Divya Exim Pvt. Ltd. Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi bench, has allowed three appeals filed by Divya Exim Pvt. Ltd. and other related companies. The central issue was whether the Assessing Officer (AO) could make additions to the assessees’ income in a search assessment under Section 153A of the Income Tax Act, 1961, without finding any incriminating material during the search.
Factual Background
The case arose from a search and seizure operation conducted on November 18, 2015, on the Shri Sajan Kumar Jain and Shri Pradeep Kumar Jindal group of cases, which included the assessees. Following the search, the AO initiated reassessment proceedings under Section 153A. The AO made several additions and disallowances to the companies’ income, which were then upheld by the Commissioner of Income Tax (Appeals) (CIT(A)).
The assessee’s counsel argued that the assessments for the relevant years were “unabated,” meaning they had already been completed and were not pending at the time of the search. Therefore, the scope of the Section 153A assessment should be limited to any incriminating material discovered during the search itself.
The additions in this case were based on a statement recorded under Section 132(4) of the Act from Shri Pradeep Kumar Jindal, who was also searched simultaneously. Mr. Jindal allegedly made adverse statements about providing “accommodation entries” to various beneficiaries, including the companies in question. The assessee’s counsel argued that this third-party statement, made in a separate search proceeding, could not be considered incriminating material pertaining to the assessees.
