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2021 (3) TMI 1113 - AT - Income TaxRectification of mistake - Assessment u/s 153A - whether no incriminating material was found as these assessments stood completed u/s. 143(3)/143(1) and were not pending on the date of search? - HELD THAT:- It is a settled proposition as laid down in the case of CIT V/s Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] that additions for the concluded and non abated assessment can be made only if there is a incriminating material found during the course of search for those years. Before us Ld. Counsel for the assessee has demonstrated through the documents placed in the paper book that Assessment Year 2003-04 to Assessment Year 2006-07 with respect to all the assessee(s) mentioned in the instant Miscellaneous Application are concluded and non abated assessments as they have either to be assessed u/s 143(3) of the Act or the time limit for issuance of notice u/s 143(2) of the Act had expired and there was no incriminating material found during the course of search with respect to Assessment Year 2003-04 to Assessment Year 2006-07 and therefore the additions made by the Ld. A.O for all these years in respect of the assessee(s) mentioned in the instant Miscellaneous Application deserves to be deleted. Looking to the peculiarity of the facts and in the interest of justice, it will be fair for both the parties, if this issue is set aside to the file of Ld. A.O for limited purpose of examining the veracity of the submissions made by the Ld. Counsel for the assessee. We accordingly order so and direct the Ld. A.O that after giving necessary and reasonable opportunity of being heard to the assessee(s), should examine, firstly as to whether any incriminating material was found during the course of search for Assessment Year 2003-04 to Assessment Year 2006-07 having any nexus with the additions made and secondly whether the Assessment Year 2003-04 to Assessment Year 2006-07 were falling under the category of concluded and non abated assessments. In case the Ld. A.O finds that Assessment Year 2003-04 to Assessment Year 2006-07 were concluded and non abated assessments and there was no incriminating material found during the course of search pertaining to these Assessment Years, in view of settled judicial precedents should not make any addition for the assessee(s) mentioned herein above and in the alternate can take necessary action as per the provisions of law. In the result first common issue raised by above captioned assessee(s) present before us, as to whether “No addition ought to have been made in respect those years where no incriminating material was found as these assessments stood completed u/s 143(3)/143(1) and were not pending on the date of search” is hereby allowed for statistical purposes. Absence of corroboration by way of independent evidence, no addition ought to have been made in respect of rough notings in the diary found in search - We find that as regards diary found relating to AY 2004-05 from the possession of the assessee Arun Sahlot, the assessee has been explaining since inception that jottings in the impugned dairy had nothing to do with actual financial transactions and it merely contained various business proposals , reminders, appointments, planning, business targets, projections etc. He filed an affidavit too before AO on oath solemnly stating that he has not made any such payments as presumed and alleged by the AO. Assessee also issued letters u/s. 131 of the Act to call the respective parties to verify the facts but the same was not done. In the statement recorded u/s. 132(4) of the Act also assessee nowhere accepted to have made any such payments alleged to have been recorded in the seized diary and he only averred that the diary contains merely work list. Despite categorical denial of any such payments by the assessee, Arun Sahlot, he was neither examined as author of the diary nor was he cross-examined as deponent of the affidavit. We take note of this very significant and important fact oozing out from AO order that the AO claims to have identified so -called recipients of the alleged payments contained in the diary by collecting their addresses and even phone numbers as narrated in his assessment order at Page 55 and 61-65 but he has neither examined any of them nor even tried to take pain to corroborate, much less corroborated, the same by way of independent evidence. Even one employee, Asim Ansari, was simultaneously searched and was simultaneously assessed by same AO and addition on account of three alleged payments to him were made in the hands of assessee - AO has also identified Asim Ansari to be the same person who was assessed by him simultaneously. But even in case of Asim Ansari also, neither he was examined by AO nor any corresponding income in the hands of the Asim Ansari, as alleged recipient, was ever made. We are of the considered view that the issue raised in Ground No.5 in the case of Arun Sahlot for Assessment Year 2004-05 needs to be set aside to the file of Ld. A.O for afresh examination. On perusal it seems that the additions are based merely on rough jottings and rough diary but still in the interest of justice and fair play we are of the view that the issue needs to be examined afresh by Ld. A.O after providing reasonable opportunity of being heard to the assessee and the Ld. A.O is also directed that in view of the settled judicial precedents and discussions herein above the addition can be made on the basis of the seized diary only if proper nexus is established and same is corroborated with relevant material. If the Ld. A.O is not able to establish any such nexus between the notings in the seized diary and the actual transaction having taken place then no addition deserves to be made and if found otherwise Ld. A.O can make addition as permissible under the law.
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