It is not open for AO to make additions while framing assessment u/s 143(3) merely on basis of seized documents beyond period of limitation u/s 153A: ITAT

THE issue is - Whether it is open for the AO to make additions while framing an assessment u/s 143(3) merely on the basis of seized documents beyond the limitation period provided u/s 153A. NO is the answer.   

Facts of the case

The assessee is an associate of BPTP group of companies. A search and seizure operation was conducted at premises of M/s BPTP wherein, the assessee was not covered. Therefore, no proceedings u/s 153A was initiated against the assessee. However, while framing the assessment u/s 143(3) for the AY 2007-08, the AO utilized the seized documents of M/s BPTP Ltd. and made an addition on account of brokerage and unaccounted transactions. Another search was carried out and the same was also concluded. Thereby, notice u/s 153A was issued to the assessee pursuant to which, it returned income for the relevant AY and submitted detailed questionnaire. After considering the submissions of the assessee to the detailed questionnaire, the AO repeated the addition that was made u/s 143(3) and passed the order u/s 153A. On appeal, the CIT(A) granted partial relief to the assessee.

On appeal, the Tribunal held that,

++ the assessee is not covered by the search dated 15.11.2007 and no proceedings u/s 153A or 153C were initiated against the assessee. However, while framing the assessment u/s 143(3), the AO made use of the documents that were unearthed during the search dated 15.11.2007. It is an admitted fact that the limitation to use the documents seized under the search dated 15.11.2007 had already been expired. While the matter stood thus, there was another search u/s 132 of the Act between 7.12.2010 and 5.2.2011, but no documents in respect of the assessee was found. Nevertheless, the AO initiated the proceedings u/s 153A of the Act and concluded them by order dated 31.12.2009;

++ the assessee contends that the Revenue circumvented the procedure established under law by conducting another search merely to make use of the documents found on 15.11.2007 which otherwise could not have been used against the assessee because of law of limitation u/s 153B. Revenue does not contradict the contention of the assessee that in spite of search between 7.12.2010 and 5.2.2011, nothing incriminatory was found against the assessee and for the purpose of order dated 28.3.2018 u/s 153A, the documents relatable to the search dated 15.11.2007 are made use of;

++ therefore, it is clear that no addition is made in the order dated 28.3.2013 over and above the addition made in the order dated 31.12.2009 u/s 143(3). The AO simply repeated the additions made in the order dated 31.12.2009. In these circumstances, we are of the considered opinion that it is a fit case to be remanded back to the AO to take a fresh view subject to the result of the appeal against the order dated 31.12.2009 by the appellate forums. Hence, we remand the matter to the file of the AO to take a proper view depending upon the result of the appeals preferred against the order dated 31.12.2009 u/s 143(3).