Revenue cannot interfere with concluded assessments under section 153A without incriminating material from search operations

ITAT Delhi held that Revenue cannot interfere with concluded assessments under section 153A without incriminating material from search operations. The tribunal found additions/disallowances were made solely based on witness statements from different search proceedings, without reference to specific incriminating documents. Following SC precedent in Abhisar Buildwell and HC decision in Anand Kumar Jain, the tribunal ruled that such statements lack reliability without cross-examination opportunity. All additions/disallowances in unabated assessments were quashed in favor of assessee due to absence of incriminating material.

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Issues Involved:
The judgment involves issues related to the jurisdiction of the Assessing Officer under section 153A of the Income Tax Act, 1961, and the legitimacy of additions/disallowances made under this section based on incriminating material found during a search and seizure operation.

Summary of the Judgment:
Issue 1: Jurisdiction under section 153A of the Act
The appeals arose from assessment orders passed by the Assessing Officer under section 153A/143(3) of the Income Tax Act, 1961. The assessee challenged the jurisdiction of the Assessing Officer under section 153A towards the additions/disallowances made. The Tribunal examined the preliminary objections raised by the assessee regarding the legitimacy of these additions/disallowances made under section 153A.

Issue 2: Legitimacy of Additions/Disallowances
A search and seizure operation was conducted, and assessments were carried out under section 153A read with Section 143(3) of the Act, resulting in certain additions/disallowances. The assessee argued that the additions were made solely based on a statement recorded under section 132(4) of the Act of a third party, which did not have any connection with incriminating material found during the search. The assessee contended that the assessments were concluded prior to the search and stood unabated, making it impermissible for the Assessing Officer to invoke authority under section 153A to make routine examinations without any link to incriminating material.

Issue 3: Legal Interpretation and Precedents
The Revenue argued that the Assessing Officer was entitled to rely on incriminating statements recorded during a parallel search under section 153A. The Tribunal analyzed the legal contentions raised by both parties and referred to relevant case laws, including the judgment in Abhisar Buildwell (P.) Ltd. The Tribunal concluded that in the absence of incriminating material in the unabated assessments, the additions/disallowances made by the Assessing Officer required to be quashed.

Conclusion:
Based on the legal principles established in relevant case laws, the Tribunal allowed all the appeals of the assessee, ruling in favor of quashing the additions/disallowances made under section 153A due to the lack of incriminating material found during the search operation.

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