DCIT Vs Rajesh Auto Merchandise Private Limited (ITAT Kolkata)
Revenue filed appeal with a delay of 17 days, which was condoned. The only dispute was whether additions made by AO in a 153A assessment for an unabated year could survive without any incriminating material found during search.
A search u/s 132 was conducted on 25.09.2020. On the date of search, no assessment was pending for AY 2013-14. Time limit for issue of notice u/s 143(2) had expired, thus the assessment stood completed/unabated.
AO made two additions u/s 153A:
- ₹1,92,00,000 – Foreign exchange fluctuation loss (disallowed)
- ₹79,82,162 – Unexplained cash credit (₹60 lakh + ₹19,82,162)
However, both items were already recorded in the regular books of account. AO did not rely on any seized or incriminating material found during search. He simply drew the additions from the existing books.
CIT(A) deleted the additions by applying the Supreme Court judgment in PCIT v. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC), holding that for unabated years, AO cannot make additions u/s 153A unless based on incriminating material found during search.
Revenue argued that the CIT(A) wrongly applied Abhisar Buildwell.
Tribunal rejected Revenue’s contention and noted:
- AY 2013-14 was unabated on the date of search.
- AO did not refer to any seized material for making the additions.
- The additions were purely based on entries from regular books, not on any search finding.
- As per Abhisar Buildwell (SC), no addition is permissible in 153A for unabated years without incriminating material.
Tribunal therefore upheld CIT(A)’s order and confirmed that the additions were beyond the jurisdiction of AO u/s 153A.
