INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - No incriminating materal found during search - Unabated assessment

AO, pursuant to search conducted at assessee's premises, sought to initiate proceedings under section 153A by issuing notices under section 153A(1) read with section 143(3). Assessee challenged this by way of writ petition contending that no incriminating material was found during search. Revenue's case was that as search was conducted, there was an obligation to initiate assessment proceedings under section 153A. Even though no incriminating materials, whatsoever, was found during search. Held: Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of search, or other post-search material or information available with AO which can be related to the evidence found, it does not mean that assessment 'can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment have to be made under this Section only on the basis of seized material. Thus, it is clear that the exercise under section 153A is not to be undertaken mechanically, it does not matter that the original assessment was not completed under section 143(3) for that purpose. In assessee's case, there being absolutely no incriminating materials found or seized at the time of search, there was no justification for initiation of assessment proceedings under section 153A, therefore, writ petitions were allowed.

Relied:Pr. CIT v. Meeta Gutgutia (2017) 395 ITR 526 (Del), CIT (Central) -III v. Kabul Chawla 2015 TaxPub(DT) 3486 (Del-HC), Jai Steel (India) v. Asstt. CIT (Along with other 16 similar matters) (2013) 1 ITR-OL 371 (Raj) : 2013 TaxPub(DT) 1647 (Raj-HC) and CIT-VII v. Chetan Das Lachman Das (2012) 254 CTR (Del) 392 : 2013 TaxPub(DT) 0009 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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