Bhagwat Dayal Vs DCIT (ITAT Delhi)
No Incriminating Material—Additions in Search Assessments Quashed by ITAT Delhi- Unabated Years: ITAT Follows Supreme Court in Abhisar Buildwell,- Search Without Seizure of Incriminating Evidence Can’t Lead to Additions— Deposits in Bank Not “Incriminating Material” u/s 153A—
Assessee, Shri Bhagwat Dayal, was a director in several companies of the SRS Group. Pursuant to a search u/s 132 conducted on 06.06.2018 in the SRS Group, the AO issued notice u/s 153A on 03.12.2019 for AYs 2013-14 to 2016-17. These years were unabated (completed) assessments as on the date of search.
In response, AO made additions based only on bank deposits, without reference to any incriminating documents found during search. The Assessee challenged the action as being beyond jurisdiction. However, the CIT(A), Gurgaon upheld the additions, holding that the AO had power to reassess total income even without seized material.
Before the ITAT, though Assessee remained unrepresented, the Bench examined the records & submissions of the Department. It was undisputed that (i) no incriminating documents were found during search, & (ii) additions were purely on the basis of bank entries already available on record.
The Tribunal referred to the Supreme Court judgment in PCIT v. Abhisar Buildwell (P.) Ltd. (2023) 454 ITR 212 (SC) which authoritatively held that:
- AO assumes jurisdiction u/s 153A only for assessments abated by search;
- For completed/unabated years, additions can be made only if based on incriminating material found during search;
- Otherwise, AO must resort to reassessment u/s 147/148 if conditions are met.
Applying the above ratio, the ITAT held that since no incriminating material was found, the AO lacked jurisdiction to make any addition in the four years under consideration. The additions based on bank deposits were therefore unsustainable in law.
