Antarctica Properties Company Limited Vs DCIT (ITAT Delhi)
Delhi ITAT: No Section 153A Addition in Completed Assessment Without Incriminating Search Material; CIT(A) Directed to Apply Supreme Court’s Abhisar Buildwell Ruling
The Delhi ITAT restored two search assessments to the CIT(A), specifically directing him to determine whether the impugned additions were actually founded upon incriminating material seized during the search, keeping in mind the Supreme Court’s landmark ruling in PCIT v. Abhisar Buildwell Pvt. Ltd.
A search u/s 132 was conducted on the Sanjay Bhaskar Group on 30.03.2021. The Revenue alleged that the assessee had created a bogus provision in its profit and loss account to artificially depress the fair market value of its shares. For AY 2015-16, however, the AO ultimately assessed the very same loss of ₹11.72 crore that had been declared by the assessee. For AY 2016-17, the returned income of ₹1.47 lakh was enhanced to ₹58.53 lakh.
The assessee’s principal challenge was that the assessments/additions under the search regime were not based upon any incriminating material recovered during the search. It relied upon Abhisar Buildwell, under which additions in respect of completed/unabated assessments cannot be made under section 153A in the absence of incriminating material unearthed during search.
The CIT(A), however, had given four opportunities of hearing to the assessee. Since there was no response, he dismissed the appeals and affirmed the AO’s orders. Before the ITAT, the assessee explained that the non-compliance arose from a communication gap between it and its tax consultant. It also sought an opportunity to cross-examine persons from whom the allegedly incriminating documents had been recovered.
The Tribunal found a “dearth of fact finding at the lower levels” and observed that it was not possible from the existing record to determine whether the impugned action was based upon incriminating material seized during search or merely upon material already forming part of the assessee’s return and regular records.
Accordingly, the ITAT set aside the orders for both years and remanded the matters to the CIT(A). Importantly, it specifically directed the CIT(A) to examine the assessee’s contention that the additions were de hors any incriminating material seized during search, while remaining mindful of the Supreme Court decision in Abhisar Buildwell. A remand report from the AO could also be called for if necessary.
Cases Discussed
- Abhisar Buildwell P. Ltd. (SC), (2023) 454 ITR 212 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
1. These are the batch of two appeals pertaining to the same assessee for AYs 2015-16 and 2016-17. ITA No.6527 arises from order dated 26.08.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A), Delhi-26. ITA No.6528 arises from order dated 25.08./2025, passed u/s 250 of the Act by Ld. CIT(A), Delhi-26.
1.1 For the sake of convenience both these appeals are being disposed of through a single order. In this case, a search and seizure operation was conducted on the Sanjay Bhaskar Group of Companies on 30.03.2021. During the course of such search proceedings, it was found that allegedly there was a bogus provision in the profit and loss account of the assessee company to artificially lower the fair market value of its shares. For AY 2015-16 the Ld. AO completed the assessment at a loss of Rs.11,72,50,817/- u/s 153(3) r.w.s. 143(3) of the Act. Incidentally this assessment was completed at a figure of loss which was declared by the assessee in its return of income. Secondly, for AY 2016-17 the returned income of Rs.1,46,870/- was enhanced to Rs.58,52,770/- by the Ld. AO.
1.2 The assessee approached the Ld. CIT(A) with several grievances, the main one being that the Ld. AO’s action was claimed to be devoid of merit on the ground that the same were not based on any seized material. Apart from this the assessee is also seen to have pleaded that there was denial of opportunity at the level of Ld. AO. It is seen that before the Ld. CIT(A) four opportunities of hearing were provided to the assessee but there was no response to such opportunities by the assessee. The fact of non-attendance is recorded on page 6 of the impugned order for AY 2015-16 and on page 7 of the impugned order for AY 2016-17. Thereafter, the Ld. CIT(A) dismissed the appeal of the assessee and affirmed the orders of Ld. AO for both the years.
1.3 The aggrieved assessee has approached the ITAT and has filed revised grounds of appeal for both the years. The first two grounds challenge the action of Ld.AO in respect of the fact that the additions have been made without there being any incriminating material recovered from the search action. In this regard reliance has been placed on the case of Abhisar Buildwell P. Ltd. (2023) reported in 454 ITR 212 (SC). Apart from challenging the action of Ld. AO on this ground there is also ground no.3 in both the appeals through which the denial of opportunity at the level of Ld. CIT(A) has been ventilated as a grievance.
2. Before us the Ld. AR argued with the help of a detailed paper book and a compilation of case laws to argue that the Ld. AO for AY 2015-16 had virtually accepted the returned income/loss of the assessee and had not been able to point out any incriminating material seized during the course of search which could have a bearing on the income determination of the assessee. Furthermore, even for AY 2016-17 the Ld. AO’s action was not based on any incriminating material seized during the course of search action. The Ld. AR placed before us copies of the judgment in the case of Abhisar Buildwell (supra) and pointed out that there were a host of other decisions which did not approve of any addition during proceedings u/s 153A of the Act, without there being any incriminating material seized during the course of search action. It was averred that the assessee could not comply to the notices issued by the Ld. CIT(A) due to a communication gap between the assessee and his tax consultant. The Ld. AR also argued that the assessee deserved an opportunity to cross-examine and seek clarification from the persons from whom the allegedly incriminating documents were recovered. The Ld. AR also assailed the findings of Ld. AO on merits by stating that none of the additions or observations of the Ld. AO in either of the years was sustainable in the face of the explanation available with the assessee for the impugned actions of the Ld. AO.
2.1 The Ld. DR relied on the orders of the authorities below and stated that the Ld. AO’s order was detailed and based on the seized material available to him for both the assessment years under consideration. It was the submission that the assessee’s non-compliance before this Ld. CIT(A) for both the years was not easily understood and thereafter the assessee could not justifiably claim any denial of opportunity.
3. We have carefully considered the rival submissions and have gone through the records before us. We have also perused the case laws relied on by the Ld. AR. It is evident that there is a dearth of fact finding at the lower levels since the assessee has not responded to the opportunities provided by the Ld. CIT(A) for both the years. At this stage, we are constrained by the fact that a determination about whether the impugned actions are as a result of incriminating material seized during the course of search and seizure or are is based on some readily available material which would be a part of the details filed with the return of income. We are also aware that for AY 2015-16 the Ld. AO has accepted the figure of loss returned by the assessee while completing the assessment order. Considering the totality of facts and circumstances of the case, we deem it fit to set aside the impugned orders for both the years and remand both these matters to the file of Ld. CIT(A) for fresh adjudication. The Ld. CIT(A) would specifically look into the challenge mounted by the assessee regarding the impugned actions being d’hors any incriminating material seized during the course of search and seizure action. For this purpose the Ld. CIT(A) would remain mindful of the case of Abhisar Buildwell (supra). The assessee would do well to present his grievance before the Ld. CIT(A) and in case required, a remand report can be directed to be submitted by the Ld. AO.
4. In the result, appeals are partly allowed for statistical purposes.
Order pronounced in the open court on 07.08.2026
