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of <h1>Appellate Tribunal rules addition under sec 153A Income Tax Act unsustainable without incriminating material</h1> <h3>M/s. Prasad & Company Projects Works Versus DCIT, CC-1, Hyderabad.</h3> M/s. Prasad & Company Projects Works Versus DCIT, CC-1, Hyderabad. - TMI Issues Involved:Validity of proceedings initiated under section 153A of the Income Tax Act.Analysis:1. The appeals were filed against a common order related to assessment years 2004-05 and 2005-06, involving six common grounds of appeal. The legal issue of the validity of proceedings initiated under section 153A was raised by the assessee.2. The search and seizure operation under section 132 led to the issuance of a notice under section 153A to the assessee for returns of income. The Assessing Officer (AO) disallowed a loss claimed by the assessee on the sale of investments, treating it as a capital loss and adding it back to the total income.3. The assessee challenged the validity of the assessment under section 153A, arguing that no seized incriminating material was found during the search. The assessee contended that the assessment was not based on any incriminating material and therefore was invalid in law.4. The CIT (A) upheld the validity of the proceedings under section 153A, leading to the appeal before the Appellate Tribunal. The assessee maintained that the loss claimed was reflected in the books of account and the return filed during the regular assessment under section 143(3).5. The Appellate Tribunal observed that the addition made under section 153A was based solely on the books of account and not on any incriminating material found during the search. It was emphasized that a search assessment requires incriminating material for undisclosed income determination, distinct from regular assessment.6. The Tribunal held that without any incriminating material found during the search, the addition made under section 153A was unsustainable in law. As a result, the appeals were allowed on the legal issue, rendering other grounds of appeal academic and not adjudicated upon.This detailed analysis of the judgment provides a thorough understanding of the legal issues involved and the Tribunal's decision regarding the validity of proceedings initiated under section 153A of the Income Tax Act.
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