ITAT held addition of unabated assessment without incrimination of seized material for assessment u/s. 153A of IT Act cannot sustain
The Income Tax Appellate Tribunal (ITAT) held that the addition of unabated assessment without incriminating seized material for assessment under Section 153A of Income Tax Act, 1961 (IT Act) is not sustainable
Mr. Dinesh Salecha (appellant) filed an appeal before the ITAT against the Deputy Commissioner of Income Tax (respondent). She stated that her return of income for the assessment year (AY) 2008-09 was filed on time and she declared a total income of Rs. 3,90,830.
There was a search and seizure action carried out against the RSBL group under Section 132 of the IT Act and the appellant was also covered. The notice under Section 153A of the IT Act was issued by the Assessing Officer (AO). The assessment under Section 143(3) r/w Section 154A of the IT Act was completed in the case of all the years on 28 March 2016, on an income of Rs. 29,50,830 (AY2008–09), Rs. 45,76,360 (AY 2009–10) and Rs. 30,16,628 (AY 2011–12).
It was stated by the appellant that the AO in his assessment order elaborately referred to the Departmental search and seizure and survey action at various places. He referred to the statements obtained under the survey from various parties said to be entry operators. He elaborately referred to the general discussion of the modus operandi quoted from the survey statements.
The appellant filed an appeal before the Commissioner of Income Tax (Appeal) [CIT(A)] against the order of the AO. The appellant also filed additional ground challenging the jurisdiction of assessment under Section 153A of the IT Act and reference to any search material was also made.
The CIT(A) in its order referred to the modus operandi of the various persons said to be entry operators. It upheld the addition under Section 68 of the IT Act by observing that the financials of the lenders were not sufficient. It was contended that CIT(A) did not address the appellant's challenge to the jurisdiction of assessment under Section 153A of the IT Act which was passed without reference to search material. The appellant then filed an appeal before the ITAT against the order of the CIT(A).
The reference of the Supreme Court's (SC) judgment was made wherein in the case of CIT v. Singhad- The SC considered the jurisdictional defects in assessment under Section 153A/153C of the IT Act without reference to incriminating seized material in the case of technical education Society.
The appeal was listed before the Coram consisting of Ram Lal Negi and Shamim Yahya of the ITAT. The coram set aside the orders and also deleted the additions. It stated, "The addition made in the assessment orders passed by the AO under Section 153A is without reference to any incriminating material found search is not sustainable. That these additions are not sustainable due to jurisdictional defect in as much as they are without reference to any incriminating material found upon search, the adjudication on the merits of the addition is only of academic interest."
It held that the addition made in the assessment orders passed by the assessing officer under Section 153A of IT Act is without reference to any incriminating material seized and hence the said order cannot sustain.