Section 153A assessment quashed due to absence of incriminating documents and lack of jurisdiction for cross-person search material

The ITAT Amritsar quashed an assessment order passed under Section 153A and deleted additions made under Section 69A. The tribunal held that additions under Section 153A can only be made based on incriminating documents found during search, which were absent in this case. Additionally, the AO lacked jurisdiction to frame assessment under Section 153A when material was found during search of another person - such cases require proceedings under Section 153C. The assessment order was deemed without jurisdiction and quashed, with all additions deleted due to absence of incriminating material from the assessee's own search.

---

---

Issues Involved:

1. Validity of additions made under Section 69A without incriminating material.
2. Applicability of Section 153A and 153C in the context of search and seizure operations.
3. Condonation of delay in filing the appeal due to medical reasons.

Detailed Analysis:

1. Validity of Additions Made Under Section 69A Without Incriminating Material:

The primary issue was whether the additions made by the Assessing Officer (AO) under Section 69A were valid, given that no incriminating material was found during the search. The appellant argued that the additions of Rs. 454706/- and Rs. 648720/- were made based on bank statements and a CA certificate, respectively, rather than on any incriminating documents found during the search. The Tribunal noted that it is a settled law that additions under Section 153A cannot be made without incriminating documents. The Tribunal relied on precedents, including the Supreme Court judgment in Pr. CIT v. Abhisar Buildwell (P.) Ltd., which held that no additions can be made in the absence of incriminating material during search proceedings. Consequently, the Tribunal deleted the addition of Rs. 454706/- for the assessment year 2014-15, as it was not based on any incriminating material found during the search.

2. Applicability of Section 153A and 153C in the Context of Search and Seizure Operations:

Another significant issue was whether the assessment under Section 153A was valid when the material relied upon was found during a search of a third party's premises, namely M/s Golden Tulip Hospitality. The appellant contended that the proceedings should have been initiated under Section 153C, which pertains to cases where incriminating material found during a search belongs to a person other than the one searched. The Tribunal agreed with the appellant, emphasizing that the AO should have proceeded under Section 153C, as the incriminating document was discovered from a third party's premises. The Tribunal held that the assessment order under Section 153A was without jurisdiction and quashed it, thereby rendering the addition of Rs. 648720/- invalid.

3. Condonation of Delay in Filing the Appeal Due to Medical Reasons:

The appellant sought condonation of a 443-day delay in filing the appeal, citing medical reasons, including undergoing surgery and treatment at AIIMS Hospital. The Tribunal considered the affidavit and medical documents provided by the appellant, finding the reasons bona fide and constituting sufficient cause under Section 5 of the Limitation Act. The Tribunal allowed the condonation of delay, referencing supportive judgments such as Senior Bhosale Estate (HUF) v. ACIT and Shakuntala Devi Jain vs Kuntal Kumari And Ors., which emphasized the importance of condoning delays in the presence of genuine reasons.

Conclusion:

The Tribunal allowed both appeals, deleting the additions made under Section 69A due to the absence of incriminating material and quashed the assessment order under Section 153A for the assessment year 2018-19 due to jurisdictional errors. The Tribunal also condoned the delay in filing the appeal, considering the medical circumstances presented by the appellant.

---