In a concluded assessment, no addition can be made under section 153A of the Income-tax Act, 1961, unless there is specific incriminating material unearthed during the search; statements recorded under section 132(4) are insufficient as a standalone basis for addition without nexus to such evidence.

O R D E R

Per Prashant Maharishi, Vice President

1. This appeal is filed by Kayum Razak Dhanani (the assessee/appellant) for the assessment year 2015-16 against the appellate order passed by the CIT(Appeals)-15, Bangalore [ld. CIT(A)] dated 31.1.2024 wherein the appeal filed by the assessee against the assessment order passed u/s. 143(3) r.w.s. 153A of the Income-tax Act, 1961 [the Act] dated 29.12.2019 by the DCIT, Central Circle 2(2), Bengaluru [ld. AO] was dismissed confirming the addition of Rs.3,98,31,520 u/s. 56(2)(vii)(c) of the Act.

2. The assessee is aggrieved and in appeal before us.

3. The assessee has also raised additional ground of appeal as follows:-

1. The authorities below failed to appreciate that the AY 2013-14 being an unabated assessment year, no additions could have been made in the absence of the incriminating material as per the provisions of section 153A of the Act and consequently the assessment order passed u/s. 143(3) r.w.s. 153A of the Act and the additions made therein are without jurisdiction on the facts and circumstances of the case.

2. The notice issued under section 153A of the Act is bad in law in as much as it does not contain whether the ld. Assessing Officer proposes to assess or reassess the income of the appellant and consequently the notice issued under section 153A of the Act is invalid and the entire assessment proceedings is bad in law and void ab initio on the facts and circumstances of the case.

4. The learned authorised representative in prayer for admission of the additional ground submits that the authorities below failed to appreciate that the impugned assessment year 2015-16 is being an unabated assessment year and no addition could have been made in the absence of the incriminating material as per the provisions of section 153A of the act and consequently the assessment order passed under section 143 (3) of the act read with section 153A of the act and addition made therein are without jurisdiction on the facts and circumstances of the case. It was further submitted that that the impugned ground of appeal is jurisdictional, goes to the root of the matter and no fresh facts are required to be investigated and therefore should be admitted.

5. The learned departmental representative vehemently objected to the admission of the additional ground and submitted that the assessee has not raised this ground of appeal before the learned lower authorities and therefore the assessee is not now entitled to raise the same.

6. We have carefully considered the rival contention and find that the impugned ground of appeal raised by the assessee as additional ground is a jurisdictional ground which can be raised at any time during the course of the appellate proceedings if the facts are available on record and further no fresh facts are required to be investigated. It is also a fact that this is a legal ground and therefore we admit the same.

7. Thus as the additional ground goes to the root of the matter that whether the addition has been made in the hands of the assessee based on any incriminating material found during the course of search or not is a question. The basic facts recorded shows that search under section 132 of the income tax act was conducted in the case of the assessee at flat No. 502, Bengaluru on 10 January 2018 in connection with the search proceedings in the group case of M RG of hospitality group. The assessee is an i