Abated search assessment allows fresh claims, but deductions and valuation additions still require verification and evidence.

In an abated search assessment under section 153A, fresh deduction claims may be raised, but entitlement to deductions such as 32AC and 80JJAA must still be verified on facts, so the claims were remanded for examination. A revised deduction under section 80IA based on corrected captive power purchase rates and internal CUP was allowed to be recomputed on verified figures. A disallowance under section 14A could not be added to book profit under section 115JB, so that adjustment was deleted. Valuation-based and cash-loan related additions, including alleged brokerage, interest and estimated undisclosed profit, were either restored for fresh valuation or deleted where they rested on conjecture or uncorroborated material.

---

---

Issues: (i) whether fresh claims for deduction under sections 32AC and 80JJAA could be entertained in the search assessment under section 153A in respect of an abated assessment and whether the claims required fresh verification; (ii) whether the revised computation of deduction under section 80IA based on corrected captive power purchase rates and internal CUP could be allowed; (iii) whether disallowance under section 14A could be added back while computing book profit under section 115JB; (iv) whether additions based on difference between stated sale consideration and market value of land, and additions for alleged cash loans, interest, brokerage and estimated undisclosed profit, could be sustained.

Issue (i): whether fresh claims for deduction under sections 32AC and 80JJAA could be entertained in the search assessment under section 153A in respect of an abated assessment and whether the claims required fresh verification.

Analysis: The assessment had abated on the date of search, so the return filed under section 153A was to be dealt with as a regular return and fresh claims were not barred merely because they were not made in the original return. At the same time, the entitlement to deduction under sections 32AC and 80JJAA depended on verification of the underlying facts and evidence, which the appellate record showed was incomplete or required examination at the assessment stage. The proper course was therefore to restore the matters for factual verification rather than finally accept or reject the claims on the existing record.

Conclusion: The claims were held to be capable of being raised, but both issues were remanded to the Assessing Officer for fresh verification and decision.

Issue (ii): whether the revised computation of deduction under section 80IA based on corrected captive power purchase rates and internal CUP could be allowed.

Analysis: The revised rates were examined in remand, and the Assessing Officer accepted the correctness of the corrected average purchase rates. Once the benchmarked rates were verified, a selective acceptance of the revised computation only where it reduced the claim, while refusing the revised figures where they increased the claim, was unsustainable. The deduction under section 80IA had to be recomputed on the basis of the verified figures for all eligible captive power plants.

Conclusion: The matter was set aside and restored to the Assessing Officer to verify the revised figures and allow the deduction accordingly.

Issue (iii): whether disallowance under section 14A could be added back while computing book profit under section 115JB.

Analysis: For computation of book profit under section 115JB, the adjustment could not be enlarged by importing a disallowance made under section 14A. Book profit was required to be computed in accordance with the MAT framework and the statutory adjustments alone, and the impugned disallowance did not form part of the permissible additions to book profit.

Conclusion: The addition to book profit on account of section 14A disallowance was deleted.

Issue (iv): whether additions based on difference between stated sale consideration and market value of land, and additions for alleged cash loans, interest, brokerage and estimated undisclosed profit, could be sustained.

Analysis: The land valuation addition required proper valuation support and the matter was directed to be examined afresh with DVO valuation. As to the alleged cash-loan transactions, the additions for interest and brokerage were found to rest on seized material from a third party and on statements and retractions, but the record did not establish the cash component with the certainty needed for a tax addition. The further estimate of undisclosed profit at 8% was pure conjecture without corroborative material. In another connected matter, a stray cash expense was held to stand telescoped against the undisclosed trading activity already assessed in the hands of the related concern.

Conclusion: The land-value issue was restored for fresh valuation, the additions for alleged cash-loan interest and brokerage were deleted, the estimate of undisclosed profit was deleted, and the telescoped cash-expense addition was deleted.

Final Conclusion: The assessee obtained substantial relief, the revenue's appeals failed, and the surviving issues were either deleted or sent back for fresh verification, leaving the proceedings finally concluded in a manner partly favourable to the assessee.

Ratio Decidendi: In an abated search assessment, new claims may be raised under section 153A, but deductions and valuation-based additions must be sustained only on verified evidence; book-profit computation under section 115JB cannot be enlarged by a section 14A disallowance, and additions based only on conjecture, uncorroborated third-party material, or selective acceptance of verified figures cannot stand.

---