ITAT on Assessment Under Section 153A/143(3): Additions Without Incriminating Material Are Invalid.

Headnote:

The Delhi ITAT held that assessments framed under Sections 153A/143(3) based solely on statements or material seized from third parties are invalid in the absence of incriminating material belonging to the assessee. The Tribunal also held that approvals under Section 153D must be issued independently with proper application of mind; mechanical approvals covering multiple assessment years are invalid. Consequently, additions under Sections 69A/69C and unsecured loans were deleted, and the assessment orders set aside.

Background:

1. The assessee, Ritu Kapur, challenged assessments for A.Ys 2013-14, 2015-16, and 2016-17 passed under Sections 153A/143(3) following a search at PMC Group’s premises.
2. Approvals under Section 153D were granted on 30/09/2021 for multiple assessment years by the Additional CIT, Central Range, Meerut.
3. Additions were made based on statements of third parties (Mr. Raj Kumar Modi & Mr. Jagdish Purohit) and unsecured loans of Rs. 75 lakhs.
4. The assessee contended that assessments were barred by limitation, mechanically approved, and lacked any incriminating material linking her to the seized assets.

Court’s Observations:

1. Additions under Sections 69A/69C: The Tribunal noted that no incriminating material was found from the assessee’s premises; additions based solely on third-party statements were illegal.
2. Approval under Section 153D: Approvals covering multiple AYs on the same day without proper application of mind were held to be mechanical and invalid.
3. Reliance on Jurisprudence: Tribunal cited Abhisar Buildwell (454 ITR 212), Gulshan Investment Pvt. Ltd., and other ITAT precedents emphasizing the requirement of incriminating material to sustain additions under Section 153A.
4. Legal Principle: Assessments under Section 153A/143(3) must be supported by evidence directly linking the assessee to undisclosed income; otherwise, they are liable to be quashed.

Legal Provisions Discussed:

1. Section 153A, Income Tax Act, 1961 – Assessments following search/seizure.
2. Section 153D, Income Tax Act, 1961 – Approval required for issuance of notice to other assessees in search cases.
3. Sections 69A & 69C, Income Tax Act, 1961 – Unexplained cash credits, loans, and other assets.
4. Principle of Incrimination Requirement – No addition can be made without connecting evidence.

Decision:

1. Assessee Appeals (ITA 743, 744, 745/Del/2023): Allowed.
2. Revenue Appeal (ITA 996/Del/2023): Dismissed.
3. Additions under Sections 69A/69C and unsecured loan of Rs. 75 Lacs deleted.
4. Assessments framed under Sections 153A/143(3) set aside for A.Ys 2013-14, 2015-16, and 2016-17.

Citation: ITA No. 8988/Del/2019

Case: DCIT, Central Circle-1, Gurgaon v. Planet Infra Promoters Pvt. Ltd.

Tribunal: Income Tax Appellate Tribunal, Delhi Bench “F”, New Delhi

Coram: Shri Challa Nagendra Prasad, Judicial Member & Shri Brajesh Kumar Singh, Accountant Member

Date of Hearing: 07 October 2025

Date of Pronouncement: 19 November 2025

Assessment Year: 2013-14