2022 (12) TMI 202 - AT - Income Tax

Assessment u/s 153A - search seizure operation took place in the premises of the assessee and certain incriminating documents were found and seized - HELD THAT - We find the AO in the order passed u/s 143(3) r.w.s. 153A of the Act determined the total income as against the returned income - We find the CIT (A) on the basis of the arguments advanced by the assessee held that the initiation of proceedings u/s 153A is not valid, the reasons of which have already been reproduced in the preceding paragraph. As the submission of the DR that the learned CIT (A) without considering the incriminating material found during the course of search has held that 153A proceedings are not valid and he has not decided the issue on merit. A perusal of the order of the CIT (A) shows that neither he has decided the appeal on merit, nor has he passed any comments regarding the various incriminating material found during the course of search and he has simply accepted the contention of the assessee that no incriminating material was found during the course of search. We deem it fit and proper to restore the issue to the file of the learned CIT (A) with a direction to give his finding regarding the nature of incriminating material found during the course of search and decide the issue keeping in mind the decision of Gopal Lal Badruka Vs. DCIT 2012 (6) TMI 657 - ANDHRA PRADESH HIGH COURT - The grounds raised by the Revenue are accordingly allowed for statistical purposes.

Summary

Issues:
Validity of initiation of proceedings u/s 153A without incriminating material found during search.

Analysis:
The appeal was filed by the Revenue against the order of the CIT (A) relating to the assessment year 2014-15. The assessee, a limited company engaged in construction, filed a revised return of income after a search & seizure operation under section 132 of the Income Tax Act. The Assessing Officer completed the assessment determining the total income at Rs.20,78,40,695/- with various additions. The assessee challenged the validity of the assessment proceedings before the CIT (A) on the grounds of no incriminating material being found during the search and the statement recorded not constituting incriminating material. The CIT (A) held the initiation of proceedings u/s 153A as invalid based on the arguments presented by the assessee and various decisions cited. The CIT (A) concluded that the statement recorded during the search cannot be treated as incriminating material. The Revenue appealed to the Tribunal, challenging the CIT (A)'s decision.

The Tribunal observed that incriminating documents were found and seized during the search operation. The AO had determined the total income based on these documents. The CIT (A) held the initiation of proceedings u/s 153A as not valid without considering the incriminating material found during the search and without deciding the issue on merit. The Tribunal noted that the CIT (A) did not pass any comments on the incriminating material and simply accepted the assessee's contention that no such material was found. In the interest of justice, the Tribunal decided to restore the issue to the CIT (A) for a fresh decision considering the nature of incriminating material found during the search. The Tribunal referred to a decision of the Hon'ble Andhra Pradesh High Court and allowed the grounds raised by the Revenue for statistical purposes. The appeal filed by the Revenue was allowed for statistical purposes.

In conclusion, the Tribunal directed a fresh decision by the CIT (A) regarding the incriminating material found during the search operation and emphasized the importance of considering all relevant factors in determining the validity of proceedings under section 153A of the Income Tax Act.