What Is Incriminating Material in Income Tax Law?

 

What Is Incriminating Material in Income Tax Law?

Incriminating material refers to any document, record, statement, digital evidence, or seized item during a search or survey that directly indicates undisclosed income, transactions, or assets of the taxpayer, and can justify an addition in assessment or reassessment.

📚 Judicially Recognized Definition

“Incriminating material” is any evidence unearthed during a search which:

  1. Relates to a specific assessment year, and

  2. Reveals income not disclosed in the original return or books of account


📂 Examples of Incriminating Material

TypeExamples
💵 Cash / JewelleryUnexplained cash or jewellery without proper source
📝 DocumentsUnaccounted invoices, promissory notes, loan ledgers
🖥️ Digital evidenceFiles/emails showing black money, hawala, or bogus transactions
📒 Books of accountParallel books of accounts
📄 AgreementsBenami transactions, property undervaluation
💼 Diaries / slipsUnrecorded business transactions or undisclosed sales

⚖️ Legal Importance in Sections 153A/153C

Under Section 153A (search assessment), additions for years where return is already filed and processed can be made only if there is incriminating material found during search.

📌 This principle is laid down in several landmark cases.

🔖 Key Judicial Precedents

  1. CIT v. Kabul Chawla (Delhi HC, 2015)

    • No addition without incriminating material for completed assessments

    • This is the leading case on the issue

  2. PCIT v. Meeta Gutgutia (Delhi HC, 2017)

    • Confirmed that completed assessments cannot be reopened under 153A without fresh incriminating evidence

  3. SC in Sinhgad Technical Education (2017)

    • Incriminating material must relate to that specific assessee and year


✅ Summary Table

IssueIncomplete (Pending) AssessmentCompleted Assessment (under 143(1)/143(3))
Can AO make addition under 153A?YesOnly if incriminating material is found during search
Is incriminating material necessary?NoYes – mandatory as per courts

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