INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - No incriminating material found during search -

AO in the assessment proceeding under section 153A received information from Anti-Corruption Bureau (ACB) regarding on money received by the persons from whom the assessee purchased the land during the year under consideration. Consequently, the AO examined those persons and recorded their statements under section 131. Thus, the addition was made by the AO under section 69 on account of undisclosed investment based on the information received from ACB as well as the statements recorded under section 131 of the sellers. Assessee contended that statements recorded under section 161 of Cr.PC by the ACB of another person cannot be treated as incriminating material found during the course of search. Similarly the statement recorded under section 131 during the assessment proceedings also do not constitute incriminating material to indicate undisclosed income of the assessee. Held: In the absence of any incriminating material the completed the assessment can be reiterated while framing under section 153A. Thus, AO was not permitted to disturb the income finalized in the completed assessment dehors incriminating material while making the assessment under section 153A. The reassessment under section 153A shall have connection with something found during the search i.e., incriminating material revealing undisclosed income. Therefore, any addition or disallowance can be made only on the basis of material gathered during the search and requisition and in case had no incriminating material was found the earlier assessment would have to be reiterated while completed under section 153A. Since, in the case in hand, no incriminating material was found indicating undisclosed investment by the assessee on account of on money for purchase of agricultural land then the addition made by the AO on the basis of the information received from the ACB and consequential inquiry conducted by the AO during the assessment proceedings cannot be treated as incriminating material to justify the addition on account of on-money when the assessment was completed and not pending at the time of search.

Followed:Pr. CIT v. Meeta Gutgutia (2017) 395 ITR 526 (Del-HC) : 2017 TaxPub(DT) 1767 (Del-HC).

REFERRED : Chetan Das Lachman Das (2012) 211 Taxman 61 (Del-HC) : 2013 TaxPub(DT) 0009 (Del-HC), Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) : 2015 TaxPub(DT) 2182 (Bom-HC), Pr. CIT v. Meeta Gutgutia (2018) 257 Taxman 441 (SC) : 2018 TaxPub(DT) 4130 (SC)<;i> and Jai Steel India v. Asstt. CIT (2013) 259 CTR 281 (Raj-HC) : 2013 TaxPub(DT) 1647 (Raj-HC).