Without incriminating material, additions cannot be made to completed/unabated assessments

ACIT Vs Mansha Agencies Pvt Ltd (ITAT Mumbai)

In this case, the Income Tax Appellate Tribunal (ITAT) considered the issue of whether the Assessing Officer (AO) could make additions to assessments when no incriminating material was found during a search conducted under section 132 or requisition under section 132A. The key points are as follows:

Background: The assessment year in question was an unabated year, falling within the scope of section 153A of the Income Tax Act. No incriminating material had been discovered during the search conducted on the assessee.

Supreme Court Decision (Abhisar Buildwell Pvt. Ltd.): The Supreme Court clarified that:

• In cases of search or requisition, the AO assumes jurisdiction for block assessment under section 153A.
• All pending assessments/reassessments stand abated.
• If incriminating material is found, the AO can assess or reassess the total income, considering both the material from the search and other available information.
• If no incriminating material is found, the AO cannot make additions to completed/unabated assessments based solely on other material.
• However, the AO can still reopen completed/unabated assessments under sections 147/148, subject to conditions.

Outcome:

• Since no incriminating material was unearthed during the search, the AO could not make additions to the assessments.
• The assessment orders for the relevant years were quashed.
• The appeals filed by the Revenue were dismissed.

Conclusion: The decision reaffirms that without incriminating material, additions cannot be made to completed/unabated assessments based solely on other evidence.