Tribunal quashes assessments without incriminating material, emphasizing the need for seized material

The tribunal ruled in favor of the assessee, quashing both assessments for the assessment years 2012-13 and 2013-14. It held that assessments under section 153A without incriminating material are not sustainable, deeming the assessments "abated" due to the lack of such material. The tribunal emphasized the necessity of incriminating material in search assessments and rejected the Revenue's argument to consider other material. The decision underscores the significance of seized material in determining the validity of assessments under section 153A.

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Issues involved:
Validity of impugned assessments for lack of incriminating material found or seized during search.

Analysis:
1. The judgment pertains to twin appeals for assessment years 2012-13 and 2013-14 against the assessments framed by the Asst. Commissioner of Income Tax, Central Circle - 2(3), Hyderabad, based on directions from the Dispute Resolution Panel (DRP) in Bangalore. The primary issue raised is the validity of the assessments due to the absence of incriminating material found or seized during the search conducted at the assessee's premises on 09.11.2016.

2. The assessee argued, citing relevant case laws, that assessments without incriminating material should be quashed. However, the CIT-DR contended that the Act does not mandate the presence of incriminating material for section 153A proceedings. He emphasized that the purpose is to assess or reassess the total income of the assessee, not solely based on seized material. The DRP's directions listed seized documents to support the assessments' basis on seized material.

3. After considering the arguments, the tribunal found no merit in the Revenue's stance. The assessments were deemed "abated" under section 153A(1) due to the search action following the filing of returns and TPO orders. The tribunal referenced case laws and the apex court's decision to conclude that section 153A proceedings without incriminating material are not sustainable in law. The seized material provided by the Revenue was found to be part of the assessee's books already considered in previous assessments.

4. The tribunal rejected the Revenue's argument that other material could be considered in a search assessment, as the issue at hand was the lack of incriminating material. Relying on case law and the DRP's compilation of seized material, which included expenses and details already disclosed, the tribunal ruled in favor of the assessee. Consequently, both assessments were quashed, rendering other arguments on merits irrelevant.

5. In conclusion, the tribunal allowed the assessee's appeals, ordering the quashing of both assessments. The judgment highlights the importance of incriminating material in search assessments under section 153A, emphasizing that assessments without such material are not sustainable in law.

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