Facts of the Case

A search and seizure operation under Section 132 of the Income-tax Act, 1961 was conducted in the case of Shri Uma Charan Gupta of Satna. Pursuant to the search, proceedings under Section 153A were initiated requiring the assessee to file returns for the relevant assessment years.

During the course of assessment, the Assessing Officer made additions treating certain amounts as undisclosed income. The assessee challenged these additions, contending that they were not based on any incriminating material discovered during the search and that the assessments for the relevant years had already been completed prior to the search.

Issues Involved

Whether additions made in proceedings under Section 153A for completed assessment years were valid in the absence of incriminating material found during the search.

Petitioner’s (Assessee’s) Arguments

The assessee argued that the additions were unsustainable as they were not supported by any material seized during the search operation. It was submitted that completed assessments cannot be reopened or reassessed under Section 153A without fresh incriminating evidence. The assessee maintained that the Assessing Officer had merely reviewed earlier records, which is beyond the scope of the provision.

 

Respondent’s (Revenue’s) Arguments

The Revenue contended that Section 153A empowers the Assessing Officer to reassess the total income of the assessee for the specified assessment years following a search. It was argued that the provision allows a fresh assessment and that the additions were validly made in accordance with law.

Court Order / Findings (ITAT)

The Tribunal examined the statutory framework governing search assessments and the material available on record. It reiterated the settled legal principle that for assessment years where proceedings had already concluded prior to the search (non-abated years), additions under Section 153A must be based on incriminating material discovered during the search.

In the absence of such material, the Assessing Officer is not justified in disturbing completed assessments. The Tribunal adjudicated the matter in light of this principle and evaluated whether the impugned additions were supported by search-related evidence.

Important Clarification

The ruling emphasizes that Section 153A does not grant unrestricted power to review concluded assessments. For non-abated years, additions must have a clear nexus with incriminating material found during the search. This principle protects taxpayers from arbitrary reassessment after search operations.

Link to download the order –

https://itat.gov.in/public/files/upload/1582195550-UMA-205.pdf

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