Search Assessments Valid as Approved by JCIT: ITAT says Additions were made Based on Incriminating Materials [Read Order]

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the search assessments search assessments framed under section 153A of the Income Tax Act, 1961 and dismissed the assessee’s appeals challenging the validity of the proceedings, the approval of the Joint Commissioner of Income Tax (JCIT), and additions linked to incriminating material seized during the search operations.

Also Read: No Merit in Assessee’s Objection of Lack of Hearing Opportunity u/s 144A: ITAT Upholds Income Tax Assessment on Best Judgment by AO

The assessee-appellant, K.K. Tourist Home, is a partnership firm engaged in the business of running tourist homes. The search and seizure operations under section 132 were conducted in the business premises of the assessee for the Assessment Years (AYs) 2009-10 to 2012-13.

In response to the notices issued under section 153A, the assessee filed its return of income declaring income of ₹99,19,290. The assessment was completed by the Assessing Officer (AO) under section 153A at a total income of ₹1,82,69,840. The AO made an addition based on the incriminating material on the sale of IMFL (Indian-Made Foreign Liquor) of ₹66,87,379, the sale of food ₹11,96,727, and the sale of beverages of ₹4,66,423.

The assessee challenged the assessments before the Commissioner of Income Tax (Appeals) ( CIT(A) ) and contended that the search assessments were invalid, that the approval granted by the JCIT under section 153D was mechanical, and that the additions made were not based on any incriminating material.

The CIT(A) dismissed the appeals and upheld the assessments with the additions.

The Bench, comprising Sonjoy Sarma (Judicial Member) and Inturi Rama Rao (Accountant Member), observed that the search assessments were legally valid, the JCIT had granted proper approval after due consideration, and the additions were based on incriminating material found during the search.

The Tribunal held that in search assessments under section 153A, where incriminating evidence is unearthed, the additions made on such material are sustainable. It rejected the plea that the JCIT’s approval was mechanical and found no infirmity in the order of the CIT(A).

Also Read: ITAT Dismisses Revenue’s Appeals in Absence of Incriminating Material in Unabated Assessments, Upholds Deletion of S.68 Additions of ₹ 2.71 Cr

Accordingly, the ITAT upheld the search assessments and sustained the order of the CIT(A).

The assessee was represented by Arun Raj S, while the Revenue was represented by Veni Raj.