Facts of the Case

A search and seizure operation under Section 132 was conducted in the case of the assessee company. Pursuant to the search, assessment proceedings were initiated under Section 153A.

The Assessing Officer completed the assessment under Section 153A read with Section 143(3), determining income at ₹78,82,390 as against the returned income of ₹30,24,550.

The assessee contended that the additions were made without any incriminating material found during the search and were based on figures already disclosed in the balance sheet.

 Issues Involved

  1. Whether additions under Section 153A can be made without discovery of incriminating material during search.
  2. Whether disclosed figures in financial statements can be reassessed in absence of new evidence.
  3. Whether the assessment order was valid in law.

  Petitioner’s (Assessee’s) Arguments

  • No incriminating material relating to the additions was found during the search.
  • Additions were made on the basis of already disclosed financial information.
  • Such action falls outside the scope of Section 153A.
  • Therefore, the assessment was illegal and liable to be quashed.

Respondent’s (Revenue’s) Arguments

  • The search triggered assessment proceedings under Section 153A.
  • The Assessing Officer was empowered to reassess total income for the relevant years.
  • The additions were justified in the context of search proceedings.

 Court Order / Findings (ITAT)

The Tribunal considered the grounds raised and the nature of additions made.

It noted that the assessee specifically challenged the additions on the basis that no incriminating material was discovered during the search and that the additions were derived from disclosed financial statements.

Important Clarification by the Tribunal

  • Search assessments are a special procedure triggered by discovery of undisclosed material.
  • Additions based solely on already disclosed records require careful legal scrutiny.
  • The scope of Section 153A depends on facts of the case and nature of evidence found during search.

 

 Link to download the order -https://itat.gov.in/public/files/upload/1652941765-141ALLD2017%20PDF.pdf

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