S.S.M. FOREX PRIVATE LIMITED,KAROL BAGH VS. DCIT, ITA 3638/DEL/2023
In a decisive win for taxpayers, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT), in the case of S.S.M. Forex Pvt. Ltd. vs DCIT (ITA Nos. 3638–3642/Del/2023), quashed additions made in five assessment years (AY 2014–15 to AY 2018–19) under Section 153A of the Income Tax Act, holding that no addition can be made in absence of incriminating material found during the search.
The judgment, which followed the binding precedent laid down by the Supreme Court in PCIT vs. Abhisar Buildwell Pvt. Ltd., reinforces the settled legal position that completed or unabated assessments cannot be disturbed under Section 153A unless supported by incriminating material found during the search.
Background
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Assessee: S.S.M. Forex Pvt. Ltd., an RBI-registered currency exchanger based in Karol Bagh, New Delhi.
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Search conducted: 30 January 2020 on the Sushil Goel Group, including the assessee.
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Section invoked: 153A (search assessment).
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Assessment Years involved: 2014–15 to 2018–19.
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Additions made: AO rejected books of account and applied a presumptive 4% profit rate on turnover due to non-availability of books during search.
Key Arguments by the Assessee
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No incriminating material was found during the search.
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Books of account were later submitted and rejected without any linkage to seized evidence.
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All years were unabated (completed) as no assessments were pending on the date of search.
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Legal position settled by Supreme Court in Abhisar Buildwell (2023) dictates that in absence of incriminating material, no addition can be made in such completed assessments.
Revenue’s Stand
The Revenue contended that:
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Non-availability of books during the search justified rejection and estimation.
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Rejection of books and estimation was valid even without seized material.
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Relied on Mukundray K. Shah (SC) and Goldstone Cements Ltd. (Gauhati HC).
Tribunal’s Findings
The ITAT, after hearing both sides, concluded:
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All five years were unabated assessments, as no reassessment was pending on the search date.
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No document (incriminating or otherwise) was referred to in the 153A assessment orders.
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Presumption that books submitted later are incriminating is flawed, especially when the books were maintained in regular course of business.
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Following PCIT v. Abhisar Buildwell (SC), additions in 153A proceedings for unabated years are impermissible without incriminating material.
Result: Additions made in AYs 2014–15 to 2018–19 were quashed in full.
However, ITAT clarified that the AO is free to initiate reassessment proceedings under Section 147/148, if otherwise permissible in law.
Final Takeaway
This case reiterates the legal sanctity of completed assessments and restricts arbitrary additions during search assessments. It serves as a reminder to authorities that Section 153A cannot be used as a roving tool without solid incriminating evidence.