DCIT Vs Jatin Madani (ITAT Delhi)
Post-Search Statements is not Incriminating Material-153C Route Ignored, 153A Fails – No Incriminating Material, No Addition-Third-Party Statements Not Enough
Revenue appealed against CIT(A)’s order deleting additions aggregating over ₹11 crore made in assessment u/s 153A r.w.s. 143(3) pursuant to search in Ashish Begwani group. AO had treated Assessee as beneficiary of accommodation entries & made additions on account of (i) commission income from cash transportation & entry facilitation, (ii) unexplained investment of ₹10 lakh, & (iii) unsecured loans of ₹10.05 crore u/s 68.
CIT(A) deleted additions holding that no incriminating material was found during search at Assessee’s premises. AO had relied only on statements of third parties (Ashish Begwani, Vikas Aggarwal, Sukanta Roy, Nishant Chhajer) & documents seized from their premises.
Tribunal examined record & upheld CIT(A)’s findings:
- As per Delhi High Court in CIT Vs. Kabul Chawla [380 ITR 573], completed assessments cannot be disturbed in absence of incriminating material found in search of the assessee.
- Statements recorded u/s 131 months after search do not constitute incriminating material.
- If seized documents belong to third parties, procedure u/s 153C should be followed; AO cannot short-circuit by using them in assessee’s 153A assessment.
- Investigation Wing report about alleged loan of ₹10 lakh & statements regarding ₹10.05 crore accommodation entries were not corroborated with any material seized from assessee.
Accordingly, ITAT held that additions were unsustainable, dismissed Revenue’s appeal & confirmed deletion of entire additions exceeding ₹11 crore.
