No addition can be made on completed assessment in absence of Incriminating Material found during course of Search: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Chennai bench held that no addition could be made on completed assessment in absence of the incriminating material found during the course of search.

Assessee, S. Tulasidoss Nedunselian assessee is a managing director of one company M/s. STN Properties Ltd. The assessee has filed his original return of income for all assessment years under Section 139 of the Income Tax Act  search and seizure.

When a search operation under section 132 of the Income Tax Act , was conducted on the residential premises of the assessee he Income-Tax Act. consequent to the search Notice issued  under Section 153A of the Income Tax Act,  and the assessee has filed his return of income on

The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee had made cash deposits into a bank account.  Therefore, the AO called upon the assessee to explain the nature and source for said cash deposits. Assese explained the nature of cash deposits.

However, without considering the explanation AO made addition towards cash deposits as unexplained money under Section 69A of the Income Tax Act.

Aggrieved by the order, the assessee filed an objection   before the Commissioner of Income-tax (Appeals) [CIT(A)].

Before the CIT(A), the assessee made submission on the issue of jurisdiction of the Assessing Officer in assessing cash deposits as unexplained money under Section  69A of the Income Tax Act.

The CIT(A) dismissed the appeal of the assessee . Therefore the assessee  filed another appeal before the tribunal.

Before the bench, K.G. Raghunath, counsel for the assessee submitted that in respect of completed assessment /unabated assessment no addition can be made by Assessing Officer in absence of any incriminating material found during the course of search under Section 132 of the Act or requisition under Section  132A of the Income Tax Act.

Further the counsel for assessee   referring to assessment order for the assessment years 2011-12 to 2015- 16 submitted that, the assessment for assessment years 2011-12 to 2015-16 are completed/ unabated as on the date of search.

Thus Since, the assessments are unabated /concluded as on the date of search, in absence of any incriminating material found as a result of search, no addition could be made.

Clement Ramesh Kumar, Counsel for the revenue argued that as per the provisions of section 153A of the Act, when search is conducted, the AO shall have power to assess or reassess the total income of six assessment years immediately preceding the assessment year, in which search takes place and said assessment proceeding is not dependent on incriminating material or otherwise found during the course of search. 

The tribunal observed that in respect of completed assessment/unabated assessment, no additions can be made by the Assessing Officer in absence of any incriminating material found during the course of search under Section 132 of the Income Tax Act or requisition under Section 132A of the Income Tax Act.

After considering  the facts submitted by both parties, the two member bench of Manjunatha. G (Accountant Member) and  V. Durga Rao (Judicial Member) observed that the assessment for the assessment years 2011-12 to 2015-16 are unabated /concluded as on the date of search, no addition can be made in the assessment framed under Section 153A of the Income Tax Act, without any incriminating material found as a result of search.

To Read the full text of the Order CLICK HERE

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