Case Number: ITA 683/DEL/2021
Appellant: Startle Constructions Pvt Ltd, New Delhi
Respondent: ACIT Central Circle-13, New Delhi
Assessment Year: 2016-17
Case Filed on: 2021-06-10
Order Type: Final Tribunal Order
Date of Order: 2023-08-25
Pronounced on: 2023-08-25
This case involves Startle Constructions Pvt Ltd and the ACIT Central Circle-13, focusing on the assessment year 2016-17. The primary issues under consideration include the validity of assessments made under section 153C of the Income Tax Act and the disallowance of assumed expenditure. The appellant contested the assessment on procedural grounds and improper disallowances.
The appeals span multiple assessment years from 2012-13 to 2016-17, involving different appellants such as Zoom Developers SEZ (Indore) Pvt Ltd, Tyagi Portfolio Management Pvt Ltd, and Jaguar Equity Ltd, all represented by the same legal counsel. The issues under contention include the validity of assessments under section 153C and disallowances of assumed expenditure.
On 23.07.2015, a search and seizure operation under section 132 of the Income Tax Act was conducted at the premises of Shri Deepak Aggarwal, Shri Mukesh Kumar, and related entities. The operation revealed incriminating documents suggesting involvement in providing accommodation entries. Based on these documents, proceedings under section 153C were initiated against the appellants.
The Satisfaction Note indicated that the seized documents had a bearing on the determination of the total income of the appellants. However, the appellants argued that the Satisfaction Note lacked specific correlation with the assessment years in question.
The appellants challenged the validity of the assessments on the following grounds:
The respondent, represented by the CIT-DR, defended the assessments, citing precedents and arguing that the Satisfaction Note and subsequent assessments were legally sound.
The ITAT Delhi Tribunal, comprising Shri N.K. Billaiya and Shri Kul Bharat, examined the case records, satisfaction notes, and relevant documentary evidence. The Tribunal’s key findings included:
In light of the findings, the Tribunal quashed the assessment orders for all appellants, declaring the assessments invalid due to lack of incriminating material. The appeals were allowed, providing significant relief to the appellants.
The Tribunal emphasized the importance of strict adherence to procedural requirements in search and seizure cases, reiterating the need for clear and specific incriminating evidence to support assessments under section 153C.
The order was pronounced in the open court on 25.08.2023, marking a significant victory for Startle Constructions Pvt Ltd and other appellants in this case.
This ruling underscores the critical importance of procedural accuracy and the necessity for specific evidence in tax assessment cases, particularly under section 153C of the Income Tax Act. It serves as a precedent for future cases involving search and seizure operations, highlighting the need for detailed and relevant incriminating material to substantiate assessments.
In the detailed analysis of the procedural background, the Tribunal reviewed the sequence of events leading to the assessment. The initial search and seizure operations were conducted on 23.07.2015, with subsequent searches revealing documents and statements confirming the involvement of the group in providing accommodation entries. The satisfaction note, drawn on 23.03.2018, initiated the proceedings under section 153C.
The assessment orders for the years 2012-13 to 2016-17 were identically worded, with variations only in the quantum of additions. The primary contention was the lack of incriminating material directly linking the seized documents to the assessment years in question. The Tribunal found that the satisfaction note did not establish a clear connection between the documents and the assessment years.
The Tribunal referred to the Supreme Court ruling in Singhad Technical Education Society 397 ITR 344, which held that the validity of assessment orders is legally unsustainable if the seized documents do not establish any co-relation with the assessment years in question. This precedent was crucial in the Tribunal’s decision to quash the assessment orders.
The Tribunal also considered the CBDT Circular No. 1/2015 dated 21.01.2015, which provided explanatory notes to the provisions of the Finance (No. 2) Act, 2014. The circular emphasized the requirement for incriminating material to substantiate assessments under section 153C, aligning with the legislative amendments that took effect from 1st October 2014.
The final judgment emphasized that the additions and disallowances made by the Assessing Officer were devoid of any incriminating material found during the search. Consequently, the assessment orders were quashed, marking a decisive victory for the appellants. The order was pronounced in the open court on 25.08.2023.
This case highlights the importance of procedural rigor and the necessity for specific evidence in tax assessments. The Tribunal’s ruling in favor of the appellants underscores the need for clear and relevant incriminating material to support assessments under section 153C of the Income Tax Act. The decision serves as a significant precedent for similar cases, emphasizing the critical role of procedural accuracy and substantial evidence in tax assessment proceedings.
Startle Constructions Pvt Ltd vs ACIT Central Circle-13: Case Filed for Assessment Year 2016-17
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