SECTION 153A JURISDICTION INVALID WITHOUT INCRIMINATING MATERIAL; ABHISAR BUILDWELL APPLIED1

By | December 20, 2025
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SECTION 153A JURISDICTION INVALID WITHOUT INCRIMINATING MATERIAL; ABHISAR BUILDWELL APPLIED1

ISSUE

Whether the Tribunal was correct in quashing additions made under Section 153A (Search Assessment) on the ground that no incriminating material was found during the search, and whether any substantial question of law arises when the Tribunal’s order is based on settled Supreme Court precedents.

FACTS

  • The Search: A search action was conducted, leading to the initiation of assessment proceedings under Section 153A against the assessee.

  • The Additions: The assessment involved two transactions. The Assessing Officer (AO) made an addition of 100% for one transaction and 20% for the other.

  • First Appeal: The Commissioner (Appeals) granted partial relief, reducing the additions to 15% for both transactions.

  • Tribunal’s Ruling: On further appeal, the Tribunal quashed the additions entirely. It held that since no incriminating material was found during the search regarding these transactions, the assumption of jurisdiction to make additions under Section 153A was itself invalid.

  • Revenue’s Appeal: The Revenue appealed to the High Court, contending that a substantial question of law arose from the Tribunal’s order.

DECISION

  • Settled Law: The High Court noted that the Tribunal’s decision was based on the jurisdictional High Court’s ruling in Continental Warehousing Corporation and, crucially, the Supreme Court’s affirmation in Pr. CIT v. Abhisar Buildwell (P.) Ltd.

  • The Abhisar Principle: The Supreme Court in Abhisar Buildwell conclusively held that for completed/unabated assessments, no addition can be made by the AO under Section 153A in the absence of incriminating material unearthed during the search.2

     

  • No Question of Law: Since the Tribunal merely applied the settled law laid down by the Supreme Court to the facts of the case, no substantial question of law arose for the High Court to adjudicate.

  • Verdict: The Revenue’s appeal was dismissed. [In Favour of Assessee]

KEY TAKEAWAYS

  • Abhisar Buildwell is Final: This case reinforces that the Supreme Court’s ruling in Abhisar Buildwell is the final word on Section 153A. If the assessment for a year was not pending (abated) on the date of the search, the AO is strictly limited to additions based only on seized incriminating material.

  • Routine Additions Invalid: The AO cannot use Section 153A to re-examine routine transactions (like share capital, unsecured loans, or profit margins) disclosed in the original return unless the search uncovers hidden evidence proving them bogus.3

     

  • Litigation Strategy: If you have a pending 153A appeal where additions were made without reference to seized material, cite Abhisar Buildwell immediately to seek quashing of the order.

HIGH COURT OF BOMBAY
Principal Commissioner of Income Tax
v.
J Kumar Infraprojects Ltd.*
M.S. Sonak and Advait M. Sethna, JJ.
IT APPEAL (IT) NO. 144 OF 2025
DECEMBER  3, 2025
Suresh Kumar for the Appellant. Shashi B. for the Respondent.
ORDER
1. Heard learned counsel for the parties.
2. The tax effect in this Appeal is less than Rs.2 crores. However, Mr. Suresh Kumar submits that issue of bogus purchases is involved and therefore the Appeal would fall within the exceptions under CBDT circulars. Without going into the issue of whether the Appeal falls within the exceptions, we have heard learned counsel for the parties on merits.
3. In this case, the Assessing Officer in respect of one of the transactions made an addition of 100% and in respect of the other only 20%. The CIT Appeals has reduced the above to 15% in relation to both the transactions. The ITAT, upon an Appeal by the Assessee, has quashed the additions by holding that during the search no incriminating material was found and therefore, the invocation of jurisdiction under Section 153(a) of the IT Act was incompetent. The ITAT has relied upon this Court’s decision in the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd ITR 645 (Bom).
4. Mr. Suresh Kumar however submits that this Appeal be admitted on the substantial questions of law formulated in paragraph 5 of the Appeal memo.
5. Since the Tribunal’s decision is based on the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd (supra), we do not think that the questions framed in the memo of Appeal can be styled as substantial questions of law. Further, this Court’s view in Continental Warehousing Corporation (Nhava Sheva) Ltd (supra) was approved by the Hon’ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd  ITR 212 (SC). In similar circumstances, we declined to admit Income Tax Appeal No.18 of 2025 by our order dated 11 November 2025.
6. Besides, we note that with regard to the second transaction, the issue involved related only to the estimation of the additions. Even this issue gives rise to no substantial question of law as has been held by us in several other matters.
7. For the above reasons, we dismiss this Appeal as involving no substantial questions of law. No costs.