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2020 (10) TMI 789 - AT - Income TaxAssessment u/s 153A - undisclosed income of partner in assessee firm - incriminating material found in the course of search which belong or relate to the assessee or not? - satisfaction recorded by the AO before proceeding to invoke the provisions of section 153C in the case of assessee is not in accordance with law - protectively assessing the income in the hands of the Assessee - HELD THAT:- Scope of making assessment of total income u/s.153C of the Act in an unabated assessment proceedings is limited and can be only of assessing income that is not disclosed which is detected or which emanates from material found in the course of search of some other person and which relate to the Assessee. Since the impugned addition of disallowance of expenses are not based on any incriminating material found during the course of search, the additions are liable to be deleted. As far as the addition made on protective basis for AY 2008-09 to 2010-11 are concerned, the said addition was made not on the basis of any incriminating material found in the search of K.Mahesh Kumar which relate to the Assessee and therefore the said addition can also not be sustained as it is contrary to the provisions of Sec.153C - no basis for protectively assessing the income in the hands of the Assessee and substantively in the hands of K.Mahesh Kumar. There is no material to show that the income declared by K.Mahesh Kumar is either his income or that of the Assessee. From the fact that K.Mahesh Kumar was a Partner in the Assessee firm it cannot be concluded that the income declared by K.Mahesh Kumar in his hands was either his income or the income of the partnership firm in which he was a partner. The declaration of income by K.Mahesh Kumar is in his hands and not in the hands of the Assessee firm in his capacity as partner. Differences in the credits in the bank account which have to be regarded as undisclosed business receipts, such differences in the credits in the bank account was not found as a result of search in the case of K.Mahesh Kumar. Since the additions are deleted on merits, we do not wish to address the arguments made by the learned counsel for the Assessee that the condition precedent for initiating proceedings u/s. 153C of the Act have not been satisfied in the present cases and therefore the assessment is liable to annulled - Decided against revenue.
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