The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) held that no addition can be made under section 153A of the Income Tax Act,1961 in the absence of seizure of any incriminating materials during search and seizure proceedings.
Rigid Conductors (Raj.) Pvt. Ltd, the appellant assessee was a private limited company and filed cross objections against the appeals of revenue for supporting the addition made by the assessing officer under Section 153A of the Income Tax Act in respect of the assessments which were completed before the date of search, except based on some incriminating material unearthed during the search which was not already disclosed.
S. R. Sharma and R. K. Bhatra, the counsels for the assessee contended that the assessee’s company was not carrying any business and the land acquired by the assessee was agricultural land and the capital gain was not attracted when the acquisition was made. It was also submitted that the assessee was regularly filling out the Income Tax Report and had disclosed the impugned land document and related expenses in the books of the assessee company.
The counsels for the assessee further contended that the supreme court in a decision uphold the finding that the scope of Section 153A of the Income Tax Act was limited to assessing only search-related income based on incriminating materials. It was also submitted that the assessment already completed can only be done when any incriminating materials were found during search proceedings and thus the law did not permit again relook of the assessment already completed.
Ajay Malik and Runi Palthe, the counsels for the revenue contended that the assessee had earned long-term capital gain during the year under consideration and the same was not disclosed by the assessee in its return of income (ROI) and was added to the total income of the assessee.
The bench observed that there was no incriminating material unearthed in the search proceeding to substantiate the addition as made in the assessment order. It was also observed that in the search no incriminating materials were found by the assessing officer who was not empowered to make any addition to the total income of the assessee.
The two-member bench comprising Dr. S. Seethalakshmi (Judicial) and Rathod Kamleh Jayantbhai (Accountant) held that in the absence of any incriminating material found or seized during search and seizure proceedings, the additions made by the assessing officer during reassessment under section 153A of the Income Tax Act are without jurisdiction and liable to be deleted while allowing the cross objections filed by the assessee.
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