The ITAT, Delhi bench, in ACIT v. Super Developers P Ltd, quashed an assessment made under section 153A of the Income Tax Act on ground that no incriminating material was found during search and there is no assessment pending against the assessee.
A search under section 132 of the IT Act was conducted against the assessee. Consequently, the Department initiated assessment under section 153A alleging that the assessee had taken accommodation entries towards share application money. Assessee challenged the above order on ground that the conditions stipulated under section 153A is not satisfied in the in the instant case, and therefore, no addition can be made.
The assessee, based on judicial precedents, contended that no material evidence was unearthed during search transpiring evasion on the part of the assessee. They also contended that no assessment for the relevant assessment year was pending at the time of search.
The appeal of the assessee was allowed by the first appellate authority and therefore, the department approached the ITAT.
Dismissing the departmental appeal, the bench noted that the additions have been made by the AO despite the fact that there was no incriminating material (whether by way of statement or document or asset, etc.) unearthed during the course of search relevant for any assessment year. Also, no proceedings were pending for this assessment year on the date of search. “In these facts and circumstances, we are of the considered view that the matter is squarely covered in favour of the assessee by precedent of Hon’ble Jurisdictional High Court in the case of Kabul Chawla (supra). Respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Kabul Chawla (supra), we hold that in the absence of any incriminating material unearthed during the course of search, the AO had no jurisdiction to initiate proceedings u/s 153A of the Act when no assessment proceedings were pending for this.”
Read the full text of the Order below.
