2017 (7) TMI 1415 - AT - Income Tax

Assessment u/s 153A - search conducted u/s 132 on the premises of the assessee - Whether no incriminating material was found during the course of search? - HELD THAT - In the present case admittedly no assessment under section 143(3) of the Act was completed and moreover even though no incriminating materials were found during the course of search the decisions relied on by the ld. CIT(A) are not applicable. See DR. P. SASIKUMAR 2016 (7) TMI 1227 - KERALA HIGH COURT wherein held even if no documents are unearthed or any statement made by the assessee during the course of search under section 132 and no materials are received for the afore specified period of six years the assessee is bound to file a return is the scheme of the pro vision. Even though the second proviso to section 153A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under section 153A(1)(a). This being the scheme of the provisions of the Act the Appellate Tribunal ought to have considered the issue with specific reference to the facts involved in the case and as provided under section 153A. We set aside the order of the ld. CIT(A) and direct him to adjudicate the grounds raised by the assessee on merits in accordance with law after allowing sufficient opportunities of being heard to the assessee. Accordingly all the appeals filed by the Revenue are allowed for statistical purposes.

Summary

Issues Involved:
1. Jurisdiction under section 153A of the Income Tax Act.
2. Validity of additions without incriminating material found during the search.

Issue-wise Detailed Analysis:

1. Jurisdiction under section 153A of the Income Tax Act:

The Department issued a notice under section 153A following a search conducted on 15.05.2012 at the assessee's premises. The assessee filed returns for the relevant assessment years. The Assessing Officer (AO) completed assessments by making additions to the income for the years 2007-08, 2008-09, and 2010-11. The assessee contested the jurisdiction of the AO to make these additions, arguing that no incriminating material was found during the search. The Commissioner of Income Tax (Appeals) [CIT(A)] annulled the assessments, agreeing with the assessee’s contention. The Revenue appealed this decision, asserting that the AO had valid jurisdiction under section 153A following the search.

2. Validity of additions without incriminating material found during the search:

The Tribunal examined whether the AO could make additions under section 153A when no incriminating material was found during the search. The CIT(A) had annulled the assessments on the grounds that the additions were not based on any incriminating documents found during the search. The Tribunal referenced various judicial precedents, including the decision in *All Cargo Global Logistics Ltd. vs. CIT* and *Smt. Geetha Jayamurugan v. DCIT*, which held that no additions or disallowances can be made if no incriminating material is found during the search. The Tribunal noted that the AO made additions based on unsecured loans without any incriminating evidence from the search, thus supporting the CIT(A)'s annulment of the assessments.

Conclusion:

The Tribunal upheld the CIT(A)’s decision to annul the assessments for the years 2007-08, 2008-09, and 2010-11, as the additions were not based on any incriminating material found during the search. The Tribunal reiterated that the scope of assessment under section 153A is limited to assessing undisclosed income or property discovered during the search, and in the absence of such incriminating material, the AO cannot make additions to the already completed assessments. The appeals filed by the Revenue were allowed for statistical purposes, directing the CIT(A) to adjudicate the grounds raised by the assessee on merits after providing sufficient opportunities for hearing.