Manan Narang Vs DCIT, ITA No. 2617/Del/2023, ITAT Delhi
The Income Tax Appellate Tribunal (ITAT) Delhi has ruled in the case of Manan Narang vs. DCIT (A.Y. 2016-17) that in the absence of incriminating material found during a search, no addition can be made under Section 153A of the Income Tax Act.
Key Facts of the Case
• A search and seizure operation was conducted on 14.10.2020 involving Shri Manoj Kumar Singh and his associates.
• The assessee’s locker was covered in the search, but no direct incriminating material was found.
• The Assessing Officer (AO) made an addition of ₹86,83,853 under Section 68, based on third-party information from CRUI Portal, not from the search itself.
• The CIT(A) deleted the addition, stating that material gathered from other sources cannot be used for 153A proceedings in the absence of search-based incriminating evidence.
Key Observations by ITAT
• No Pending Assessment at the Time of Search: Since the assessment was already completed, the doctrine of abatement did not apply.
• Material from Other Sources is Not Sufficient: ITAT cited PCIT vs. Abhisar Buildwell Pvt. Ltd., ruling that in completed assessments, only incriminating material found during a search can be used for additions.
• AO Can Reopen the Case Under Section 147/148: While 153A additions were invalid, ITAT clarified that AO can proceed under Section 147/148 if conditions for reassessment are met.
Final Verdict
• The ITAT dismissed the Revenue’s appeal, confirming that no addition can be made in 153A if no incriminating material is found during a search.
• However, the AO retains the power to reopen the assessment under Sections 147/148, subject to legal compliance.
Key Takeaway for Taxpayers
If your case falls under a 153A assessment, ensure that any additions made by the AO are directly linked to search findings. If not, they can be challenged based on this ruling.