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Facts
A search and seizure operation was carried out on 24.05.2017, leading to an assessment order under Section 142(3)/153A on 20.12.2019, adding Rs.12,01,153/- for unexplained investment in construction. The Ld. CIT(A) partly allowed the appeal, sustaining an addition of Rs.6,11,153/-. Aggrieved by this, the assessee filed the present appeal, arguing that the addition was made without incriminating material found during the search.
Held
Relying on the Supreme Court's decision in PCIT vs. M/s Abhisaar Buildwell, the Tribunal held that an addition under Section 153A/153C can only be made if incriminating material is found during the search. Since the addition in this case was made without any incriminating material, it cannot be sustained. Consequently, the Tribunal deleted the addition confirmed by the CIT(A).
Key Issues
Whether an addition made under Section 153A/153C of the Income Tax Act, 1961, without any incriminating material found during a search and seizure operation, is legally sustainable.
Sections Cited
142(3), 153A, 153C, 132, 132A, 153, 147, 148
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Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
(ASSESSMENT YEAR 2012-13) Shailesh Kumar, Asst. CIT (Central) C/o Malik & Co. Meerut. (Advisors & Advocate- Vs. Since 1927), 305/7, Thapar Nagar, Meerut-250001, Uttar Pradesh. PAN-ARGPK0548N (Appellant) (Respondent) Appellant by Shri Sankalp Malik, Adv., Shri Sanjay Malik, Adv.,Shri Murtaza Shuberi, Adv. and Shri Praveen Bansal, CA Respondent by Ms. Pooja Swaroop, CIT-DR Date of Hearing 18.11.2025 Date of Pronouncement 17.12.2025 ORDER
PER YOGESH KUMAR U.S., JM:
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-3, Noida [“Ld. CIT(A)”, for short], dated 21.08.2024 for Assessment Year 2012-13.
Shailesh Kumar vs. ACIT 2. Brief facts of the case are that a search and seizure operation was carried out on 24.05.2017 in the residential premises of the assessee and it was covered in the search in the case of H.S. Tewari group of cases. An assessment order came to be passed u/s 142(3)/153A of the Income Tax Act, 1961 (‘the Act’ for short) by making addition of Rs.12,01,153/- as the assessee failed to prove the source of the investment in construction.
Aggrieved by the assessment order dated 20.12.2019, assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 21.08.2024 partly allowed the appeal of the assessee by sustaining the addition of Rs.6,11,153/-.
Aggrieved by the order of the CIT(A) dated 21.08.2024, assessee preferred the present appeal. The Ld. Counsel for the assessee arguing on grounds No.1, 4 & 5 of the appeal, submitted that the addition made by the AO is dehors the incriminating material found during the course of search. Therefore, relying on the ratio laid down by the Hon’ble Supreme Court in the case of PCIT vs. M/s Abhisaar Buildwell (2024) 2 Supreme Court Cases 433, sought for allowing the appeal.
Per contra, the Ld. DR relying on the orders of the lower authorities, submitted that assessee failed to explain the investment on account of construction of property, therefore, the addition has been rightly made by the AO and the CIT(A) has already given partial relief thus, sought for dismissal of the appeal.
We have heard both the parties and perused the materials available on record. Ongoing through the assessment order, it is found that the addition has been made dehors incriminating material, the Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) laid down the ratio that, the addition by exercising jurisdiction u/s 153A/153C of the Act can be made only when there is incriminating material found during the course of search and in the absence of any incriminating material found during the course of search, the AO cannot exercise the power conferred u/s 153A of the Act. The relevant portion of the judgment of Hon’ble Supreme Court in the case of Abhisar Buildwell (supra) are as under: “31. As per the provisions of Section 153-A, in case of a search under Section 132 or requisition under Section 132-A, the AO gets the jurisdiction to assess or reassess the "total income" in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153-A. the assessment or reassessment, if any relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. As per sub-section (2) of Section 153-A. if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand reviewed with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the "total income" for the entire six years' period/block assessment period. The intention does not seem to be to reopen the completed/ unabated assessments, unless any incriminating material is found with respect to assessment year concerned falling within last six years preceding the search. Therefore, on true interpretation of Section 153 A of the 1961 Act, in case of a search under Section 132 or requisition under Section 132-A and during the search any incriminating material is found, even in case of unabated/completed