No additions if AO failed to show nexus between documents seized during search of third person and assessee

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No additions if AO failed to show nexus between documents seized during search of third person and assessee

[2019] 109 taxmann.com 202 (Gujarat)
IT : Where Assessing Officer made addition to assessee’s income in respect of unexplained capital gain on transfer of shares on basis of documents seized during course of search of another person, since AO failed to show nexus on basis of cogent material between documents seized and assessee, impugned addition was to be deleted
Section 153C of the Income-tax Act, 1961 – Search and seizure – Assessment of any other person (Documents seized in search) – Assessment year 2010-11 – A search and seizure operation under section 132 was undertaken at business premises of ‘S’ Ltd. in course of which documents were seized containing details of payments/receipts in respect of transactions in shares by way of cheques and cash – Assessing Officer took a view that said documents belonged to assessee – Accordingly, proceedings were initiated against assessee under section 153C and certain addition was made to assessee’s income on account of undisclosed capital gain on transfer of shares – Commissioner (Appeals) as well as Tribunal formed an opinion that it could not be conclusively established that documents seized belonged to assessee – Thus, addition made by Assessing Officer was deleted – Whether, on facts, it was necessary on part of revenue authorities to show some nexus on basis of cogent materials between documents seized and assessee – Held, yes – Whether since Assessing Officer failed to establish any such nexus, impugned addition was rightly deleted – Held, yes

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