Unabated Section 153A Assessments: additions need incriminating search material, not post-search source inquiries.

In an unabated assessment under section 153A, additions cannot be sustained unless they are based on incriminating material found during search. Here, the assessment year was treated as unabated because no assessment was pending on the date of search, and the addition rested on examination of the source of cash deposits in bank accounts of alleged paper companies, not on material discovered in the search. On that basis, the addition was held unsustainable under section 153A, and the matter was decided in favour of the assessee.

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Issues: Whether, in an unabated assessment under section 153A, additions could be sustained in the absence of incriminating material found during search.

Analysis: The assessment year was treated as an unabated year since no assessment was pending on the date of search. The addition was not founded on any material discovered during the search, but on examination of the source of cash deposits in bank accounts of alleged paper companies attributed to the assessee. In an unabated assessment, additions under section 153A can be made only on the basis of incriminating material found during search.

Conclusion: The addition could not be sustained under section 153A and the issue was decided in favour of the assessee.

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