Mere seizure of share certificates cannot be considered as incriminating material without any other corroborative evidences during search: ITAT, Delhi
Recently, ITAT, Delhi has held that mere seizure of share certificates cannot be considered as incriminating material without any other corroborative evidences during search. It has further held that statement recorded u/s 132(4) cannot be construed as incriminating material unless corroborated by evidences found during the search
Let us have a Short Overview of the case:
Hon’ble Income Tax Appellate Tribunal, Delhi (ITAT Delhi) in the case of Pioneer Finest Limited. (ITA No. 2148/DEL/2023, 2159/DEL/2023 and 2160/DEL/2023) vide its order dated 31st December, 2024 dismissed the appeals of the revenue for AY 2014- 15, 2015-16 and 2017-18 respectively filed by the tax department against the orders of CIT(Appeals) holding that additions made under section 68 of the Income Tax Act, 1961 (‘the Act’) based on share certificates found during the course of search are beyond the scope of Section 153C of the Act and assessment framed subsequently are held to be without jurisdiction and hence, quashed.
The issues involved in the appeal filed by the revenue were whether the share certificates found during the search along with statements of the entry operators are incriminating material in nature or not?
The Hon’ble Delhi ITAT following the decision of the coordinate bench which has also been upheld by the Hon’ble Delhi High Court in PCIT(Central) vs. Panchmukhi Management Services (P.) Ltd, ITA No. 319/2022 vide its order dated 26/09/2022 held that CIT(Appeal) committed no error in observing that merely seizure of share certificates cannot be considered as incriminating material on its own unless other corroborative evidences are found during the course of search.
Further, on the contention of the revenue that statement of the entry operator has also been made as basis for making the addition by the Ld. AO and the statement recorded u/s 132(4) of the Act is an incriminating material in nature, the Hon’ble Delhi ITAT relying on the Judgement of jurisdiction High Court in CIT vs. Harjeev Aggarwal 2016 SCC online (Del) 1512, 2016 TaxPub (DT) 1836 (Del-HC) held that statement recorded u/s 132(4) cannot be construed as incriminating material unless corroborated by evidences found during the search.
With the above observations, the Hon’ble Delhi ITAT affirmed the view of the CIT(Appeals) that additions made under section 68 of the Act under section 153C of the Act are beyond the scope of the said section and consequently dismissed the appeals filed by the revenue.
The Copy of the order is as under:
