Bombay High Court Dismisses Revenue's Appeal in Landmark Income Tax Case

Court rules that additions in completed assessments require incriminating material found during search, upholding ITAT's decision favoring Milan Kavin Parikh.

In a significant judgment delivered on November 25, 2025, the Bombay High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT), providing relief to Milan Kavin Parikh, who was embroiled in a protracted legal battle over alleged undisclosed overseas bank accounts. The Revenue's appeal challenging the ITAT's order was dismissed, reinforcing the legal principle that additions in completed or unabated assessments under Section 153A of the Income Tax Act, 1961 require incriminating material discovered during a search.

The case stemmed from a search and seizure operation conducted on August 8, 2011, targeting M/s. Mahendra Brothers Exports Pvt. Ltd. and its affiliates, including Parikh. The Revenue alleged that undisclosed foreign bank accounts were held in HSBC Bank (Suisse) SA Geneva, naming Parikh as a beneficial owner based on a "base note" received from French authorities. However, no incriminating material linking Parikh directly to these accounts was found during the search.

The Assessing Officer had initially added significant amounts to Parikh's income based on the base note, but this decision was overturned by the ITAT, which found the additions unsustainable in the absence of incriminating evidence from the search. The Revenue's appeal to the Bombay High Court was subsequently dismissed by a bench comprising Justices G.S. Kulkarni and Aarti Sathe. The court emphasized that without incriminating material unearthed during a search, the Assessing Officer cannot reassess income based solely on post-search documents like the base note.

This ruling aligns with the Supreme Court's precedent in Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd., which restricts the scope of Section 153A to cases where actual incriminating material is found during searches. The Bombay High Court's decision further solidifies the legal understanding that completed assessments cannot be reopened without meeting specific legal thresholds, ensuring taxpayer protections against arbitrary reassessment.

Mr. Suresh Kumar, representing the Revenue, and Mr. Atul Jasani, representing Parikh, presented their arguments before the court. The judgment has been hailed as a reaffirmation of the principle that tax authorities must adhere strictly to procedural requirements, especially in cases involving international financial transactions.

Bottom Line:

Income Tax Act - Addition cannot be made by Assessing Officer in respect of completed/unabated assessments without incriminating material found during the course of search under Section 132 or requisition under Section 132-A of the Act.

Statutory provision(s): Income Tax Act, 1961 Sections 153A, 132, 132-A, 69, 147, 148.

Pr. Commissioner of Income Tax-Central-1 v. Milan Kavin Parikh, (Bombay)(DB) : Law Finder Doc Id # 2820372