Lack of Incriminating Material in 153C Proceedings: ITAT upholds CIT(A)'s Decision to quash Assessments [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[CIT(A)]'s decision to quash the assessment finding no incriminating material in the 153C proceedings.

The Revenue-appellant filed an appeal against the  order passed by the CIT(A) dated 30.6.2023.In the case of Kohli Tent House, respondent-assessee,a search was conducted under Section 132 on 03.05.2018 by the Investigation Wing, New Delhi, covering the assessee, including Shri Sanjeev Kohli and Shri Sunit Goel.

During the assessment, the Assessing Officer ( AO ) found that some seized material related to the assessee. On 09.02.2021, the AO transferred the material to the AO of the assessee. The AO then added Rs. 2,57,57,240/- for suppressed business receipts and completed the assessment, determining the income at Rs. 2,62,84,080/- under Section 153C on 08.10.2021.

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The assessee appealed to the CIT(A), who, on 30.06.2023, decided in their favor. The CIT(A) observed that the AO’s addition was based on documents from Assessment Year(AY) 2016-17 and 2017-18, with no incriminating material or evidence found during the search for the relevant year. It was also noted that no seized material or statements supported the addition for that assessment year.

The Revenue aggrieved by the order of the CIT(A) appealed before the tribunal.

The two member bench comprising Yogesh Kumar US ( Judicial Member ) and Shamim Yahya ( Accountant Member ) noted that the CIT(A), in the order dated 30.06.2023 for AY 2013-14, found no incriminating material related to the year in question. The AO’s addition was based on documents from AY 2016-17 and 2017-18, and no seized material or statements supported the addition for AY 2013-14.

The tribunal observed that the CIT(A)’s decision aligned with the Supreme Court ruling in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., which held that, without incriminating material, proceedings under Section 153C are invalid. Following this precedent, the tribunal upheld the CIT(A)’s decision  to quash the assessment and dismissed the Revenue’s appeal.

In short the appeal filed by the revenue was dismissed.

To Read the full text of the Order CLICK HERE

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