Section 153A additions require incriminating search material for completed years; third-party statements alone were insufficient.

For completed or unabated assessment years covered by section 153A, additions can be made only on the basis of incriminating material found during search under section 132 or requisition under section 132A. Here, the additions were supported mainly by statements and third-party information, but no corroborative material was found in the assessee's search record to show that the alleged loans were accommodation entries. On that footing, third-party statements and regular books could not by themselves sustain the additions under section 153A, and the merits of the additions did not require further examination. The additions were therefore treated as beyond jurisdiction and quashed in favour of the assessee.

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Issues: Whether additions made in assessments under section 153A of the Income-tax Act, 1961 could be sustained for unabated or completed assessment years in the absence of incriminating material found during search.

Analysis: The assessments related to completed years preceding the search. The additions were founded mainly on statements and third-party information, but no corroborative material was found during the search in the hands of the assessee to show that the alleged loans were accommodation entries. The governing principle applied was that, for completed or unabated assessments covered by section 153A, the Assessing Officer acquires jurisdiction to make additions only when incriminating material is found during search under section 132 or requisition under section 132A. In the absence of such material, third-party statements or regular books and records cannot by themselves justify additions under section 153A. The merits of the additions were therefore not required to be examined further.

Conclusion: The additions made under section 153A were held to be beyond jurisdiction and were quashed, in favour of the assessee.

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