2013 (5) TMI 874 - AT - Income Tax

Assessment u/s 153A/153C - Addition u/s 68 AND 14A -- Held that - additions made by the Assessing Officer with regard to unexplained gift of Rs. 10, 00, 000 made under section 68 and disallowance of Rs. 1, 01, 300 under section 14A are beyond the scope of section 153A / 153C. Consequently we set aside the impugned order passed by the learned Commissioner (Appeals) and on the preliminary ground itself both the additions are deleted. Thus the issues arising out of the ground are treated as allowed.

Summary

Issues:
1. Challenge to addition made under section 153C for assessment year 2005-06
2. Challenge to addition of gift received under section 68
3. Challenge to disallowance under section 14A

Analysis:

Issue 1:
The appellant challenged the addition made under section 153C for the assessment year 2005-06, arguing that no incriminating material was found during the search to warrant such addition. The appellant contended that once the assessment for the year had been finalized and no new material was discovered during the search, no additional assessment could be made. The appellant relied on relevant case laws to support their argument. The Departmental Representative, however, argued that specific questions during the search led to the addition. The Tribunal examined the facts and relevant provisions, concluding that no addition could be made under section 153A once the assessment had been finalized, and no incriminating material was found during the search. Citing the Mumbai Special Bench decision, the Tribunal held that additions could only be made based on incriminating material found during the search.

Issue 2:
The appellant contested the addition of a gift received under section 68, arguing that the gift was genuine and no incriminating material was found to suggest otherwise. The Tribunal noted that no seized material or incriminating documents were mentioned in the assessment order, indicating the lack of evidence to support the addition. Relying on the Mumbai Special Bench decision, the Tribunal ruled that the addition was beyond the scope of section 153A/153C and consequently deleted the addition.

Issue 3:
The appellant challenged the disallowance under section 14A, contending that it was not justified. Following the findings on the previous issues, the Tribunal held that since the addition/disallowance under section 14A was beyond the scope of section 153A, the challenge by the Revenue became irrelevant. Therefore, the Tribunal dismissed the Revenue's appeal.

In conclusion, the Tribunal allowed the appellant's appeal, setting aside the additions made under sections 68 and 14A. The Revenue's appeal was dismissed as the disallowance under section 14A was deemed infructuous based on the Tribunal's earlier findings.