record/Assessment Orders to suggest that the additions were made based on any specific incriminating material seized during the course of the search. Hence, following the decisions of the Hon ble Jurisdictional High Court in the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) we hold that the additions made while competing the assessments u/s. 153A/153C cannot be sustained.
Issues Involved:
1. Validity of the order passed by the Assessing Officer under section 153C read with section 143(3) and section 153A read with section 143(3) of the Income Tax Act. 2. Whether additions made without any incriminating material found during the search are valid. 3. Examination of whether the assessments were abated or not. 4. Consideration of precedents and judicial pronouncements relevant to the case. Detailed Analysis: 1. Validity of the order passed by the Assessing Officer under section 153C read with section 143(3) and section 153A read with section 143(3) of the Income Tax Act: The appeals were filed against the orders of the learned Commissioner of Income Tax (Appeals) for the Assessment Years 2008-09 and 2005-06. The primary contention was that the assessments were not abated, and no incriminating material was found to justify the additions made by the Assessing Officer. The assessee argued that the additions were not based on any seized material, and there was no reference to such material in the Assessment Orders. 2. Whether additions made without any incriminating material found during the search are valid: The assessee's counsel cited the decisions of the Hon'ble Jurisdictional High Court in CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [374 ITR 645] and CIT v. Gurinder Singh Bawa [386 ITR 483], arguing that assessments made without any incriminating materials are bad in law. The Department's representative countered that loose sheets and books of accounts were seized during the search, constituting incriminating material. However, the Tribunal found that the Assessing Officer did not refer to any specific seized document in the Assessment Orders, thus supporting the assessee's contention. 3. Examination of whether the assessments were abated or not: The Tribunal noted that the assessments for the Assessment Years 2005-06 and 2008-09 were not abated as the time limit for issuing notice under section 143(2) had expired before the date of the search on 31.10.2009. In the cases of M/s. Flamingo (DFS) Private Limited, M/s. Flemingo Duty Free Shop Pvt Ltd, and M/s. Darling Properties P. Ltd, the additions were made based on the verification of details filed by the assessee, not on any incriminating material found during the search. 4. Consideration of precedents and judicial pronouncements relevant to the case: The Tribunal referred to several judicial pronouncements, including the decisions of the Hon'ble Jurisdictional High Court and various ITAT benches, which consistently held that in the absence of incriminating material, no additions could be made under section 153A/153C if the assessments were not abated. The Tribunal cited the case of M/s. Bermaco Energy Systems Ltd. v. DCIT, where similar issues were decided in favor of the assessee, reinforcing the principle that additions should be based on incriminating material found during the search. Conclusion: The Tribunal concluded that since the assessments were not abated and no incriminating material was found during the search, the additions made by the Assessing Officer could not be sustained. The appeals of the assessee were partly allowed, and the Tribunal did not go into the merits of the additions/disallowance made by the Assessing Officer, as the legal issue was decided in favor of the assessee. Order Pronounced: The order was pronounced in the open court on the 27th September 2017.
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