By TIOL News Service

AHMEDABAD, MAR 01, 2017: THE ISSUE IS - Whether additions while framing assessment u/s 153(A) for the block period can be made only after considering incriminating material found during search. YES is the verdict.

Facts of the case:

The assessee filed a return for which a warrant of authorization was issued and proceedings u/s 153A were initiated. The AO made additions on the basis of the incriminating material found during the search conducted. The assessee preferred an appeal before the CIT(A), who confirmed the additions made by the AO. The case went to the Tribunal, who deleted the additions made u/s 153(A).

On appeal, the HC held that,

++ it is to be noted that u/s 153A, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A and the earlier assessment shall have to be reiterated. The court followed as in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax. Besides, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of Income-tax-1 v. Jayaben Ratilal Sorathia, wherein it has been held that while it cannot be disputed that considering section 153A, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. Therefore, it cannot be said that the tribunal committed any error in deleting the additions made under section 153(A) and/or any substantial question of law arise.

(See 2017-TIOL-402-HC-AHM-IT)