The Delhi High Court while dismissing as many as 10 petitions filed by the Income Tax Commissioner held that Section 153A addition cannot be made in absence of incriminating materials found, seized at the time of search.
The appellant, Revenue stated that the ITAT has erred in confirming the orders of the Commissioner Income Tax (Appeal) and directing the Assessing Officers to delete the additions made under Section 68 of the Act on account of unexplained credits and under Section 69C of the Act on account of unexplained expenses.
Mr. Ajit Sharma, the counsel for the petitioner submitted that the ITAT has completely misread and misinterpreted the provision of Section 153A of the Act and has failed to appreciate that the mandatory provision of Section 153A of the Act requires the AO to assess the total income of six assessment years under Section 153A of the Act and this cannot be done if the scope of Section 153A is limited to only undisclosed income. He submits that the mandate under Section 153A of the Act is to issue the notice for six assessment years and assess the total income irrespective of incriminating material discovered during the search.
The appellant Revenue contends that in the present cases incriminating documents or materials had been found during the course of the searches and consequently by virtue of Section 153A of the Act, the Assessing Officer had to assess the total income of six years under Section 153A of the Act. Learned counsel further submits that the assessments were not completed under Section 143(3) in the present cases, consequently, prior to the date of search i.e. 18th June, 2013, the assessment of the respondents had not attained finality.
The division bench of Justice Manmohan and Justice Navin Chawla noted that even in the present appeals filed by the appellant/Revenue there is no specific ground that any incriminating material had been found during the search. The Tribunal’s finding that “It is an admitted fact that in the search action under Section 132 of the Act, no incriminating document/material was found and seized at the time of search and also subsequently” is correct and suffers from no perversity. Consequently, it is not open to the appellant to contend that incriminating documents or materials had been found and seized during searches.
The court opined that the questions of law raised in present appeals have been settled by earlier Division Bench in Kabul Chawla and assessment of the respondents had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search. Consequently, no addition can be made under Section 153A of the Act as the cases of respondents are of non-abated assessments.
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