‘Beyond Scope’ of Section 153A: ITAT quashes Assessment Order [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order passed beyond the scope of Section 153A of the Income Tax Act, 1961.

In this case, the deceased assessee, Ghanshyam Das Agarwal, was an individual running an export business under the name and style of M/s. Bharat Export. It's vital to note that the group has another corporate company, M/s. Navbharat Exports Pvt. Ltd., owned by Uttam Kumar Agarwal, who is the son of the above mentioned assessee, and Rita Agarwal, who is the wife of the assessee, and the assessee’s daughter-in-law are the directors of the above mentioned company.

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The assessee had filed his Income Tax Return under Section 139(1) of the Income Tax Act, 1961   for Assessment Years (AY) 2010-11 and 2012-13 on 15.10.2010 and 29.03.2013, declaring a loss of Rs. 4,01,96,196/- in A.Y. 2010-11 and income of Rs. 15,07,080/- in A.Y. 2012-13.

The Income Tax Department conducted a search and seizure under Section 132 of the Income Tax Act on March 24, 2015.

A notice was subsequently issued by the AO under Section 153 A of the Income Tax Statute on 22.06.2016 and while passing the assessment order, additions were also made to it.

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Aggrieved by the orders of the AO and the Commissioner of Income Tax (Appeals) [CIT(A)], the representatives of the deceased assessee had approached the Income Tax Appellate Tribunal.

One of the major issues raised by the assessee was that the AO's addition of Rs. 7,56,94,789/- to the assessee's accounts towards sundry creditors in the hands of the assessee was not justified on the ground that the said figure was not being reflected in the books of Navbharat Exports (P) Ltd. in the assessment.

The counsel for the assessee contended that the  Supreme Court in the case of Abhisar Buildwell (P) Limited had propounded that additions under Section 153A could only be made on the basis of seized material found during the course of search.

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The bench, consisting of Rajpal Yadav (Vice President) and Rakesh Mishra (Accountant Member), held that after the judgment of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P) Limited, these additions are not sustainable. The ITAT bench allowed the appeals in favor of the assessee and deleted the additions disallowance of losses made by the AO in all three assessment orders as they were passed beyond the scope of Section 153A of the Income Tax Act, 1961.

To Read the full text of the Order CLICK HERE

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