Validity of assessment u/s 153A of the Income Tax Act, where ...

Section 153A Valid Only with Incriminating Material Found in Assessee's Premises; Errors in Income Additions Noted.

October 16, 2024

Case Laws     Income Tax     AT

Validity of assessment u/s 153A of the Income Tax Act, where material was found during the search of a person other than the assessee. It examines whether such material can be considered for assessment u/s 153A. The key points are: Section 153A assessment can only be framed based on incriminating material found during the search of the assessee's premises, not from any other person's search. The Delhi High Court's decision in Kabul Chawla's case supports this view. The addition being the difference between ITR filed u/s 153A and Section 139 was an error by the Assessing Officer, as the assessee had revised the income in the same proceedings. Regarding undisclosed income from the Bajaj Enclave Scheme, the assessee's role was limited to investing in land purchase, while others developed and marketed the project. No evidence of undisclosed profit was found at the assessee's premises. The addition of alleged bogus development expenses was incorrect, as the assessee consistently stated that the development expenses were borne by others. The addition u/s 68 for unexplained credits in the bank account was also incorrect, as the assessee provided supporting documents, and the CIT(A) had accepted the declared profit rate. The estimation of profit by the CIT(A) and adding only the profit instead of the whole.

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