No Addition u/s 153A without incriminating material found during search – Statements of third parties not sufficient: ITAT Delhi
Gulshan Investment Pvt. Ltd & others Vs JCIT (ITA No.3872/Del/2024)
Facts:
1. The core dispute involves additions made by the AO u/s 153A of the Income Tax Act, following a search & seizure operation u/s 132. The relevant assessment years range from 2013–14 to 2016–17.
2. The key legal issue across all these appeals was whether additions made u/s 153A for completed (unabated) assessment years can be sustained in the absence of any incriminating material found during the course of search at the assessee’s premises.
3. In all these cases, the assessments for the years in question had already been completed u/s 143(3), & there were no ongoing or pending proceedings at the time of search. Notably, during the search operations, no unaccounted assets, books of account, cash, jewellery, bullion, or other incriminating documents were found or seized from the premises of any of the assessees.
4. AO made additions primarily on the basis of statements recorded during the search proceedings of two third-party individuals who were alleged to be accommodation entry operators. These statements were later retracted by both individuals.
5. However, relying on those statements alone, the AO proceeded to treat the unsecured loans received by the assessees as bogus, also making consequential additions on account of interest payments & alleged commission expenses.
ITAT Delhi held as below:
1. Supreme Court in a landmark ruling in Abhisar Buildwell Pvt. Ltd. [(2023) 454 ITR 212 (SC)] had held that, in the case of unabated (i.e., completed) assessments, additions u/s 153A can only be made, if supported by incriminating material found during the search of the assessee.
2. These individuals, whose statements were recorded, had no direct connection to the assessee companies, nor were their statements corroborated by any documents or assets recovered from the assessee group.
3. Since the assessments were unabated & no incriminating material was discovered during the search on the assessee, all additions are deleted & the appeals are allowed in favour of the assessee.
The copy of the order is as under:
1744872543-94u6gz-1-TO
