Incriminating material must relate to the relevant assessment year; an assessment based on earlier-year seized documents was quashed.

An assessment under section 153C for Assessment Year 2013-14 was held unsustainable because the seized material linked only to Financial Year 2010-11, relevant to Assessment Year 2011-12. In the absence of incriminating material pertaining to the year under appeal, the assessment could not be justified merely by reference to the search proceedings. The principle applied was that separate incriminating material must exist for each assessment year. The assessment order was quashed.

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Issues: Whether the assessment under section 153C of the Income-tax Act, 1961 for Assessment Year 2013-14 could be sustained when the seized material relied upon pertained to an earlier financial year and no incriminating material was found for the year under appeal.

Analysis: The satisfaction note showed that the seized document related to Financial Year 2010-11, relevant to Assessment Year 2011-12, whereas the assessment under challenge was for Assessment Year 2013-14. In the absence of incriminating material pertaining to the year under consideration, the assessment could not be framed merely on the basis of the search action. The principle that separate incriminating material must exist for each assessment year was applied.

Conclusion: The assessment order could not be sustained and was quashed.

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