Presence of Incriminating Material on Record: ITAT Upholds Income Tax Proceedings U/s 153A [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has upheld the initiation of income tax proceedings u/s 153A of the Income Tax Act, 1961 in view of presence of incriminating material and information on record.

Read more: Reopening of Assessments u/s 153A Not Allowed Without Incriminating Material: ITAT  

Search had taken place in the premises of the assessee on 22.01.2018 pursuant to which certain incriminating materials were seized and a notice u/s 153A was issued to the assessee. The assessee challenged the issuance of the said notice on the reasoning that no incriminating material was seized from the assessee’s premises and therefore initiation of proceedings u/s 153A was not valid in the eyes of law.

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However, the Assessing Officer completed the assessment taxing share capital and share premium aggregating to ₹1.74 cr as unexplained. On appeal, the Commissioner of Income Tax (Appeals)  [ CIT(A) ] confirmed the addition on merits. It was observed by the CIT(A) that there is existence of incriminating evidence allowing the Assessing Officer to frame assessment within the purview of Section 153A.

Read more: Income Tax Assessment u/s 153 A must be based on Incriminating Material: SC 

Counsel for the assessee, Ved Jin, Aman Garg and Ishita Jain, submitted that no assessment resulting in addition/disallowance could have been made in the absence of any incriminating material on record. Reliance was also placed on a number of decisions to support his contention. Therefore, consequential relief was prayed for by the assessee.

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Jaya Choudhary and Om Prakash, appearing for the revenue, contended that the statement recorded u/s 132(4) of the Act, 1961 constitutes as incriminating material wherein the assessee failed to explain the genuineness of the share capital and share premium. It was further submitted that in case the search would have not taken place, the truth would have never been revealed.

Read more:Addition u/s 153C of Income Tax Act without Incriminating Material is Invalid: Delhi HC

It was contended that non-existence of the assessee was itself a crucial fact and incriminating in nature. It was also the specific contention of the department that the assessee failed to bring any corroboratory material on record to contradict the finding of the CIT(A) on merits.

The bench comprising Vikas Awasthy (Judicial member) and Avdesh Kumar Mishra (Accountant Member), on a perusal of the material available on record and by placing reliance on the decision of the Hon’ble Gauhati High Court in Goldstone Cements ltd.(2022) held that there was incriminating material and information on record before the Assessing Officer.

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Thus, the findings of the CIT(A) were upheld and not interfered with. The assessment order completed in pursuance of Section 153A of the Act and the notice was held valid in the eyes of law.

Hence, the appeal of the assessee pertaining to AY 2009-10 was dismissed.

To Read the full text of the Order CLICK HERE

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