The Income Tax Appellate Tribunal (ITAT) held that an order passed by Assessing Officer (AO) under Section 153A of the Income-tax Act, 1961 be held bad in law in the absence of any valid search under Section 132 conducted against the assessee.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). In his detailed order the CIT(A) however did not find merit in the addition made under Section 69 of the Act and deleted the amount.
The assessee contended that the document, referred by the AO in his report, was never mentioned as incriminating in any of the notices issued under Section 142(1) or the show cause notices issued or in the order impugned. At the stage of hearing of this appeal however the AO has tried to make out altogether a new case by stating that, the assessee sold entire investments through a journal entry, and no transactions were entered through the bank. We, therefore, do not find merit in the contradictory submissions made at this stage.
The ITAT consisting of a Judicial Member, A. T. Varkey and an Accountant Member, Dr. A. L. Saini upheld the contention of the assessee and stated, “the AO simply made a sweeping remark that some of the entities enlisted in the billing trail were paper/shell companies. In our considered opinion such a general statement-making sweeping allegation was not sufficient to justify the humongous addition while framing the addition u/s 153A of the Act, which necessarily had to be based on some tangible incriminating material found in the course of search.”