Absence of Incriminating Material for order u/s 153A of the Income Tax Act: Delhi HC dismisses Appeal [Read Order]

A Division Bench of the Delhi High Court dismissed appeal in the absence of incriminating material for an order passed under Section 153A of the Income Tax Act, 1961. The respondent in the present appeal is M/s PGF Ltd.

The appeal has been filed by the Appellant-Revenue, challenging the consolidated order passed by the Income Tax Appellate Tribunal (ITAT), whereby the ITAT has upheld order passed by the Commissioner of Income Tax (Appeals) (CIT(A)) quashing the assessment order passed under Section 153A of the Income Tax Act, 1961 for the respective Assessment Years pursuant to the search carried out at the premises of the Respondent-Assessee under Section 132 of the Income Tax Act, 1961.

Both the appellate authorities, CIT(Appeal) and the ITAT have returned concurrent findings of fact that no incriminating material was found during the search conducted, warranting assessment under Section 153A of Income Tax Act, 1961.

The Appellant– Revenue submitted that it is not necessary that incriminating material is found during search under Section 132 of the Income Tax Act, 1961 for an order under Section 153A of the Income Tax Act, 1961 to be passed even where original assessments have attained finality and have not abated.

Sachit Jolly, the Amicus Curiae submitted that in terms of Section 153A(1) of the Income Tax Act, 1961 where search is initiated under Section 132 of the Income Tax Act, 1961 assessments for six assessment years preceding the date of search may be reopened and completed under that Section and stated that no addition under Section 153A can be made in the absence of incriminating material found during the search, particularly where original assessments have already concluded.

Dismissing the appeal, the Bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “It is to be noted that the Appellant-Revenue has not placed reliance or even referred to any statement recorded under Section 132(4) of the Income Tax Act, 1961. No such statement has been produced before this Court. Therefore, in the facts of the present case, the issue does not arise for consideration unless it can be demonstrated by the Appellant-Revenue that the statements recorded under Section 132(4) disclose some incriminating material on the basis of which orders under Section 153A have been passed.”

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