Completed search assessments cannot sustain additions without incriminating material; pure legal objections may be raised in cross objection.

A pure legal ground challenging the validity of an assessment under section 153A may be raised in cross objection even if it was not argued before the first appellate authority, because appellate powers are wide enough to admit such jurisdictional objections. In a completed search assessment, an addition cannot be sustained unless it is founded on incriminating material found during the search; where the addition of share application money under section 68 was made only from balance-sheet verification and not from search evidence, it was held unsustainable and deleted. The revenue challenge therefore failed on the merits.

---

---

Issues: (i) Whether the assessee could raise a legal ground in cross objection challenging the validity of the assessment under section 153A in the absence of incriminating material found during search. (ii) Whether the addition of share application money under section 68 could survive when no incriminating material was found during search and the assessment was a completed one.

Issue (i): Whether the assessee could raise a legal ground in cross objection challenging the validity of the assessment under section 153A in the absence of incriminating material found during search.

Analysis: The cross objection raised a pure question of law going to the validity of the addition in a search assessment. The Tribunal held that such a legal ground was not barred merely because it had not been urged before the first appellate authority. It relied on the width of appellate powers and rejected the objection that a cross objection can be entertained only if the specific issue had already been decided against the cross objector.

Conclusion: The legal ground in the cross objection was held maintainable and was admitted for adjudication.

Issue (ii): Whether the addition of share application money under section 68 could survive when no incriminating material was found during search and the assessment was a completed one.

Analysis: The addition was found to have been made only on verification of the balance sheet and not on the basis of any incriminating material unearthed in the search. Applying the settled rule that no addition can be made in respect of a completed assessment under section 153A without incriminating material, the Tribunal held that the reassessment addition was unsustainable. Once the assessee succeeded on this ground, the merits of the revenue's appeal did not survive for adjudication.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the merits of the cross objection.

Final Conclusion: The assessment addition could not be sustained in a completed search assessment in the absence of incriminating material, and the revenue's challenge failed.

Ratio Decidendi: In a completed assessment under section 153A, an addition cannot be made unless it is founded on incriminating material found during search; a pure legal challenge to that jurisdictional defect may be raised for the first time in cross objection.

---