2012 (8) TMI 368 - HC - Income Tax

Search and Seizure – assessment – application of Section 153A if incriminating material is found during search even if assessments are completed - Tribunal deleted the addition made on various ground for reason that no material was found during the search carried out u/s 132 and also on the ground that for all the six years under consideration, the returns filed by the assessee before the search had been processed u/s 143(1)(a) and Section 153A was not a de novo assessment and have to be necessarily restricted to the undisclosed income unearthed during the search

Held that:- AO has the power u/s 153A to make assessment for all the six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee filed returns before the date of search which stood processed u/s 143(1)(a). Where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included.

The other reason given by the Tribunal that no material was found during the search is factually unsustainable since the entire case and arguments had proceeded on the basis that the document embodying the transaction with Mohini Sharma was recovered from the assessee. If a document is found in the course of the search, Section 153A is triggered & it is mandatory for the AO to issue notices u/s 153A calling upon the assessee to file returns for the six AYs prior to the year in which the search took place – Decided in favor of Revenue.