2018 (6) TMI 684 - AT - Income Tax

Assessment u/s 153A - absence of any incriminating materials - Held that - There is no any reference to seized materials whatsoever based on which the additions/disallowances were made - thus assessments made are bad in law for the reason that AO made additions without there being any seized materials pursuant to action u/s. 132 - See Narpat Mehta v. ACIT 2016 (10) TMI 1198 - ITAT MUMBAI - additions/disallowances made in the assessments for the Assessment Years 2005-06 to 2007-08 which were unabated has no legs to stand - hence assessment order passed u/s 153A is quashed - Decided in favor of assessee.

Summary

Issues:
Challenging the order of the Ld. CIT(A) in upholding the action of the Assessing Officer in passing the order u/s.153A without jurisdiction and in the absence of any incriminating materials.

Analysis:
The appeals filed by the assessee were against the common order of the Ld. Commissioner of Income-tax (Appeals)-11, Pune for the Assessment years 2005-06, 2006-07 & 2007-08. The main contention was that the Assessing Officer made additions without any seized materials pursuant to action u/s. 132 of the Act. The assessee argued that since the assessments were not abated, additions could only be made based on the seized material. The Assessing Officer had not referred to any seized materials in making the additions/disallowances. The Ld. CIT(A) held that the Assessing Officer must consider the Books of Accounts inventoried during the search as new materials for completing the assessment u/s. 153A, which the tribunal found to be incorrect. The assessments for the mentioned years were unabated, and the Assessing Officer could only make additions/disallowances based on the seized materials.

The Hon'ble Jurisdictional High Court in a relevant case emphasized that the power under section 153A should only be exercised if incriminating material is found during the search. A similar issue was addressed in another case where it was concluded that the assessments were non-abated, and no incriminating material was found to support the additions/disallowances. The Revenue failed to provide evidence that the disallowances were based on seized incriminating material. The Tribunal had set aside additions/disallowances in previous years of the same assessee's case. The Bombay High Court also ruled that without seized incriminating material, non-abated assessments cannot be subject to proceedings under section 153A.

In light of the above decisions and the absence of any seized materials, the tribunal quashed the Assessment Orders passed u/s. 153A for the years 2005-06 to 2007-08. The tribunal held that the additions/disallowances made in these assessments, which were unabated, were not supported by any seized materials and therefore were not valid. Consequently, the appeals of the assessee were allowed based on this preliminary issue.