Search assessment under section 153A upheld, but gift additions were remitted for fresh verification of genuineness and donor creditworthiness.

In a search assessment under section 153A, the Assessing Officer may reopen and verify six preceding assessment years where seized gift deeds and affidavits are found and the earlier returns were only processed under section 143(1). On those facts, the Tribunal upheld invocation of section 153A. However, where the genuineness of the gifts and the creditworthiness of the donors had not been properly examined, and summons under section 131 were not issued to the donors, the gift-related addition was set aside and remitted for fresh verification after giving the assessee an opportunity of hearing.

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Issues: (i) Whether proceedings and additions under section 153A could be sustained in the search assessments; (ii) whether the addition made towards gifts received by the assessee required fresh verification.

Issue (i): Whether proceedings and additions under section 153A could be sustained in the search assessments.

Analysis: Section 153A authorises assessment or reassessment of the total income of six assessment years immediately preceding the search year. In the present facts, gift deeds and affidavits were found and seized during search, and the earlier returns had only been processed under section 143(1), without scrutiny verification. The Tribunal held that in such circumstances the Assessing Officer was competent to invoke section 153A and verify the gifts in the search assessments.

Conclusion: The challenge to the section 153A proceedings failed, and the action of the Assessing Officer was upheld.

Issue (ii): Whether the addition made towards gifts received by the assessee required fresh verification.

Analysis: Although the assessee relied on the seized gift declarations, the Tribunal found that the Assessing Officer had not examined the donors by summons under section 131 and that the assessee had also not fully discharged the burden of proving the genuineness of the gifts and the creditworthiness of the donors. In the interests of justice, the gift issue was directed to be examined afresh by the Assessing Officer after giving the assessee an opportunity of hearing.

Conclusion: The addition on account of gifts was set aside and remitted for de novo consideration.

Final Conclusion: The search assessment was sustained, but the gift-related addition was not finally affirmed and was sent back for fresh adjudication, resulting in partial relief to the assessee.

Ratio Decidendi: In a search assessment under section 153A, the Assessing Officer may verify disclosed gifts where seized material is found, but where the genuineness and creditworthiness of the gifts remain unverified, the issue may be remitted for fresh examination.

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