Nirmal Singh Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh Gives Full Relief: Additions under 153A Quashed for Want of Incriminating Material
Chandigarh ITAT has delivered a significant ruling in favour of Assessee by deleting additions made in four consecutive assessment years on the ground that they were not supported by any incriminating material found during search.
Assessee had filed returns for assessment years 2015-16 to 2019-20, all of which had already attained finality. Subsequently, a search u/s 132 was conducted on 28.01.2021 covering Assessee & educational societies with which he was associated. During assessment proceedings u/s 153A, AO alleged diversion of funds from Gyan Jyoti Educational & Social Welfare Society for personal benefit, including investment in plots at Mohali & provision of car facility, & made additions aggregating to several lakhs across different years.
Assessee argued that the impugned years were unabated & no addition could be made in the absence of incriminating documents discovered during the course of search. It was contended that the only document relied upon by AO was a net worth certification prepared by a chartered accountant, which merely reflected assets & liabilities as on a later date & did not establish diversion of trust funds. Relying upon the binding judgment of the Supreme Court in Pr. CIT v. Abhisar Buildwell (P) Ltd. (149 Taxmann.com 399), as well as precedents including Kabul Chawla (Delhi High Court), Saumya Construction (Gujarat High Court), Continental Warehousing Corporation (Bombay High Court) & Meeta Gutgutia (Delhi High Court), it was submitted that no addition could be sustained for completed assessments unless supported by incriminating material unearthed in search.
