Additions made in completed assessments under section 153A of the Income Tax Act must be solely based on incriminating material discovered during the search operation; otherwise, such additions are beyond the legal scope of the said provision and must be deleted.

O R D E R

PER NIKHIL CHOUDHARY, A.M.:

These three appeals have been filed by the assessee against the various orders of the ld. CIT(A)-3, Lucknow, all dated 27.06.2023, wherein the ld. CIT(A) has dismissed the appeals of the assessee against orders passed by the Assessing Officer under section 153A r.w.s. 143(3) of the Income Tax Act for the assessment years 2011-12, 2012-13 and 2013-14. The grounds of appeal in the three assessment years are as under:-

A.Y. 2011-12

“1. BECAUSE "certain rough noting of expenses" (para 3.2 of the assessment order) cannot be said to be "incriminating material so to enable the assessing officer to initiate proceedings under section 153A of the Income-tax Act, 1961 (hereafter referred to as Act for brevity) therefore the entire proceedings right from initiation to passing of the assessment order deserves to be declared as null and void.

2. BECAUSE of Ground No.1 above entire variation of Rs.23,88,198/- made up as under:

in the assessment order dated 21.12.2015 passed under section 153A r.w.s. 143(3) of the Act is outside the scope of additions/variations that can be made under section 153A of the Act and therefore is entirely bad in law and on facts of the case.

WITHOUT PREJUDICE TO ABOVE

3 BECAUSE the authorities below have erred in law and on facts in making addition towards alleged difference in turnover of Rs.7,07,588/- worked out as under:

as undisclosed income of the assessee.

4. BECAUSE without prejudice to Ground No. above, CITA after having accepted that the books of accounts of the appellant had been subjected to audit under section 44AB of the Act should have applied appellant's disclosed Net Prof Rate of 1.99% on alleged difference in turnover of R.7,8-re had erred in law and on facts in confirming the entire dance in turnover of Rs.7,07,58- as undisclosed income of the appellant.

5. BECAUSE the authorities below have erred in law and on facts in making extra profit addition of Rs.36,50,630/-by applying the Net Profit Rate of 4.50% vis a vis 1.95% disclosed by the appellant in the audited books of accounts.

6. BECAUSE extra profit addition of Rs.16,50,610/- is wholly bad in law and on facts of case as the authorities below have failed to bring on record any comparable case so as to enable them to adopt Net Profit Rate of 4.50% on adhoc basis vis-à-vis the rate of 1.99% disclosed by the appellant.

7. BECAUSE without prejudice to Ground No.3 & 6 above, looking to the history of the appellant extra profit addition of Rs. 16,80,610/- by applying the Net Profit Rate of 4.50% on adhoc basis is much too high and excessive.

8. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice.”

A.Y. 2012-13

“1. BECAUSE "certain rough noting of expenses" (para 3.3 of the assessment order) cannot be said to be "incriminating material" so to enable the assessing officer to initiate proceedings under section 153A of the Income-tax Act, 1961 (hereafter referred to as Act for brevity) therefore the entire proceedings right from initiation to passing of the assessment order deserves to be declared as null and void.

2. BECAUSE of Ground No. 1above entire variation of Rs. 5,98,210/- made up as under:-