2026 (4) TMI 53 - HC - Income Tax

Section 153A additions to completed assessments require incriminating material found during search; absent it, additions fail.

Section 153A does not permit additions to completed or unabated assessments unless incriminating material is found during search. Where the relevant ... Scope of assessment u/s 153A in completed or unabated assessments - Requirement of incriminating material for additions in search assessments HELD THAT: - As decided in GURINDER SINGH BAWA [2015 (10) TMI 1761 - BOMBAY HIGH COURT] in similar situation, categorically held that once the assessment has attained finality for a particular year i.e. it is not pending, then it cannot be subject to tax in proceedings under Section 153A of the Act. The Court recorded that Revenue did not dispute the absence of any incriminating material found in the search against the assessee. It held that the legal position stood settled by the decisions of this Court and by the Supreme Court that, once an assessment has attained finality and is therefore unabated, the Assessing Officer cannot make additions in proceedings under section 153A in the absence of incriminating material unearthed during search. The Court also noted that section 153A does not make any distinction between assessments earlier processed under section 143(1) and those completed u/s 143(3). As the Tribunal had followed this settled position in deleting the additions, no error or illegality was found in the impugned order. [Paras 5, 6, 7, 8, 9] Final Conclusion: The Court held that, in the absence of any incriminating material found during search, no addition could be made under section 153A in respect of completed or unabated assessments for the years in question. The Revenue's appeals were therefore rejected, with liberty remaining governed by law in respect of any separate recourse under sections 147/148 as noticed in the precedents. Issues: Whether additions could be made under section 153A of the Income-tax Act in respect of completed or unabated assessments when no incriminating material was found during search.Analysis: The assessments for the relevant years had attained finality and were not pending on the date of search. No incriminating material was found during the search to support the additions. The settled position, as affirmed by binding precedent and the Supreme Court, is that section 153A does not permit disturbance of completed assessments in the absence of incriminating material. The mere fact that some assessments were framed under section 143(1) and others under section 143(3) did not alter the legal position, and the pendency of an SLP against an earlier High Court decision did not justify departure from binding jurisdictional law.Conclusion: The additions were not sustainable under section 153A and the Revenue's challenge failed.Ratio Decidendi: In respect of completed or unabated assessments, no addition can be made under section 153A in the absence of incriminating material found during search.