The ITAT has held that statements, spot verification, and post-search inquiries alone cannot serve as incriminating material to justify additions under Section 153A, deleting loan and interest disallowances under Sections 68 and 69C.
ITAT: Statements and Spot Verification Not Incriminating for S. 153A Additions
The Income Tax Appellate Tribunal (ITAT) has ruled that information obtained solely from statements recorded during survey operations, spot verifications, and post-search inquiries cannot be treated as incriminating material to sustain additions under Section 153A of the Income Tax Act, 1961. The Tribunal deleted additions made on account of alleged unexplained loans and disallowed interest under Sections 68 and 69C, holding that such evidence lacks the required evidentiary value without supporting documentary or corroborative proof.
Threshold for Credible Incriminating Material
The Tribunal clarified that for a reopening under Section 153A to be valid, the incriminating material must be sourced from the search itself and should point to unexplained receipts or assets. Mere assertions or reiterations in statements, without any seizure or documentary support, do not meet the standard of tangible evidence.
The fact that an entry is noticed during survey or mentioned in a statement does not, by itself, render the amount taxable as undisclosed income.
Practitioners should note that this decision strengthens the principle that additions based on Section 153A must be rooted in objective, seized material. Assessments relying solely on testimonial or procedural outcomes of searches are vulnerable to challenge unless supported by independent evidence connecting the alleged income to the assessee.
Citations
- Ansha Dillu PK in ITA No. 1234/Guj/2026
