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2021 (9) TMI 65 - AT - Income TaxAssessment u/s 153A - scope of 153A proceedings - Whether addition made by the AO is not based on seized material / documents found during the course of search? - HELD THAT - It is an admitted fact that the time for completion of original assessments has ended and the assessment proceedings attained finality at the time of search for these years. It is also undisputed that additions made by the AO is not based on incriminating material found during the course of search, albeit it is based on the assessment record only. Additions made are beyond the scope of 153A proceedings. This proposition of law has been well settled and reiterated in the case of CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Pr. CIT vs. Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT Thus there is no incriminating material qua each of the assessment year roped in under section 153A, then, no addition can be made while framing the assessment under section 153A. - Decided in favour of assessee.
Issues:
1. Validity of additions made by Assessing Officer based on valuation of property without any seized material. 2. Interpretation of scope of section 153A in relation to additions made without incriminating material. 3. Application of legal precedents in determining the scope of assessment under section 153A. Analysis: Issue 1: Validity of additions without seized material The case involves appeals by the assessee against orders of the CIT (A) regarding additions made by the Assessing Officer without any seized material during a search and seizure operation. The Tribunal noted that the additions made on property valuation were not supported by any material found during the search, which was undisputed by the revenue. It was established that no incriminating material formed the basis of the additions. As per the second proviso to section 153A, assessments not based on seized material are to be treated as unabated. The Tribunal concluded that the additions lacked a nexus to the seized material, rendering them beyond the scope of section 153A. Issue 2: Scope of section 153A in absence of incriminating material The Tribunal deliberated on the argument that once a notice under section 153(3) is issued, the Assessing Officer has the authority to assess the total income based on the return filed, irrespective of the presence of incriminating material. However, the Tribunal emphasized that for assessments under section 153A, the additions must be linked to seized material. Citing legal precedents, the Tribunal highlighted that assessments under section 153A should not be arbitrary and must have a connection to the seized material. The absence of incriminating material during the search led to the conclusion that the additions made were beyond the purview of section 153A. Issue 3: Application of legal precedents The Tribunal extensively relied on legal precedents such as PCIT Vs. Meeta Gutgutia, CIT Vs. Kabul Chawla, and other relevant judgments to interpret the scope of section 153A. The Tribunal emphasized that assessments under section 153A should be based on seized material and not arbitrary. The legal propositions laid down by the High Court in various cases were analyzed to establish that in the absence of incriminating material, completed assessments can be reiterated, and abated assessments can be made. The Tribunal concluded that the principles derived from legal precedents were applicable to the present case, where no incriminating material was found during the search, leading to the allowance of the assessee's appeal. In conclusion, the Tribunal allowed the assessee's appeal, highlighting that the additions made without any incriminating material found during the search were beyond the scope of section 153A. The judgment reiterated the importance of a nexus between additions and seized material in assessments under section 153A, as established by legal precedents.
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