Hector Enterprises Pvt. Ltd Vs DCIT (ITAT Delhi)
Section 153A Assessment Quashed – No Incriminating Material Addition Based Only on Retracted Statement Held Invalid
The Delhi ITAT allowed the assessee’s appeal and deleted the addition of ₹27.99 crore made as alleged long-term capital gains in proceedings under Section 153A, holding the entire assessment to be without jurisdiction and unsustainable on merits. The Tribunal noted that although a search was conducted at the assessee’s premises, no incriminating material whatsoever was found or seized from the assessee. The addition was made solely on the basis of an Excel file seized from a third party and on the statement of the assessee’s director recorded under Section 132(4), which was subsequently retracted.
Relying extensively on the Supreme Court decision in Abhisar Buildwell, Delhi High Court rulings in Kabul Chawla, Pavitra Realcon and Anand Kumar Jain (HUF), the Tribunal held that in the case of completed/unabated assessments, no addition can be made under Section 153A in the absence of incriminating material found during the search. It further held that statements recorded during search, without corroborative evidence, cannot be the sole basis of addition, especially when retracted. The Tribunal also observed that, if at all, proceedings ought to have been initiated under Section 153C and not under Section 153A.
Accordingly, the assessment was held bad in law and the entire addition of ₹27.99 crore was deleted. The assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
