Case Law Details
DCIT Vs Sanjeev Aggarwal (ITAT Chandigarh)
In DCIT vs. Sanjeev Aggarwal, the Income Tax Appellate Tribunal (ITAT) Chandigarh addressed the validity of additions made under Section 153A of the Income Tax Act, 1961. The case stemmed from a search conducted on November 15, 2017, on the Scott Edil group, leading to reassessments under Section 153A. The Revenue appealed against the CIT(A)’s decision to delete additions made by the Assessing Officer (AO), arguing that digital data seized during the search constituted incriminating material. The assessee, in cross-objections, challenged the assessment’s jurisdiction and specific additions under Sections 2(22)(e) and 69C. The ITAT noted that assessments for the relevant years were already completed before the search, and no new incriminating material was found that justified the additions.
Citing the Supreme Court’s ruling in PCIT vs. Abhisar Buildwell (P) Ltd., ITAT ruled that additions under Section 153A cannot be made in the absence of incriminating material if the assessment is not pending at the time of search. Accordingly, the ITAT upheld the CIT(A)’s deletion of the additions, rendering the assessee’s cross-objections academic. The appeals and cross-objections were dismissed, reinforcing the principle that reassessments post-search must be based on concrete evidence rather than reappraisal of existing records.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The captioned appeals by the Revenue and the corresponding Cross Objections have been filed by the assessees against the separate orders of the ld. CIT(A). Since facts and issues involved in all the captioned appeals/Cross Objections are identical, hence the same have been heard together and are being disposed of by this common order.
2. All the captioned appeals/Cross Objections pertain to the assessments carried out under Section 153A of the Income Tax Act, 1961 pursuant to the search action carried out under Section 132 of the Income Tax Act, 1961 on 15. 1 1.2017 in Scott Edil group of cases.
3. The Revenue’s appeal in ITA No.501/CHD/2023 alongwith corresponding Cross Objection of the assessee C.O.No. 10/CHD/2024 are taken as lead cases for the purpose of narration of facts.
ITA 501/CHD/2023 & C.O.No. 10/CHD/2024
4. The Revenue in this appeal has taken the following grounds of appeal :
“1. Whether on the facts and circumstances of the case and in law Ld CIT(A) is right in deletion the addition of Rs 1.70,69,249/- & Rs. 10,80,751/-by holding that there was no incriminating material whereas digital data found and seized during search operation, on the basis of which aforesaid additions were made duly represents incriminating material ?
2. Whether on the facts and circumstances of the case and in law Ld CIT(A) was right in placing reliance upon the decision of Hon’ble Supreme Court in the case of Pr. CIT Central-3 vs Aphisar Buildwell Pvt. Ltd C A No. 6580/2021 and deleting the aforesaid additions by not considering the facts that additions made by the AO was based upon the incriminating material in the form of digital data (Annexure A-10 & A-7) found and seized during search operation ?
3. Whether digital data (Annexure A-10 & A-7) consisting of ledger, books of accounts etc found and seized during search operation on the basis of which additions were made by the AO. does not amount to incriminating material ?
4. The appellant craves leave to add or amend any ground of appeal before the appeal is heard or disposed of.
whereas the assessee has taken the following Cross Objections:
1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 10614/CIT(A)-3/GGN/2019-20 dated 31.05.2023 has erred in passing the order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961, to the extent of not allowing some of the grounds raised by the appellant on merits and facts of the case.
2. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in upholding the order passed by the Ld. AO even when the transfer order u/s 127 dated 30.03.2018 was without sanction of law and once order u/s 127 is bad, the order u/s 153A r.w.s 143(3) passed by Ld. AO is also bad.
3. That on facts, circumstances and legal position of the case, the Worthy CIT(A), vide Para 10.4 of his order, has erred in giving directions which are contrary to Law.
4. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in not allowing the ground relating to the addition of Rs. 1,60,40,400/- made by Ld. AO u/s 2(22)(e) received from SEPL on merits and facts of the case.
5. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in not allowing the ground relating to the addition of Rs. 10,28,849/- made by Ld. AO u/s 2(22)(e) received from SEPL on merits and facts of the case.
6. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in not allowing the ground relating to the addition of Rs. 10,80,751/- u/s 69C of the Act on account of difference in valuation of property situated at Plot No. 28/6,Industrial Area, Phase II, Chandigarh as per DVO’s report and as books of the appellant on merits and facts of the case.
7. That on facts, circumstances and legal position of the case, the impugned assessment order passed by Ld. AO acquiring jurisdiction u/s 153A is invalid and unlawful as stated and purported approval us 153D dated 28.12.2019 is without due application of mind and merely in ritualistic manner stated approval is accorded which is disputed and challenged here so as to invalidate the entire assessment.
8. That on facts, circumstances and legal position of the case Worthy CIT(A) has erred in confirming the action of Ld. AO of passing assessment order without having DIN.
9. That the respondent craves leave for any addition, deletion or amendment in the grounds of cross-objections on or before the same is heard or disposed of.
5. The Cross Objection of the assessee are barred by limitation by 164 days. A separate application for condonation of delay has been filed. Considering the reasons explained in the said application, the delay in filing the Cross Objections is hereby condoned.
6. The Revenue in these appeals is aggrieved by the action of the ld. CIT(A) in deleting the addition made by the AO in an assessment carried out under Section 153A of the Income Tax Act by holding that since the original assessment in all these cases stood completed/non abated on the date of search action and since no incriminating material was found during the course of search action, therefore, in view of the law laid down by the Hon’ble Supreme Court in the case of PCIT Vs Abhisar Buildwell (P) Ltd. (2023) 149 taxmann.com 399, the impugned additions made by the AO on re-appreciation of the facts and evidences on file, were not sustainable. The relevant part of the order of the ld. CIT(A) is reproduced as under :
“9.6 It is noted that on the date of search, assessments for AY 2010 11, 2012 13, 2013 1/1, 2015-16 and 2016-17 were completed assessments. From the careful perusal of assessment orders passed u/s 153A for above assessment years, it is found that the above additions made by the AO were not based upon any incriminating material found and seized during the course of search proceedings in the case of the appellant or any other person. On the basis of such facts, respectfully applying the ratio of the decision of Hon’ble Supreme Court in the case of Abhisar Uuildwell Pvt Ltd to the fads of the present case, it is held that the above additions on account of difference in for construction expenses declared in the books of account as compared to valuation made by the DVD for above assessment years (AY 2010-11, 2012-13, 2013-11, 2015-16 and 2016-17) could not have been made by the AO in the assessments made u/s 153A of the Act in the absence of any incriminating material found and seized during the course of march proceedings in the case of the appellant or any other person. (AY 2010 11, 2012 13. 2013-14, 2015-16 and 2016-17).
9. 7 Therefore Keeping in view above facts and discussion made as above additions made by the AO for AV 2010-11, 2012-13, 2013-14, 2015 16 on protective basis, and AY 2016-17 on substantive bash as above are hereby deleted and corresponding grounds of appeal are hereby allowed. However as directed by the Hon ‘ble Supreme Court in the case of Abhisar Buildwell (supra), the AO may consider taking appropriate action under the relevant provisions of the Act on the above issue in the appropriate case after considering the facts of the case carefully on the above issue.”
7. The issue is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell (P) Ltd. (supra), wherein it has been held by the Hon’ble Supreme Court that no addition can be made in the absence of any incriminating material found during the course of the search action in the case of non abated/completed assessment on the date of search.
8. In view of this, the impugned additions made by the AO in the assessment carried out under Section 153A of the Income Tax Act are not sustainable and the same have rightly been deleted by the ld. CIT(A).
9. So far as the Cross Objections of the assessee are concerned, the assessee has contested the additions on merits. However, since the legal issue has been decided in favour of the assessee, therefore, the Cross Objections of the assessee have become infructuous as the same have been rendered academic in nature. The same are accordingly dismissed as infructuous.
10. In the result, all the appeals of the Revenue as well as the Cross Objections of the assessee stand dismissed.
Order pronounced on 06.11. 2024.
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