S. 153A can’t be invoked when Revenue got Prior Information and No Corroborative Evidence was found from Search: ITAT [Read Order]

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New Delhi bench of ITAT quashed the addition made by AO and ruled that section 153A of the Income Tax Act cannot be invoked if the Revenue got any information prior to the date of search and no corroborative evidence was found from the search.

In instant case, Assessee is an individual deriving his income from salary, short-term capital gain and income from other sources. A search and seizure action was carried out in the premises of the assessee and group cases and in pursuance to such action, notices u/s.153A were issued on for the six assessment years prior to the year in which search took place. Thereafter, in response to said notice Assessee filed the return of income declaring the same income as was shown in the original return of income.

The aforementioned additions were made from the available documents which evidencing that documents contained the name of the assessee through various entities wherein assessee was linked with these accounts in some manner or the other.

During the course of the assessment proceedings u/s 153A also, statement of the assessee was recorded which too has been reproduced by the Assessing Officer in his assessment order. On keen observation on the question answers recorded by AO it is crystal clear that no evidence regarding the HSBC account in Switzerland was found from the possession and premises of the assessee and he denied in all the questions put forth by AO and investigating authorities and finally the entire information and material was in possession of the Department prior to the date of search.

While sum-up all the findings, thereafter, AO held that the amount reflected in these bank accounts is to be taxed u/s.69. Before CIT (A) assessee had challenged the same legal issue, however, CIT (A) rejected the assessee’s explanation by holding that the statement u/s 132(4) of the Act do constitute incriminating material within the meaning of section 153A of the Act.

V.K. Bindal, the Advocate appeared on behalf of Assessee, argued that the addition which has been made by AO is bad in law since it is not based on any incriminating material found during the course of the search.

He further argued that the information as received from DTAA by the foreign authority was made available to the Department prior to the date of search and thereafter no document or any single material was found either relating to opening of foreign bank account or to link assessee with any of the bank accounts or to infer that assessee was any kind of beneficial owner in the bank account of the various entities. In order to confirm the said arguments, the counsel pressed various court’s decision regarding the same.

The Tribunal bench pressed the decision of Jurisdictional High Court and analyzed a plethora of judgments wherein legal proposition in terms of scope of addition which can be made u/s. 153A (1) are described in the order and by following that tribunal admitted that no incriminating material was found during the course of search and hold that such an addition cannot be roped in in the assessment order passed u/s 153A.

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