DCIT Vs VPR Mining Infrastructure Private Limited (ITAT Hyderabad)
153C Notice Quashed – No Incriminating Material for AY 2018-19, Addition Based Only on GST Data Invalid
Assessee, engaged in mining & infrastructure contracts, filed return for AY 2018-19 declaring ₹97.78 crore. Regular assessment u/s 143(3) was completed on 11.03.2021. Later, search u/s 132 was conducted in the case of Vasistha Constructions Pvt. Ltd. (VCPL), a subcontractor of the Assessee. Certain documents were seized, & proceedings u/s 153C were initiated for AYs 2015-16 to 2020-21.
In the satisfaction note, the AO recorded that some seized pages showed sub-contract receipts of VCPL from the Assessee for FY 2018-19, & VCPL further gave work to four other contractors. However, no addition in AY 2018-19 was made on the basis of this seized material. Instead, the AO disallowed ₹10.53 crore subcontract expenses paid to Sunil Hitech Engineer Ltd (SHEL) based solely on information from GST authorities, alleging bogus invoices & accommodation entries.
CIT(A) quashed the 153C notice & annulled the assessment, holding that:
- The seized material did not pertain to AY 2018-19, as even noted in the AO’s own satisfaction note.
- No incriminating material for this year was found in search.
- The disallowance was based entirely on external GST information, not on seized documents.
- Therefore, mandatory jurisdictional conditions of section 153C were not satisfied.
Before the Tribunal, the Revenue argued that even third-party information & post-search enquiries can justify additions in 153C assessments. They relied on Supreme Court’s decision in K. Krishnamurthy (2025) & Delhi HC in Indian National Congress (2024).
