INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - Absence of incriminating material -

Search and seizure proceedings under section 132(1) were carried out at the residential premises of assessee. Apart therefrom, search operations were also carried out in the case of some other concerns including BLVE wherein it was found that assessee was a substantive shareholder in the said company. Ledger account of assessee as appearing in the books of account of BLVE revealed that she had received an amount by way of cheque. AO called upon assessee to explain as to why the said loan could not be assessed as 'deemed dividend' as per the provisions of section 2(22)(e). AO held that assessee had received a loan from a company in which she had substantial interest, thus made an addition under section 2(22)(e). Held: In a case where no assessment proceedings were pending on the date of the search and seizure proceedings, assessment under section 153A can be carried out only on the basis of seized material. Where no incriminating material was unearthed during the 'course of search proceedings and assessment proceedings remain unabated as on the said date, no additions can be validly made in the hands of the assessee. Since no assessment proceedings were pending in the case of the assessee, in the absence of any incriminating material having been found in the course of such proceedings, no addition could have been validly made in the hands of assessee.

Followed:CIT v. Kabul Chawla (2015) 126 DTR (Del) 130 : (2016) 380 ITR 573 (Del) : 2015 TaxPub(DT) 3486 (Del-HC), CIT v. Murli Agro Product (Income Tax Appeal No. 36/Bom/2009 (Bom)(HC), CIT v. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom) : 2015 TaxPub(DT) 2182 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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