Unabated Assessment Additions/ Disallowances Made In Absence Of Incriminating Material Merits To Be Quashed: New Delhi ITAT

The Bench of Kul Bharat (Judicial Member) and Pradip Kumar Kedia (Accountant Member) observed that “additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under section 132 of the Act and such additions are solely based on appraisal report against the subscribers of the assessee in the course of search in that case”. (Para 8)

As per the brief facts of the case, a search and seizure operation u/s 132 was carried out at the premises of Urbtech group of cases including the captioned assessee. Consequently, a notice u/s 153A was issued seeking to assess the income of the assessee under the provisions of section 153A. Later, the assessment was carried out u/s 153A read with Section 143(3) and certain additions / disallowances were made.

The Bench found that the assessee had issued shares at premium to two subscribers, which were alleged by the AO to be controlled by entry provider namely, Tarun Goyal who has admitted such facts on oath in the course of search carried out at his premises.

The Bench also noted that the AO while framing the assessment has solely relied upon the observations in the Appraisal Report provided in the case of Tarun Goyal collected in the course of post search inquiry / investigations.

No reference to any incriminating material is found in relation to subscribers in the course of search in the case of assessee herein, and there is a total absence of reference to any incriminating material found in the course of search in the case of the assessee which may have any bearing to the impugned additions/disallowances except observations in the appraisal report in the case of Mr. Tarun Goyal adverse to subscriber companies in an all-together different search proceedings, added the Bench.

As a corollary, the Bench observed that some additions have been made in the course of routine inquiry at the time of assessment under Section 153A without showing any correction to the incriminating material unearthed in the course of search.

Hence, the ITAT allowed the assessee's appeal and deleted the additions made by AO.

Counsel for Appellant/ Assessee: C.S. Anand

Counsel for Respondent/ Revenue: T. James Singson

Case Title: Feather Infotech Pvt Ltd Verses DCIT
Case Number: ITAs No.977 & 891/Del/2022

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