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

ITAT Delhi held that assumption of jurisdiction under section 153C was invalid where seized material disclosed no unaccounted income of the assessee. The AO made additions based on materials other than the incriminating material referenced in the satisfaction note (trust deed). Following Abhisar Buildwell SC precedent, the tribunal ruled that in unabated assessments, additions cannot be made without incriminating material from search operations. All additions were deleted and decided in favor of the assessee.

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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.

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