Shorya Trading Company Pvt. Ltd., vs. ACIT, ITA No.1365/Del/2022
Income Tax Appellate Tribunal (ITAT) Delhi quashed an assessment made under Section 153A of the Income Tax Act, 1961 in the case of Shorya Trading Company Pvt. Ltd. for Assessment Year 2017–18. The Tribunal held that since no search warrant was issued and no incriminating material was found or seized, the assumption of jurisdiction under Section 153A was without authority of law.
Background of the Case:
- The assessee filed its original return declaring income of ₹870.
- Assessment was reopened under Section 153A and completed under Section 143(3) r.w.s. 153A, making an addition of ₹8.10 lakhs as unexplained cash deposits during demonetization.
- The assessee challenged the jurisdiction of the AO, contending that no search under Section 132 was ever conducted at its premises and only a survey under Section 133A was carried out.
Tribunal’s Findings:
- The AO admitted in writing that the assessee’s name did not appear in any panchnama and no documents relating to the assessee were found or seized.
- ITAT referred to Section 153A and emphasized that a valid search or requisition is a sine qua non for invoking jurisdiction under this section.
- Since the entire proceedings were triggered solely on a survey and not on a valid search, the notice under Section 153A was invalid and the assessment order was quashed.
Legal Precedents Relied On:
- PCIT vs. Abhisar Buildwell (SC)
- CIT vs. Sarvamangalam Builders (Delhi HC)
- CIT vs. Balaji Yarn Ltd. (Bombay HC)
- Siksha ‘O’ Anusandhan vs. CIT (Orissa HC)
These cases collectively affirm that survey operations cannot trigger jurisdiction u/s 153A unless a search is also conducted.
Key Takeaway:
This decision reinforces the principle that Section 153A cannot be invoked merely on the basis of a survey. Unless a search is conducted and the assessee is covered under a panchnama or search warrant, no notice under Section 153A can be issued. This case is a valuable precedent for challenging assessments initiated under Section 153A in absence of a valid search.