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Facts
A search under Section 132(1) was conducted on the assessee, after which the AO issued a notice under Section 153A and made three additions concerning contract receipts, discrepancy in transfer of assets to a retiring partner, and sub-contractor charges without TDS. The assessee had filed its return of income, which matched its original return under Section 139(1).
Held
The Tribunal held that the additions were not based on any incriminating material found during the search, making them unsustainable. The AO had incorrectly treated the assessment as a regular assessment under Section 143(3), despite the original return having attained finality, and the time limit for regular assessment under Section 143(2) had expired.
Key Issues
Whether additions made under Section 153A, in the absence of incriminating material discovered during a search, are valid, particularly when the period for regular assessment had already elapsed.
Sections Cited
132(1), 153A, 139(1), 143(3), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
VIRTUAL HEARING O R D E R PER RAJPAL YADAV, VP The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 23.12.2024 passed for assessment year 2013-14.
The assessee has taken three substantial grounds of appeal wherein it has pleaded that ld.CIT (Appeals) has A.Y.2013-14 2 erred in confirming the addition of Rs.9,40,781/-, Rs.3,99,178/- and Rs.15,94,975/-. 2.1. The ld. counsel for the assessee has raised an additional ground of appeal wherein he has pleaded that assessment order has been passed u/s 153A but ld. AO has not referred any incriminating material in the assessment order, therefore, additions are not sustainable in view of latest judgement of the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. 454 ITR 212.
3. The brief facts of the case are that a search u/s 132(1) was carried out at the premises of the assessee on 19.11.2018. In order to give logical end to the proceedings, ld. AO has issued notice u/s 153A of the Act. The assessee has filed its return of income on 08.02.2020 declaring total income of Rs.5,40,970/- which is equivalent to the amount declared by it in the return u/s 139(1) of the Income Tax Act filed on 27.09.2013. The ld. AO has made three additions to the total income of the assessee. These additions are ; a) According to the AO, assessee had contract receipts from M/s Sandalwood Infratech Pvt. Ltd.
A.Y.2013-14 3 In such contract receipts, there is a discrepancy between the receipts recognized by the assessee vis-à-vis by the payer. Hence, he worked out such difference at Rs.9,40,781/- and made the addition. b) One of the partners of the assessee Shri Hari Om Sharma retired from the partnership. He has 1/3r d share and his account was settled. According to the AO, assessee has claimed that shuttering material amounting to Rs.8,05,021/- was transferred to the retiree partner whereas in the books of account, assets transferred are only of Rs.4,05,843/-. The difference has been added by the AO. c) There was expenditure of Rs.15,94,975/- with respect to sub-contractor charges. According to the AO, TDS was not deducted on such payments, hence, addition deserved to be made.
On due consideration of the above all three items, we are of the view that they are the items of regular assessment. None of the addition has been made on the A.Y.2013-14 4 strength of any incriminating material found during the course of search. The AO has visualized the return of income and its accounts as if he was passing a regular assessment u/s 143(3) of the Income Tax Act. Such additions cannot be made to the total income of the assessee without the support of any incriminating material discovered during the course of search. The time limit to issue notice u/s 143(2) expired long back before the search has taken place at the premises of the assessee, hence this return attained finality and it could only be abated if any incriminating material was found during the course of search. Therefore, we allow the appeal of the assessee and delete the additions made by the AO and confirmed by the CIT (Appeals).
In the result, appeal is allowed.
Order pronounced on 16.03.2026.