2018 (5) TMI 1820 - AT - Income Tax

Assessment u/s 153A - enhancement of income - assessments made pursuant to search operation - higher deduction u/s 80 IC - Held that - In the present case the impugned seized paper does not belong to the Assessment Years involved in the impugned appeals. Furthermore with respect to the same paper it is also important to note that it is evident from that paper that Surya Vinayak Industries have over paid the assessee than what it should have allegedly paid for over invoicing. This evident facts also runs contrary to the other finding that Surya Vinayak industries is company of not having capacity to supply so much material in para no 145 of the order. If it is so then how it could have paid the assessee over and above what is required to be paid if the goods are over invoiced.it cannot be disputed that assessee has purchased the material. Now the issue is at what rate. If it Is the case of the revenue that assessee has purchased goods at Rs. 100 But has booked purchases at Rs. 150 and received Rs. 50 back from the supplier in cash then revenue should have brought on record the near about comparable prices of those material with reasonable evidences. These facts could have been proved either by the availability of the material in the market or also by the production cost of the supplier. Revenue has not brought on record any such material. Most of the part of the order justifying the addition in absence of this merely remains allegations without evidences. Additions in such a manner cannot be sustained. As none of the documents seized during the course of search are shown to us pertaining to the Assessment Year 2005-06 to 2009-10 we are of opinion that all the additions made by the ld Assessing Officer are not based on incriminating documents found during the course of search hence they are not sustainable. There is no incriminating material found during the course of search relevant to Assessment Year 2005-06 to AY 2009- 10 which are concluded Assessment Year and could have been disturbed only on the basis of any incriminating material showing escapement of income found during the course of search relevant to that assessment year only. Hence we do not have any other option but to allow ground No. 1 of the appeal of the assessee for the impugned assessment years. - Decided in favour of assessee.

Issues Involved:
1. Validity of notice issued under Section 153A.
2. Whether the additions made by the Assessing Officer (AO) are based on any incriminating material found during the course of search.
3. Jurisdiction of the AO to assess the total income irrespective of the seized material.
4. Specificity of incriminating material to the respective assessment years.

Detailed Analysis:

1. Validity of Notice Issued Under Section 153A:
The assessee challenged the validity of the notice issued under Section 153A, arguing that the additions/disallowances made were not based on any incriminating material seized during the search. The main contention was that for concluded assessments, additions can only be made if there is incriminating material found during the search. The CIT (A) and the Tribunal examined whether the AO had the jurisdiction to issue the notice under Section 153A and make additions.

2. Whether the Additions Made by the AO are Based on Any Incriminating Material Found During the Course of Search:
The Tribunal agreed with the assessee's argument that for the assessment years 2005-06 to 2009-10, which were concluded assessments, any additions should be based on incriminating material found during the search. The Tribunal analyzed various seized documents and concluded that none of the documents pertained to the assessment years in question. The key document, a statement dated 30.11.2010, was found to relate to AY 2011-12 and not to the years under appeal. The Tribunal held that no incriminating material was found for the years 2005-06 to 2009-10, and therefore, the additions made were not valid.

3. Jurisdiction of the AO to Assess the Total Income Irrespective of the Seized Material:
The CIT (A) held that the AO had the jurisdiction to assess the total income irrespective of the seized material, relying on the decision of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia. However, the Tribunal disagreed, stating that for concluded assessments, any additions should be based on incriminating material found during the search. The Tribunal emphasized that the AO's power to assess or reassess the total income under Section 153A is contingent upon the discovery of incriminating material during the search.

4. Specificity of Incriminating Material to the Respective Assessment Years:
The Tribunal referred to the decision of the Hon'ble Supreme Court in CIT v. Sinhgad Technical Education Society, which held that incriminating material must pertain to the specific assessment year in question. The Tribunal found that the documents relied upon by the revenue did not pertain to the assessment years 2005-06 to 2009-10. The Tribunal concluded that the additions made for these years were not based on any incriminating material found during the search, and therefore, the additions were not sustainable.

Conclusion:
The Tribunal allowed the appeals of the assessee, holding that the additions made for the assessment years 2005-06 to 2009-10 were not based on any incriminating material found during the search. Consequently, the appeals of the revenue were dismissed as infructuous. The Tribunal emphasized the requirement of incriminating material specific to each assessment year for making additions under Section 153A in the case of concluded assessments.

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