CLR Editorial Notes: In the Assessement Year 2005-06, the Assessing Officer passed an intimation u/s 143(1) accepting the return from an assessee as filed. Subsequently, there was a search u/s 132. The Assessing Officer noticed that an amount of Rs. 93 lakhs was received by the assessee as a loan in earlier years had been treated as a gift and credited to the capital account. He eventually passed an assessment order u/s 153A in which he held that the said amount was assessable as a cash credit u/s 68. The CIT(A) partly confirmed this addition in the said assessment. The assessee argued before the Tribunal, that no incriminating material was found during the search and hence the addition could not be made u/s 153A. The Tribunal upheld this plea and held:
In All Cargo Global Logistics 137 ITD 287 (Mum)(SB), the Special Bench held that in a case where the assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. However, in a case where the assessment has not abated, an assessment u/s 153A can be made only on the basis of incriminating material (i.e. books of account & other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search). On facts, as the assessment was completed u/s 143(1) and the time limit for issue of s. 143(2) notice had expired on the date of search, there was no assessment pending and there was no question of abatement. Therefore, the addition could be made only on the basis of incriminating material found during search. As the addition u/s 153A was made on the information/material available in the return of income (i.e. the information regarding the gift was available in the return of income as capital account had been credited by the assessee by the amount of gift) and not on the basis of any incriminating material found during the search, the AO had no jurisdiction to make the addition u/s 153A.
Case Files Available for download