2024 (2) TMI 1199 - AT - Income Tax

Section 153C assumption invalid without seized material showing assessee's unaccounted income, additions deleted following Abhisar Buildwell precedent

Vidhya Devi C/o M/s. RRA Tax India Versus DCIT Central Circle Noida

ITAT Delhi held that assumption of jurisdiction under section 153C was invalid where seized material disclosed no unaccounted income of the assessee. The ... Validity of assumption of jurisdiction u/s. 153C - additions challenged on the ground that they are not based on any incriminating material - whether addition seized material does disclose any unaccounted/ undisclosed income of the assessee? HELD THAT:- Admittedly, in the assessment order the AO has not made any addition with reference to seized material. In fact, said seized material does not disclose any unaccounted/ undisclosed income of the assessee. Therefore, in our view, assumption of jurisdiction u/s.153C of the Act based on such document is invalid. Even, otherwise now it is fairly well settled that in case of unabated assessment no addition can be made in absence of incriminating material found during the search and seizure operation. As discussed earlier, the only incriminating material referred to in the satisfaction note is the trust deed of PGP charitable trust. Though, in the assessment order the AO has made a number of additions, however, none of them are with reference to the incriminating material referred to in the satisfaction note. Whereas, the additions are based on some other material. Thus, case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] squarely applies to the facts of the present case. Therefore, considering the totality of facts and circumstances of the case, we hold that not only the assumption of jurisdiction u/s.153C is invalid, but, the additions made are unsustainable as they are not with reference to any incriminating material. Accordingly, we delete the additions. Decided in favour of assessee. Issues involved:The validity of assumption of jurisdiction under section 153C of the Income Tax Act and the challenge to additions made without any incriminating material.Jurisdictional Issue:The appeal by the assessee challenged the validity of assumption of jurisdiction under section 153C of the Income Tax Act, contending that no incriminating material belonging to the assessee was found. The satisfaction note only referred to a trust deed not related to the assessee, rendering the assumption of jurisdiction invalid. The AO did not identify the assessment year to which the seized material relates, leading to vague initiation of proceedings. The Hon'ble Supreme Court's decision in Singhad Technical Society was cited in support of the contention.Additions without Incriminating Material:The additions made by the AO were challenged as not based on any incriminating material referred to in the satisfaction note. The only incriminating material mentioned was the trust deed of PGP charitable trust, which did not disclose any undisclosed income of the assessee. Despite several additions in the assessment order, none were linked to the incriminating material. Citing the Supreme Court's decision in Abhisar Buildwell Private Limited and DCIT Vs. U. K. Paints, it was argued that the additions were unsustainable without reference to incriminating material.Judgement:The ITAT Delhi held that the assumption of jurisdiction under section 153C of the Act was invalid as it was based on a trust deed not related to the assessee. In cases of unabated assessment, no additions can be made without incriminating material found during the search and seizure operation. Since the additions were not based on the incriminating material mentioned in the satisfaction note, they were deemed unsustainable. Therefore, the ITAT allowed the appeal of the assessee and deleted the additions.Separate Judgement:No separate judgement was delivered by the judges.