Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(ITAT) 21552

INCOME TAX APPELLATE TRIBUNAL (BANGALORE BENCH)
Waseem Ahmed, Accountant Member, Soundararajan K, Judicial Member
Gopal Shashidhara – Appellant
Versus
Dy. Commissioner of Income Tax – Respondent
ITA No.748/Bang/2025 | ITA No.749/Bang/2025 | ITA No.750/Bang/2025 | ITA No.751/Bang/2025 | ITA No.752/Bang/2025 | ITA No.753/Bang/2025 | ITA No.754/Bang/2025

Advocates:
For the Appellants/Petitioners: B.S Balachandran, Ankur Pai Dhungat
For the Respondents: Balusamy N

In unabated assessments under Section 153A of the Income Tax Act, no additions can be sustained without incriminating material found during a search. Furthermore, an assessment order not authenticated by the Assessing Officer's signature is void ab initio.

Headnote:(A) Income Tax Act, 1961 - Section 132A - Section 153A - Section 69A - Section 131 - Search and seizure - Addition in completed assessment - Requirement of incriminating material - In the absence of incriminating material, no addition can be made in completed/unabated assessments - Mere statement of assessee without corroborating evidence does not constitute incriminating material. (Paras 8.1, 8.2, 11, 16)

(B) Income Tax Act, 1961 - Abated assessment - Scope of assessment - In an abated year, the Assessing Officer has jurisdiction to examine returned income and make additions irrespective of incriminating material. (Para 16.1)

(C) Income Tax Act, 1961 - Assessment order - Validity - An assessment order must be authenticated by the signature of the Assessing Officer - An unsigned assessment order is void ab initio. (Para 35.1, 35.3)

Facts of the case:
The assessee challenged several additions made by the Assessing Officer under the head 'Income from House Property' and 'Unexplained cash', originating from search and seizure operations. The assessee contended that for unabated assessment years, no addition could be made without incriminating evidence, while for abated years, specific grounds regarding the merits and validity of the signed order were challenged.

Findings of Court:
The Tribunal noted that for completed/unabated assessments, additions solely based on the assessee's statement were unsustainable in the absence of incriminating material. For abated years, additions were upheld if the assessee failed to reconcile income as per rent agreements. Furthermore, the assessment order for the final assessment year was quashed for being unsigned.

Issues: Whether additions made in assessments under Section 153A were sustainable without incriminating material and whether an unsigned assessment order is valid.

Ratio Decidendi: Following the settled law in Abhisar Buildwell (P) Ltd, no addition is permissible in completed assessments u/s 153A unless corroborated by incriminating material found during search. An assessment order lacking the signature of the officer is invalid and void ab initio.

Result: Appeals partly allowed.

Table of Content
1. assessment additions require incriminating material in completed assessments. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. additions in unabated search assessments are unsustainable without incriminating evidence. (Para 8 , 11)
3. abated assessments permit additions regardless of incriminating material found. (Para 13 , 16)
4. unreconciled income differences in abated assessments justify additions. (Para 17 , 18 , 19 , 20 , 21 , 22)
5. unexplained cash must be taxed in the correct financial year under section 69a. (Para 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30)
6. an assessment order must be signed to be legally valid. (Para 32 , 33 , 34 , 35)

O R D E R

PER BENCH :

1. These appeals are filed by the assessee against the order of the CIT(A) – 11, vide order dated 27/01/2025 for the assessment years from 2013-14 - 2019-20.

2. The assessee in ground Nos. 2 to 4 has challenged the additions made by the AO under the head house property amounting to ₹ 2,67,400.00 in the absence of incriminating document found during the search under section 132A of the Act.

3. The AO noticed that cash of ₹16,95,100/- was seized during the search. In his statement u/s 131 of the Act, the assessee admitted that he had been earning rental income of ₹50,000 to ₹55,000 per month for the last 6–7 years. However, in the return filed u/s 153A of the Act, the assessee declared only ₹1,52,600/- as income from house property. The AO concluded that the assessee had understated his rental income, estimated annual rental income at ₹6,00,000/-, allowed standard deduction of ₹1,80,000/-, and made an addition of ₹2,67,400/- only to the total income of the assessee.

4. On appeal, the ld. CIT(A) confirmed the addition. He observed that the assessee himself admitted to a higher rental income in the statement recorded and failed to furnish rent agreements or receipts. Hence, the AO’s reliance on the statement and estimation of income was justified.

5. Being aggrieved by the order of learned CIT-A, the assessee is in appeal before us.

6. The learned AR submitted that the addition was made without any incriminating material. Apart from the cash seizure, no documents were found in the search to prove that the assessee had undisclosed income. The AO relied only on the assessee’s statement u/s 131 of the Act, which cannot by itself be treated as incriminating evidence. The ld. AR placed reliance on:

• CIT v. IBC Knowledge Park (P) Ltd (2016) 385 ITR 346 (Kar.)

• CIT v. Veerprabhu Marketing Ltd (2016) 388 ITR 574 (Cal.)

• PCIT v. Golden Goenka Fincorp Ltd (2023) 148 taxmann.com 313 (Calcutta)

• Pr. CIT v. Best Infrastructure (P) Ltd (2017) 397 ITR 82 (Delhi)

• PCIT v. Abhisar Buildwell (P) Ltd (2023) 454 ITR 212 (SC)

7. It was stressed that Hon’ble Supreme Court in the case of Abhisar Buildwell (SC) has settled the law that no addition can be made in respect of completed assessments unless incriminating material is found. The learned DR, in reply, submitted that the cash seizure and the assessee’s own statement clearly show that he was earning higher rental income than what was disclosed. The assessee failed to produce rent agreements or evidence to support the lower income offered in the return. Therefore, the AO was justified in making a reasonable estimate based on the statement, and the ld. CIT(A) was correct in confirming the same.

8. We have carefully considered the rival submissions of both the parties and perused the materials available on record. It is an admitted fact that except for the assessee’s statement, no incriminating documents were found during search to establish undisclosed rental income.

8.1 The Hon’ble Supreme Court in PCIT v. Abhisar Buildwell (P) Ltd (2023) 454 ITR 212 (SC) has categorically held that in respect of completed/unabated assessments, no addition can be made in the proceedings u/s 153A unless based on incriminating material found during the course of search. A statement recorded without corroboration does not constitute incriminating materi

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