K.K. Tourist Home Vs DCIT (ITAT Cochin)
Conclusion: JCIT had granted proper approval after due consideration, and the additions were based on incriminating material found during the search. Tribunal held that in search assessments under section 153A, where incriminating evidence was unearthed, the additions made on such material were sustainable.
Held: Assessee was a partnership firm engaged in the business of running tourist homes. Search and seizure operations under section 132 were conducted in the business premises of assessee. In response to the notices issued under section 153A, assessee filed its return of income declaring income of ₹99,19,290. The assessment was completed by AO under section 153A at a total income of ₹1,82,69,840. AO made an addition based on the incriminating material on the sale of IMFL (Indian-Made Foreign Liquor) of ₹66,87,379, the sale of food ₹11,96,727, and the sale of beverages of ₹4,66,423. Assessee challenged the assessments before CIT (Appeals) and contended that the search assessments were invalid, that the approval granted by JCIT under section 153D was mechanical, and that the additions made were not based on any incriminating material. CIT(A) dismissed the appeals and upheld the assessments with the additions. It was held that search assessments were legally valid, JCIT had granted proper approval after due consideration, and the additions were based on incriminating material found during the search. Tribunal held that in search assessments under section 153A, where incriminating evidence was unearthed, the additions made on such material were sustainable. It rejected the plea that the JCIT’s approval was mechanical and found no infirmity in the order of the CIT(A). ITAT upheld the search assessments and sustained the order of the CIT(A).
