DCIT Vs Gaurav Dalmia (ITAT Delhi)
For AY 2016-17, the assessee’s original scrutiny assessment had already been completed under section 143(3) in 2018, making it an unabated year on the date of search in March 2021. In the subsequent section 153A assessment, the AO added ₹100 crore under section 69A based on a loose sheet (Annexure A-1, page 14) seized not from the assessee but from the residence of an employee, treating entry no. 31 (“Others – 100,00,00,000”) as alleged cash received on sale of shares.
The Tribunal held that although material found from a third person can be considered as “found in the course of search”, for an unabated year any addition under section 153A must still be founded on truly incriminating material relatable to that year. Examining the seized sheet (reproduced on page 22), it noted that except entry 31, all other entries were accepted by the AO as duly recorded in the regular books. For the disputed ₹100 crore entry, the assessee produced bank and ledger evidence showing it represented investment in JM Financial Mutual Fund through banking channels, not cash. This explanation remained unrebutted by the AO.
The Revenue’s case relied heavily on statements under section 132(4) of three employees. However, those statements were retracted, only partially relied upon by the AO himself, and were unsupported by any independent corroborative evidence. The Tribunal reiterated that such statements, without corroboration, cannot by themselves constitute incriminating material.
Since the document did not reveal any undisclosed asset or off-books transaction and the alleged cash trail was neither proved nor linked to any deployment of funds, the seized paper was held to be non-incriminating for this completed year. Applying the Supreme Court ruling in Abhisar Buildwell, the Tribunal quashed the entire section 153A assessment for want of incriminating material in an unabated year.
Consequently, the Revenue’s appeal on merits was dismissed as infructuous and the assessee’s legal ground under Rule 27 was allowed, deleting the ₹100 crore addition in toto.
FULL TEXT OF THE ORDER OF ITAT DELHI
