Appeals Dismissed: No Additions Under Section 153A Without Incriminating Evidence Found During Search

The court dismissed the appeals, affirming that additions or disallowances under Section 153A of the Income Tax Act, 1961, cannot be made in the absence of incriminating material found during a search. The court referenced the legal precedent set in CIT v. Kabul Chawla, which restricts interference with completed assessments unless incriminating evidence is discovered. It was noted that no such material or statements under Section 132(4) were presented by the Revenue. The court determined that prior judgments, including those from the SC and Punjab & Haryana HC, did not constitute incriminating material for the search in question.

---

---

Issues Involved:
1. Whether additions/disallowances can be made under Section 153A of the Income Tax Act, 1961 in the absence of any incriminating material found during the search.
2. The relevance of statements recorded under Section 132(4) of the Act, 1961 as incriminating material.
3. The impact of prior judgments and orders, including those of the Punjab & Haryana High Court and the Supreme Court, on the assessment orders under Section 153A.

Issue-Wise Detailed Analysis:

1. Additions/Disallowances under Section 153A in the Absence of Incriminating Material:

The court addressed whether additions or disallowances can be made in the absence of incriminating material found during a search. The court noted that both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) had quashed the assessment orders under Section 153A on the grounds that no incriminating material was found during the search conducted on 22nd September 2005. The court reiterated the legal position established in CIT v. Kabul Chawla, 380 ITR 573, which held that completed assessments can only be interfered with under Section 153A if some incriminating material is unearthed during the search. This principle has been consistently applied by this court and other High Courts in subsequent cases.

2. Relevance of Statements Recorded under Section 132(4):

The court examined whether statements recorded during the search under Section 132(4) could be considered incriminating material. The Revenue had argued that such statements could form the basis for additions or disallowances under Section 153A. However, the court noted that no such statements were produced or relied upon by the Revenue in this case. The court cited CIT v. Harjeev Aggarwal, which held that a statement recorded during the search, without reference to material found, does not empower the Assessing Officer to make a block assessment. Additionally, in cases where statements are retracted, corroborative material is required to make any additions.

3. Impact of Prior Judgments and Orders:

The court considered the relevance of prior judgments, particularly those of the Punjab & Haryana High Court and the Supreme Court, on the assessment orders under Section 153A. The court noted that the Assessing Officer did not refer to or rely upon the judgment of the Punjab & Haryana High Court in the assessment order. Furthermore, the Supreme Court's judgment rendered in 2013 could not be considered incriminating material for a search conducted in 2005. The court concluded that these judgments did not constitute incriminating material found during the search and thus could not validate the assessment orders under Section 153A.

Court's Reasoning and Conclusion:

The court concluded that the issue of whether additions or disallowances can be made under Section 153A in the absence of incriminating material found during the search is no longer res integra, following the decision in Kabul Chawla. The court found that all assessment years in question were "unabated," meaning no proceedings were pending on the date of the search. The court emphasized that the Revenue did not contend that any incriminating material was found during the search. Consequently, the court dismissed the appeals, stating that no substantial question of law arose for consideration.

Appreciation for Amicus Curiae:

The court placed on record its appreciation for the assistance rendered by Mr. Sachit Jolly, learned Amicus Curiae.

---