SHIV SHAKTI OIL MILLS,KAITHAL, HARYANA vs. ITO, WARD-1, KAITHAL, HARYANA

In compliance with the directions issued under section 263 of the Act, the Assessing Officer initiated fresh proceedings and ultimately framed the impugned assessment under section 143(3) r.w.s. 263 read with section 144B of the Act vide order dated 31.03.2022, wherein an addition of Rs.9,96,000/- was made under section 68 of the Act treating the same as unexplained cash credits.

Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, upheld the action of the Assessing Officer and dismissed the appeal of the assessee.

The assessee is now in further appeal before the Tribunal.

We have heard the rival submissions and perused the material available on record. The assessee has raised Ground No.1 challenging the validity of the assessment proceedings initiated under section 143(3) r.w.s. 153A of the Income Tax Act in the absence of any incriminating material found during the course of search. Before us, the Ld. The authorised Representative submitted that the assessment was originally framed under section 143(3) r.w.s. 153A had attained finality and no incriminating material pertaining to the impugned addition was found during the course of search proceedings. It was 4 913 to 915/CHD/2025 contended that the addition made by the Assessing Officer is not based on any material seized during search but merely on the basis of certain investigation inputs and statements, which cannot constitute incriminating material within the meaning of section 153A of the Act. It was further submitted that though the impugned assessment has been framed pursuant to the order passed under section 263 and technically passed under section 143(3)/144B of the Act, the very foundation of the proceedings arises from section 153A and therefore the settled law governing assessments under section 153A squarely applies. Accordingly, it was argued that in absence of any incriminating material relating to the year under consideration, the addition made by the Assessing Officer is liable to be quashed.

On the other hand, the Ld. Departmental Representative relied upon the orders of the lower authorities and submitted that the Assessing Officer had passed the impugned assessment in compliance with the directions issued by the Ld. Pr. CIT under section 263 of the Act and therefore the addition has been rightly made.

We have considered the rival submissions and examined the record. It is an undisputed fact emerging from the record that the original assessment for the Assessment Year 2012-13 was completed under section 143(3) r.w.s. 153A vide order dated 07.12.2018 accepting the returned income of the assessee. The said assessment

However, from the perusal of the assessment order as well as the material placed before us, it is evident that the addition made by the Assessing Officer is not based on any incriminating material found during the course of search proceedings. The addition has been made merely on the basis of investigation inputs and the statement of an alleged entry operator. It is now well settled that in respect of completed assessments falling within the scope of section 153A of the Act, no addition can be made in the absence of incriminating material found during the course of search. The Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. has clearly held that in respect of completed assessments, additions under section 153A can be made only on the basis of incriminating material found during the search.

In the present case, the assessment for the year under consideration had already attained finality and the Revenue has not 6 913 to 915/CHD/2025 brought on record any incriminating material found during the search relating to the impugned addition of Rs.9,96,000/-. In such circumstances, the Assessing Officer was not justified in disturbing the completed assessment while framing the assessment in consequence of the order passed under section 263 of the Act.

In view of the above discussion and respectfully following the settled legal position, we hold that the addition made by the Assessing Officer in the impugned assessment order is not sustainable in law. Accordingly, the legal Ground No.1 raised by the assessee is allowed and the impugned assessment order is liable to be quashed.

Since we have allowed the appeal of the assessee on the legal ground challenging the validity of the assessment itself, the remaining grounds raised by the assessee on merits become academic and therefore do not require adjudication.

In the result, the appeal of the assessee is allowed.