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
