Incriminating material in search assessments governs additions, while section 153C jurisdiction may survive under binding later precedent.

In search-related assessments of completed years, additions were examined against the requirement of incriminating material found during search. The article notes that the Tribunal upheld the validity of section 153C proceedings, following later jurisdictional High Court authority, despite an earlier coordinate bench view. It also states that a deemed-dividend addition under section 2(22)(e) could not be sustained where the alleged loans and advances were already disclosed in audited accounts and no fresh incriminating material was found. The resulting position described is that the section 153C jurisdiction survived, while the deemed-dividend addition was deleted for want of incriminating material.

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Issues: (i) Whether the assessments framed under section 153C of the Income-tax Act, 1961 were unsustainable for want of incriminating material found during search. (ii) Whether the addition made as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 could survive in the absence of incriminating material.

Issue (i): Whether the assessments framed under section 153C of the Income-tax Act, 1961 were unsustainable for want of incriminating material found during search.

Analysis: The additions pertained to completed assessment years. The Tribunal noted that completed assessments can be disturbed only on the basis of incriminating material found during search. On the facts, the material relied upon by the Assessing Officer consisted of details already reflected in the audited financial statements and no fresh incriminating document was shown to have been found during search to justify the disputed additions. The Tribunal also held that the earlier coordinate bench view based on the searched-person argument did not survive in view of the later jurisdictional High Court decision.

Conclusion: The assessments under section 153C were held to be valid, and the Revenue succeeded on this issue.

Issue (ii): Whether the addition made as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 could survive in the absence of incriminating material.

Analysis: The Tribunal found that the alleged loans and advances were already disclosed in the companies' balance sheets and audited accounts. Since no incriminating material was found during search to support the deemed-dividend addition, and the completed assessments could not be disturbed on ordinary material already available on record, the addition could not be sustained.

Conclusion: The addition under section 2(22)(e) was deleted, in favour of the assessee.

Final Conclusion: The Revenue succeeded on the jurisdictional validity of the section 153C proceedings, but the deemed-dividend additions were deleted for want of incriminating material, resulting in a partly allowed appeal.

Ratio Decidendi: In search-related assessments of completed years, additions can be sustained only on the basis of incriminating material found during search, while jurisdiction under section 153C is not vitiated merely because a contrary earlier view exists when a later binding jurisdictional precedent holds otherwise.

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