IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "D", MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER And SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA. No.412/MUM/2026 Assessment Year: 2017-18 Dilmohan Singh Pannu, Assistant Commissioner of Income Tax, Flat No. 162, Neelkanth Apartments, Sector 13, Rohini, Vs. Central Circle 2(1), Mumbai, Room Delhi. No.804, 8th Floor, PrathisthaBhavan, Old CGO Annexe, MaharshiKarve PAN No. ABFPS 8999 A Road, Mumbai.

(Appellant) (Respondent)

Present for:

Assessee : Shri KapilHirani, Ld. Adv.Shri byRevenue by : Umashankar Prasad, Ld. CIT D.R.

Date of Hearing : 25.03.2026 Date of Pronouncement : 25.03.2026 ORDER Per: Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Assessee against the order dated 10-11-2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) [in short “Ld. Commissioner”] under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2017-18.

2. Having heard the parties and perusing the material available on record, including the assessment order dated 25.03.2022 passed under section 153A of the Act, we observed that an addition of ₹60,00,000/- has been made by the Assessing Officer on the basis of a WhatsApp chat recovered from the possession of a third person, wherein the figure ‘60’ was mentioned, which was construed by the Assessing Officer as ‘₹60,00,000/-‘.

3. It is an admitted position that during the course of search and seizure operation conducted in the case of the Assessee, only bank locker of the Assessee was searched and no incriminating material was either found or seized from such locker. Thus, the core issue that arises for our consideration is “whether the addition made on the basis of incriminating material recovered from the possession or premises of 3^rd party may be family or blood relation, by way of assessment proceedings and order under section 153A of the Act, is sustainable in the absence of any incriminating material recovered from the premises or search of the Assessee, in whose hand the addition has ultimately been made”.

4. We observe that the Hon’ble Delhi High Court in the case of CIT v. Kabul Chawla380 ITR 173 has elaborately dealt with the scope of assessment under section 153A of the Act and held that the existence of incriminating material found during the course of search is a sine qua non for making the addition pursuant to a search. And in respect of unabated assessments, no addition can be made in the absence of incriminating material unearthed during the search.

5. The said principle has subsequently been affirmed by the Hon’ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd.(2023) 454 ITR 212. (S.C) dated 12/05/2023

6. The Ld. CIT-DR vehemently argued that for making an addition under section 153A of the Act, it is not necessary that incriminating material must be found from the premises of the Assessee alone, and that material found from places of related persons (family members) covered under the search may by on different dates or places, can be relied upon for making the addition by way of assessment proceedings/order under section 153A of the Act.

7. We are unable to accept the aforesaid contention of the Ld. DR. as the provisions of sections 153A and 153C of the Act operate in distinct fields and are governed by their respective statutory parameters. Any deviation from the prescribed statutory scheme, would render the assessment unsustainable in law. If any incriminating material is unearthed during the search from third person then the appropriate mechanism is provided in section 153C of the Act and/or the proceedings should have been initiated and carried out under the provisions of section 153C of the Act but not under the provisions of section 153C of the Act, as done in this case.

8. The Hon’ble Co-ordinate Bench of the Tribunal at Delhi in Gulshan Investment Pvt. Ltd. &Ors. VS. Joint Commissioner of Income-tax {ITA No 3872/Del/2024 (Α.Υ. 201