Case Law Details
A.P. Refinery Pvt. Ltd Vs DCIT (ITAT Chandigarh)
No Addition could be made under section 153A of Income Tax Act, 1961 in absence of incriminating material found during course of search under section 132
Conclusion: Addition under Section 153A could not be made in the absence of incriminating material found during the course of a search conducted under Section 132. In case no incriminating material was unearthed during the search, AO could not reassess taking into consideration the other material in respect of completed assessments/unabated assessments.
Held: Assessee-company was engaged in the business of manufacturing and trading edible oils. After completing the scrutiny assessment, AO passed an assessment order under Section 143(3) after effecting a disallowance of Rs. 3,00,000/- out of expenses debited to the Profit and Loss Account. When a search and seizure operation was conducted in Group Companies, including the registered office of assessee, a notice under Section 153A was issued to assessee. In response to such notice, a return of income was filed under Section 153A showing income at Rs. 15,82,649/-. Thereafter, an order was passed under Section 153A read with Section 143(3) of the Income-Tax Act. Aggrieved by the order, the assessee filed an appeal before the CIT(A), who confirmed the order. Thus, assessee filed a second appeal before the Tribunal. It was held that in case of completed assessment and not abated due to initiation of search u/s 132 or making of requisition u/s 132A, AO had to reassess the total income of the assessee and the assessment already completed could be tinkered with or distrusted where some incriminating material was found and seized during the course of search or requisition as case may be indicating undisclosed income of the assessee. Therefore, AO would assume the jurisdiction to reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return. In case no incriminating material was unearthed during the search, the AO could not reassess taking into consideration the other material in respect of completed assessments/unabated assessments. There was no linkage or nexus which had been stated or established by the AO with any such hard disk seized during the course of search as far as the determination of unaccounted sales of Rs 2,77,18,768/- and profit thereon determined at Rs 23,72,728/- which had been brought to tax. Therefore, the addition of Rs 23,72,728/- made by the AO during the reassessment proceedings completed u/s 153A was undisputedly not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act but based on other material/documentation available with the AO and being a case of completed/unabated assessment, in absence of any incriminating material found during the course of search, the addition so made could not be sustained following the dicta laid down in “Abhisar Buildwell P. Ltd.”
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
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