Appeal allowed due to lack of incriminating material, deletions under sections 153A & 143(3) upheld. Judiciary

The appeal was allowed as no incriminating material was found during the search operations, leading to the deletion of additions under section 153A read with section 143(3). The ITAT upheld the assessee's plea based on the jurisdictional High Court's binding precedent, emphasizing that additions cannot be made in the absence of such material. The decision was pronounced on October 21, 2022.

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Issues Involved:
1. Whether any addition can be made in an assessment under section 143(3) read with Section 153A in the absence of any incriminating material found during the course of search operations.

Issue-wise Detailed Analysis:

1. Absence of Incriminating Material for Addition under Section 153A:
The primary issue in this appeal is whether, in the absence of any incriminating material found during the search operations, any addition can be made in an assessment under section 143(3) read with Section 153A. The assessee, a company engaged in construction and development, was subjected to search operations by the income tax department, leading to a fresh return filing under section 153A. The Assessing Officer (AO) required the assessee to furnish details supporting the credibility and genuineness of share transactions with two Mauritius-based entities. Despite the assessee providing necessary details, the AO added receipts from these entities as unexplained credit under section 68, citing similar additions in the case of a sister concern, Luxora Realtors Pvt Ltd.

2. Jurisdictional High Court's Binding Precedent:
The learned counsel for the assessee argued that the issue is covered by a coordinate bench decision in the case of Luxora Realtors Pvt Ltd, where similar facts were involved. The CIT(A) had previously allowed the appeal on the ground that no incriminating material was found during the search, which was upheld by the ITAT. The revenue's appeal against this decision was based on the argument that under section 153A or 153C, the AO can make additions on any issue, irrespective of whether incriminating material was found during the search.

3. Conflicting Decisions of Non-Jurisdictional High Courts:
The revenue relied on several non-jurisdictional High Court decisions, such as CIT v. Raj Kumar Arora (Allahabad), E.N. Gopakumar v. CIT (Kerala), and others, which supported the view that additions can be made even in the absence of incriminating material. However, the jurisdictional Bombay High Court's decision in CIT v. Continental Warehousing & All Cargo Global Logistics, which favored the assessee, was binding. The ITAT noted that while non-jurisdictional High Court decisions have persuasive value, they do not override the binding precedent set by the jurisdictional High Court.

4. Legal Precedent and Binding Nature:
The ITAT emphasized that the binding nature of the jurisdictional High Court's decision remains intact unless overturned by a higher judicial forum. The mere pendency of an appeal against a binding judicial precedent does not dilute its binding nature. The ITAT, therefore, upheld the assessee's plea, following the jurisdictional High Court's judgments in Continental Warehousing and All Cargo Global Logistics, and deleted the impugned additions.

Conclusion:
The appeal was allowed on the ground that no incriminating material was found during the search operations, and therefore, no additions could be made under section 153A read with section 143(3). The ITAT did not find it necessary to deal with the merits of the additions, as the jurisdictional issue was decisive. The decision was pronounced in open court on October 21, 2022.

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