Rachita Sahga Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi has set aside tax additions of ₹42.94 lakh each for Rachita Sahgal and Vivek Sahgal, citing improper application of Section 153C of the Income Tax Act, 1961. The cases stemmed from a search operation conducted on January 3, 2018, targeting the M/s Navneet Dawar group.
The Revenue contended that incriminating material found during the search “belonged” to the Sahgals, indicating “on-money” payments in property transactions, leading to identical additions in their assessments for Assessment Year 2018-19.
However, the ITAT determined that the assessing authority’s satisfaction for initiating proceedings was flawed. It highlighted that under the amended Section 153C(1)(b) (effective June 1, 2015), seized documents must “pertain” or “relate to” a person other than the searched entity, whereas the assessment order erroneously stated the material “belonged” to the Sahgals. The phrase “belongs to” applies only to specific items like money or bullion under Section 153C(1)(a). The Tribunal concluded that the proceedings were based on an invalid satisfaction.
Furthermore, the ITAT rejected the application of Section 292C of the Act, which allows for a presumption against the person from whom incriminating material is seized. The Tribunal clarified that this presumption does not extend to a third party. Therefore, without corroborative evidence, the additions based solely on the seized material could not be sustained on merits.
