Assessee's Appeals Allowed, Additions Deleted for AYs 2013-14 & 2014-15

The Tribunal allowed the assessee's appeals and deleted the additions made in assessments under Section 153A for AYs 2013-14 and 2014-15 as there was no seized material available, ruling that the additions were not sustainable based on various judicial decisions.

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Issues Involved:
1. Whether additions can be made in assessments passed under Section 153A without any incriminating material found during the course of search relating to the relevant assessment years.

Issue-wise Detailed Analysis:

1. Whether additions can be made in assessments passed under Section 153A without any incriminating material found during the course of search relating to the relevant assessment years:

The primary issue in both assessment years (AYs 2013-14 and 2014-15) is whether additions can be made in assessments passed under Section 153A of the Income Tax Act, 1961, without any incriminating material found during the course of search.

The assessee filed returns declaring total income at Rs. 38,11,850/- and Rs. 6,30,000/- for AYs 2013-14 and 2014-15, respectively. Scrutiny assessments were passed on 28.03.2016 and 26.12.2016. A search under Section 132 was conducted on 12.09.2017 in the GPT Group of cases, leading to the issuance of notices under Section 153A. The Assessing Officer (AO) determined the taxable income at Rs. 3,41,07,970/- and Rs. 60,65,410/- for AYs 2013-14 and 2014-15, respectively.

The assessee's counsel argued that the AO did not reference any seized material and investigated unsecured loan transactions as if passing a regular assessment order under Sections 143(3) or 147. The counsel contended that this is not a searched year, and additions should not be made in this manner, relying on various judicial decisions.

The CITDR argued that numerous documents were found and seized during the search, and the AO followed correct procedures by investigating specific points from these documents.

The Tribunal considered rival contentions and the record, emphasizing the legal position on Section 153A as established in various authoritative judgments. The Tribunal referred to the Delhi High Court's decision in CIT Vs. Kabul Chawla, which summarized the legal position:

i. Notice under Section 153A(1) must be issued mandatorily after a search, requiring returns for six AYs preceding the search year.

ii. Pending assessments on the search date shall abate, and total income for such AYs must be recomputed afresh.

iii. The AO can assess and reassess the total income for the six years preceding the search year in separate orders.

iv. Although Section 153A does not mandate additions strictly based on search evidence, assessments must have relevance or nexus with seized material.

v. In the absence of incriminating material, completed assessments can be reiterated, and abated assessments or reassessments can be made.

vi. Only one assessment shall be made for each AY based on search findings and other material on record.

vii. Completed assessments can be interfered with under Section 153A only based on incriminating material found during the search.

The Tribunal also referred to other judicial decisions, including the ITAT Delhi Bench's decision in DIT Vs. Smt. Shivali Mahajan and others, which held that assessment under Section 153A must be based on seized material. Material recovered from another person's premises cannot be used for the searched person's assessment; instead, Section 153C or 147 should be invoked.

In the present case, the AO made references to unsecured loans from different entities, which were already part of the accounts and subject to scrutiny in previous assessments. The Tribunal found no specific material authorizing the AO to undertake assessment proceedings under Section 153A for these years. Therefore, the Tribunal concluded that the additions were not sustainable, relying on the legal position established in various judicial decisions.

Consequently, the Tribunal allowed the assessee's appeals and deleted the additions made without any seized material available for the relevant assessment years.

Order pronounced in the open court on 18th April, 2022.

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