PCIT Vs Shri Mehndipur Balaji (Allahabad High Court)
The Allahabad High Court considered two sets of appeals filed by the Income Tax Department arising from common orders of the Income Tax Appellate Tribunal (ITAT), Lucknow, involving assessments framed under Section 153A of the Income-tax Act, 1961 following search operations conducted under Section 132. The substantial questions of law framed by the Court were whether assessment or reassessment under Section 153A can be made only on the basis of incriminating material found during search and whether such assessment can be framed where no incriminating material is found.
The first set of appeals related to the Chaurasia Group. Search and seizure operations were conducted on 27.11.2015, with simultaneous searches at the premises of several group entities including Shri Mehndipur Balaji Enterprises (P) Ltd. A survey under Section 133A was also conducted. According to the assessment records, various incriminating documents were found and impounded. The cases were centralized, notices under Section 153A were issued, returns were filed, and notices under Sections 143(2) and 142(1) followed. The Assessing Officer made additions under Sections 68 and 69 in respect of alleged bogus unsecured loans, long-term capital gains (LTCG), interest and commission relating to Success Vyapar Ltd. and Neil Industries Ltd. The Commissioner of Income Tax (Appeals) dismissed the assessees’ appeals. However, the ITAT allowed the appeals, holding that the assessments had already attained finality and that no additions could be sustained in the absence of incriminating material.
