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2014 (1) TMI 1942 - AT - Income TaxAssessment u/s 153A - Addition u/s 68 - bogus LTCG - penny Stocks - any incriminating material found in the search or not? - whether in respect of completed / unabated assessment, any addition can be made by the AO in absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132A or not. HELD THAT:- In case of unabated assessment, the reassessment can be made on the basis of the satisfaction note pursuant to which the search has been initiated and books of account or other documents not produced in the course of original assessment but found in the course of search which indicate undisclosed income or undisclosed property, and secondly, the reassessment can be made on the basis of the undisclosed income or undisclosed property which is physically found and discovered in the course of search. In case of completed assessment and not abated as on the date of search, as in the instant case, the AO has to reassess the total income of the assessee and the assessment already completed can be tinkered with or distrusted where some incriminating material is found and seized during the course of search indicating undisclosed income of the assessee. AO would assume the jurisdiction to reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. In case no incriminating material is unearthed during the search, the AO cannot reassess taking into consideration the other material in respect of completed assessments/unabated assessments. In the instant case, there is nothing on record and/or brought to our notice during the course of hearing that the Competent authority was seized of the aforesaid statement of Shri S. K Khemka at the time of recording of the satisfaction whereby the authorization has been issued and the search warrant was issued whereby the search has been initiated in case of the assessee. Therefore, the statement of Shri S.K Khemka is availability of other material/documentation which has come in the knowledge and possession of the AO for the first time during the course of reassessment proceedings and therefore can’t be referred to and relied upon by the AO to augment, supplement and add to the material found during the course of search in terms of the share certificates and contract notes and in terming the same as incriminating material found during the course of search in case of the assessee. The contents advanced by the ld CIT/DR therefore cannot be accepted. We are of the considered view that the addition made by the AO during the reassessment proceedings completed u/s 153A is not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act in case of the assessee. Being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search, the addition so made cannot be sustained and is hereby directed to be deleted. In the result, the ground of the assessee’s appeal is allowed.
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