Ritu Kapur Vs DCIT (ITAT Delhi)
Mechanical 153D Approval & No Incriminating Material – Delhi ITAT Quashes Entire 153A Assessments
In these cross-appeals arising out of search assessments u/s 153A, the Assessee challenged the additions made entirely on the basis of the statement of a third party (Raj Kumar Modi) without any incriminating material found during search on PMC Group to which the Assessee belonged. ITAT noted that the assessments for the relevant years were unabated; hence, as per the law laid down by the Supreme Court in Abhisar Buildwell (454 ITR 212), additions u/s 153A can survive only if supported by incriminating material found during search. The Department failed to point out even a single seized document relating to the Assessee. The entire basis was only third-party statements, which, as held in earlier Delhi ITAT decisions (Gulshan Investment, Trilok Chander Chaudhary, Om Prakash Tantia), cannot substitute incriminating material. The Tribunal held that the AO ought to have invoked s.153C if relying on material/statements found in search on another person. As this was not done, the assessments were unsustainable.
On the Assessee’s additional legal ground, the Tribunal examined the approval granted u/s 153D. The approval letter showed that the Addl. CIT granted approval for 14 assessment years of two assessees on the same day, without even a whisper of independent application of mind. Relying on binding precedents—Delhi High Court rulings in Shiv Kumar Nayyar, Anuj Bansal, Allahabad HC in Sapna Gupta, & Orissa HC in Serajuddin & Co.—the ITAT held that such ritualistic, mechanical approval vitiates the assessment itself. The SLP against Serajuddin having been dismissed by the Supreme Court further fortified this position.
