Varadappan Natarajan Vs ACIT (ITAT Chennai)
Search Assessments Cannot Be Fishing Expeditions – Only Seized Material Can Trigger Additions- ITAT Chennai Quashes Additions in Search Assessment for Lack of Incriminating Material
Chennai ITAT, in the case of V. Natarajan, a Chartered Accountant & Chairman of Pavai Varam Educational Trust, quashed the additions made by AO in assessments framed u/s 153A r.w.s. 143(3) for A.Ys. 2015-16 & 2016-17, holding that no additions can be made under Section 153A without incriminating material found during search.
A search u/s 132 was conducted on 27.12.2016 at the premises of Assessee & the educational trust. For A.Y. 2016-17, Assessee had filed his original return only in July 2017, after the search. AO disallowed interest expenditure of ₹14.94 lakh, treated income of ₹38.79 lakh offered under “Other Sources” as unexplained cash credit u/s 68, & taxed it at the higher rate u/s 115BBE. Similar additions (including marriage gifts ₹24.80 lakh & loans from relatives ₹50.50 lakh) were made for A.Y. 2015-16.
CIT(A) had upheld these additions, relying on the Delhi HC decision in Amit Arora v. DCIT, holding that since the return was filed post-search, AO had jurisdiction to make additions even without seized material.
Before ITAT, Assessee relied on SC decision in PCIT v. Abhisar Buildwell (P.) Ltd. (454 ITR 178) & his own earlier years’ Tribunal orders, contending that none of the additions were based on any seized evidence but on information already available in the returns.
