TaxTMI 
TaxTMI 
2025 (3) TMI 2142
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The brief facts of the case as emerging out from the assessment order are that assessee belongs to Kewal Krishan Chhabra Group of cases, Ludhiana. A search under Section 132 of the Income Tax Act was conducted on Kewal Krishan Chhabra Group on 28.11.2018. The assessee was not covered under the search operation. The ld. AO has observed that assessee has constructed a Society Cinema Complex, Society Plaza Project. He observed that during the course of search, incriminating documents, loose papers etc. were found and seized which exhibits that assessee has incurred expenditure in cash over and above the one stated in the accounts. Hence, AO has made a reference to the DVO for determining the estimated cost of construction in its projects. The ld. DVO has submitted the report and on the basis of that report, AO has worked out a difference between the cost of construction declared by the assessee vis-à-vis estimated by the DVO. On page No. 6 of the assessment order he has made a comparison between all its figures. It emerges out that in assessment year 2017-18, assessee has declared cost of construction at Rs. 6,73,75,202/- and in 2018-19 Rs. 5,81,49,284/-. The Valuation Cell ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther any documents relating to additions made by the AO have been seized/impounded or not and what is the legal position w.r.t. sections 153C of the Act. Before proceeding further, it is essential to have a look at the provisions of section 153C, which are reproduced as under: 153C(1) [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153. where the Assessing Officer is satisfied that,- (b) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the boo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as issued on 30.09.2021 to file return of income in compliance to this notice." On plain reading of this paragraph, it is seen that there is no mention of specific seized document/money/bullion/jewellery/any other valuable article, which belongs to/pertains to the appellant. The AO made addition on account of/difference in value of immoveable property as valued by the DVO and as per books of account. There is no reference of any incriminating material found during search indicating unexplained investment in immoveable properly. 5.3.3 Now this issue of scope of assessment u/s 153A of the Act has been decided by the Hon'ble Supreme Court In the case of DCIT vs. U. K. Paints (Overseas) Ltd. (2023) vide order dated 25.04.2023 in Civil Appeal No. 6634 of 2021, wherein it has been held as under: Quote As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under Section 153C of the Act are rightly set aside by the High Court. As no incriminating material was found in case of any of the Assessee e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question invoked in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs." Unquote 5.3.5 Therefore, Hon'ble Apex Court has clearly laid down the scope of assessment u/s. 153A/153C and held the pre-condition of initiation of assessment proceeding u/s 153A/153C for a particular year is the existence of seized material in that year. In case there is no incriminating material, AO cannot assess or reassess the income. 5.3.6 To summarize, the basic test of any document being qualified to be incriminating is that it must have some indication of undisclosed transaction/activity, which is not reflected in the bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly. The assessments in both the years have been passed under Section 153C of the Income Tax Act therefore, we deem it necessary to take note of relevant part of Section 153C of the Income Tax Act, which reads as under : 153C. Assessment of income of any other person.-(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account o....