2025 (2) TMI 984 - AT - Income Tax

Assessment u/s 153A when no incriminating material was found during the search - AO has only made the addition by invoking the provisions of Section 68 on account of unexplained cash credits receipts from the sale of house u/s 57 and trading addition on additional sales - HELD THAT - Revenue is unable to controvert the argument of the assessee that there is no incriminating document referred to in the assessment order by the AO nor any such document was produced either before the ld. CIT(A) or before the Tribunal. Therefore by respectfully following the judgement of Abhisar Buildwell 2023 (4) TMI 1056 - SUPREME COURT we are of the opinion that no addition could be made in the hands of the assessee in the order passed u/s 153A in absence of any incriminating material. Accordingly we direct to delete the additions made without referring to any incriminating material. Liberty is granted to the AO to initiate reassessment proceedings u/s.147/148 of the Act as per law in case of completed/unabated assessment if no incriminating material found during the course of search. Accordingly the ground of appeal no. 1 of the assessee is allowed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the completion of assessment under section 153A of the Income Tax Act was valid when no incriminating material was found during the search. The detailed analysis of the issue is as follows:The relevant legal framework and precedents considered in this case include the provisions of Section 153A of the Income Tax Act, 1961. The Court interpreted that for an assessment under Section 153A, there must be the existence of incriminating material found during the search. The key evidence and findings in this case were that no incriminating material was referred to by the Assessing Officer for making additions, and the assessment was solely based on details provided by the assessee during the assessment proceedings. The Court applied the law to the facts by emphasizing that in the absence of incriminating material, no additions could be made under Section 153A. The treatment of competing arguments involved the Assessee arguing that the assessment was invalid due to the lack of incriminating material, while the Revenue contended that the additions made were justified based on the assessee's own admissions. The Court concluded that since no incriminating material was found during the search, the additions made without reference to such material were invalid. The Court allowed the appeal of the assessee, directing the deletion of the additions. The Court also granted liberty to the Assessing Officer to initiate reassessment proceedings under Sections 147/148 of the Act if no incriminating material was found during the search.The significant holding in this case is that in the absence of incriminating material, no additions can be made in an assessment under Section 153A of the Income Tax Act. This principle was established based on the interpretation of relevant legal provisions and precedents, leading to the final determination that the additions made without incriminating material were to be deleted.In conclusion, the Court's decision focused on the requirement of incriminating material for assessments under Section 153A of the Income Tax Act, ultimately leading to the allowance of the assessee's appeal and the deletion of additions made without such material.