2013 (11) TMI 1630 - AT - Income Tax

Assessment u/s 153C - Held that - As the facts emerge the assessing officer while framing the assessment u/s 153C and making these additions has not relied on any incriminating material. We find merit in the argument of ld. Counsel that the very same additions are made u/s 143(3) which is subject matter of appeal pending before ITAT. Therefore, the same additions cannot be made u/s 153C. No addition can be made without any incriminating evidence in an assessment u/s 153C.The issues which are pending before ITAT and are subject matter of its jurisdiction cannot be added u/s 153C assessment in view of proviso to Sec. 153A. - Thus addition deleted

Issues Involved:
1. Validity of assessment under sections 153C/143(3) of the Income Tax Act without granting proper opportunity.
2. Legality of notice issued under section 153C and assessment under section 153A/143(3) without satisfying statutory preconditions.
3. Addition of unexplained creditors as unexplained cash credit under section 68 of the Act.
4. Levying of interest under section 234B of the Act.

Issue 1: Validity of assessment under sections 153C/143(3) without proper opportunity:
The appellant contested that the Commissioner of Income Tax (Appeals) erred in upholding the assessment under sections 153C/143(3) without providing a fair opportunity. The appellant argued that the appeal was part of a batch related to a group of cases, and thus, the lack of appearance should not have led to an exparte disposal. However, during the hearing, the appellant did not press this ground, and it was rejected.

Issue 2: Legality of notice under section 153C and assessment under section 153A/143(3):
The appellant challenged the legality of the notice issued under section 153C and the assessment under section 153A/143(3) for not meeting statutory preconditions. The appellant argued that since no incriminating material was found during the search, the notice was deemed illegal and unsustainable. The Tribunal agreed that the assessing officer did not rely on any incriminating material for the additions made, which were already part of the regular assessment pending before ITAT. Consequently, the Tribunal deleted the additions based on the absence of incriminating evidence.

Issue 3: Addition of unexplained creditors under section 68 of the Act:
The appellant contested the addition of alleged unexplained creditors as unexplained cash credit under section 68 of the Act. The appellant argued that the addition lacked material found during the search and was unsupported by evidence, making it jurisdictionally unsustainable. The Tribunal noted that the assessing officer did not rely on any incriminating material for the additions, which were already under appeal before ITAT. Following legal precedents, the Tribunal deleted the additions due to the absence of incriminating evidence.

Issue 4: Levying of interest under section 234B of the Act:
The appellant challenged the levy of interest under section 234B, claiming it was not applicable to the circumstances of the case. However, the judgment did not provide specific details on the Tribunal's decision regarding this issue.

In summary, the judgment addressed various issues related to the validity of assessments, additions of unexplained creditors, and the legality of notices under different sections of the Income Tax Act. The Tribunal primarily focused on the absence of incriminating evidence to support the additions made by the assessing officer, leading to the deletion of those additions. The appellant's arguments were considered in light of legal precedents, resulting in the partial allowance of the appeal.

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