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Completed Assessments Can Be Interfered With Only On The Basis Of Incriminating Material Unearthed During Course Of Search: ITAT
Mariya Paliwala
20 July 2022 8:00 PM IST
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that completed assessments could be interfered with by the AO while making an assessment under section 153A only on the basis of some incriminating material unearthed during the course of search. If in relation to any assessment year, no incriminating material was found, no addition or disallowance could be made in...
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that completed assessments could be interfered with by the AO while making an assessment under section 153A only on the basis of some incriminating material unearthed during the course of search. If in relation to any assessment year, no incriminating material was found, no addition or disallowance could be made in relation to that assessment year in the exercise of powers under section 153A of the Income Tax Act.
The two-member bench of Astha Chandra (Judicial Member) and Anil Chaturvedi (Accountant Member) has observed that the assessment for AY 2013-14 was already completed prior to the date of search. The scope of proceedings under section 153A had to be confined only to material found in the course of the search.
The department conducted the search on September 16, 2018. A warrant of authorisation was issued in the name of the assessee, M/s. Automobiles Component (India) Ltd., which is now known as M/s. AGM Properties Pvt. Ltd. The search was carried out at the premises of Nem Chand Gupta, who was a director of the assessee company.
The notice under section 153A of the Income Tax Act, 1961 was issued on 02.09.2016 and served, requiring the assessee to file its return. A Notice under section 143(2) was issued to fix the hearing. The assessee asked for a copy of the panchnama stating that no search has ever been conducted in respect of the company AGM Properties Pvt. Ltd. Therefore, notices under sections 153A and 143(2) were unwarranted. The AO gave a copy of Panchnama and intimated that a warrant of authorisation was issued in the name of the erstwhile company M/s. Automobile Component (India) Ltd. and that the proceedings under section 153A had validly been taken.
However, the assessee did not file a return and the AO proceeded to complete the assessment ex-parte. He computed the total income by adding the current liability of Rs. 59,98,500 and 2% commission on a protective basis to the income shown as per return. The AO completed the assessment under section 153A read with section 144 of the Income Tax Act.
The assessee filed an appeal before the CIT (A). The assessee contended that the warrant of search and the actual search were not on the assessee company. In fact, the search took place in the case of Nem Chand Gupta. During the course of searching, there was no seizure at all of any cash, jewellery, or any other valuable article or thing, or any books of account or documents, and even then, assessment under section 153A has been completed.
The CIT (A) extracted the observations of the AO made in the assessment order and gave the finding that he did not find an infirmity in the order of the AO.
The ITAT found that during the course of the search, no incriminating material whatsoever was found and seized. The assessment under section 153A can be carried out only on the basis of seized material.
Case Title: AGM Properties P. Ltd. Versus ACIT
Citation: ITA No. 305/Del/2019
Dated: 19.07.2022
Counsel For Appellant: Advocates Rakesh Gupta, Somil Agarwal, Deepesh Garg
Counsel For Respondent: CIT(DR) Ishtiyanque Ahmed
