Tribunal quashes invalid assessment, citing lack of incriminating material, and allows appeal.

The Tribunal found the assessment under section 153A invalid as there was no pending assessment or incriminating material discovered during the search. Citing relevant case law, the Tribunal quashed the assessment order and allowed the appeal, concluding that the assessment was legally flawed. The other issues raised were not addressed due to the invalidity of the assessment.

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Issues Involved:
1. Validity of search warrant and search on the assessee company.
2. Validity of assessment under section 153A in the absence of pending assessment and incriminating material.
3. Justification of additions made by the AO based on alleged accommodation entries.

Detailed Analysis:

1. Validity of Search Warrant and Search on the Assessee Company:

The assessee contended that the search warrant was not issued in its name but in the name of M/s. Automobiles Component (India) Ltd., which later became M/s. AGM Properties Pvt. Ltd. The search was conducted at the premises of a director, Shri Nem Chand Gupta, and not directly on the assessee company. The assessee argued that no incriminating material was found or seized during the search.

2. Validity of Assessment under Section 153A:

The assessee argued that for a valid assessment under section 153A, there must be a pending assessment or incriminating material found during the search. Since the return for AY 2013-14 was filed and assessed under section 143(1) on 15.11.2013, and no notice under section 143(2) was issued by the due date of 30.09.2014, the assessment was deemed concluded. The search conducted on 17.09.2015 did not find any incriminating material, rendering the assessment under section 153A invalid. The Tribunal referred to the Delhi High Court's decision in CIT vs. Kabul Chawala, which held that completed assessments could only be interfered with based on incriminating material found during the search.

3. Justification of Additions Made by the AO:

The AO added a current liability of Rs. 59,98,500/- and 2% commission thereon amounting to Rs. 1,19,970/- on a protective basis to the income shown by the assessee. The assessee argued that if it was involved in providing accommodation entries, the amount could not be its income but should be added to the person who obtained the accommodation entry. The Tribunal noted that no incriminating material was found during the search to justify these additions.

Tribunal's Findings:

The Tribunal concluded that the assessment for AY 2013-14 was already completed and not pending at the time of the search. Since no incriminating material was found during the search, the assessment under section 153A was invalid. The Tribunal quashed the assessment order, citing the legal position established in the Delhi High Court's decisions in CIT vs. Kabul Chawala and Meeta Gutgutia.

Conclusion:

The Tribunal allowed the appeal, holding that the assessment order was bad in law and quashed it. The other grounds raised by the assessee were not adjudicated as the assessment order itself was invalidated.

Order Pronouncement:

The order was pronounced in the open court on 19th July 2022.

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