ITAT Upholds CIT(A) Order, Deletes Additions u/s 153A Citing Lack of Incriminating Material Post-Search [Read Order]

The Income Tax Appellate Tribunal (ITAT) Chandigarh ruled in favor of the assessee and upheld the order of the Commissioner of Income Tax (Appeals) CIT(A), deleting the additions made under Section 153A of the Income Tax Act, 1961. The tribunal stated that the additions were not justified as there was no incriminating material found during the search proceedings. The ruling followed the precedent set by the Hon’ble Supreme Court in PCIT vs. Abhisar Buildwell Pvt. Ltd., which held that in cases where assessments were completed before the search, additions could only be made if incriminating material was discovered during the search.

The case involved multiple appeals and cross-objections related to assessments carried out under Section 153A following a search conducted on November 15, 2017, on the Scott Edil group of cases. The appeals were filed by the Revenue against the deletion of additions made in the assessments of Sanjeev Aggarwal, residing at Plot No. 1057, Industrial Area, Phase-II, Chandigarh, and  Vishali Aggarwal, residing at House No. 2273, Sector 21-C, Chandigarh. The Revenue argued that digital data seized during the search, specifically Annexures A-10 and A-7, contained incriminating material justifying the additions. However, CIT(A) ruled that these digital records did not constitute incriminating material and could not be the basis for reassessment. The CIT(A) also observed that since the assessments for AYs 2012-13, 2013-14, 2015-16, and 2016-17 were already completed before the search, the additions could not be sustained in the absence of new incriminating material.

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During the ITAT hearing, Parikshit Aggarwal and Shruti Khandelwal represented the assessee, while K. Mehboob Ali Khan, CIT DR, appeared for the Revenue. The tribunal reviewed the evidence and upheld the CIT(A)’s findings. The bench, consisting of Sanjay Garg (Judicial Member) and Krinwant Sahay (Accountant Member), stated that reassessments under Section 153A must be based on new incriminating material found during the search. The Bench emphasized that the Revenue could not reopen completed assessments without substantial evidence discovered during search operations.

As a result, all appeals filed by the Revenue were dismissed, and the cross-objections filed by the assessee were deemed infructuous. The ruling reinforces the principle that completed assessments cannot be reopened arbitrarily and highlights the importance of adhering to legal requirements for reassessments under Section 153A.

To Read the full text of the Order CLICK HERE

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