2016 (11) TMI 1387 - AT - Income Tax

Addition made under section 68 - assessments made under section 153A - Held that - The Revenue could not bring on record any incriminating material suggesting for above addition. Therefore respectfully following the jurisdictional High Court decision in the case of All Cargo Global Logistics 2015 (5) TMI 656 - BOMBAY HIGH COURT and CIT vs. Gurinder Singh Bawa 2015 (10) TMI 1761 - BOMBAY HIGH COURT , we hold that the assessments made under section 153A for the assessment years 2006-07 and 2007-08 are bad in law as there is no incriminating material found in the course of search suggesting for making additions under section 68 of the Act in these two assessment years. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of assessments under section 143(3) read with section 153A of the Act.
2. Deletion of additions made under section 68 of the Act.
3. Deletion of addition on account of unexplained receipt from the sale of shares.
4. Deletion of addition on account of unexplained investment for receiving shares.
5. Deletion of addition on account of loans claimed to have been accepted from specific parties.

Issue-wise Detailed Analysis:

1. Legality of Assessments under Section 143(3) read with Section 153A of the Act:
The Revenue appealed against the CIT(A)'s order for the assessment years 2006-07 and 2007-08, challenging the deletion of additions made under section 68. The assessee filed a petition under rule 27 of the ITAT Rules, contesting the legality of the assessments under section 143(3) read with section 153A, arguing that no incriminating material was found during the search under section 132. The Tribunal noted that the CIT(A) had confirmed the legality of the assessments, stating that the assessments were abated due to the presence of seized material. However, the Tribunal found no mention of such incriminating materials in the CIT(A)'s order or the assessment order and concluded that since no proceedings were pending at the time of the search, the assessments were not abated. The Tribunal cited several cases, including All Cargo Global Logistics and CIT v. Gurinder Singh Bawa, to support the view that additions in non-abated assessments could only be made based on material found during the search. Consequently, the Tribunal held that the assessments for 2006-07 and 2007-08 were bad in law.

2. Deletion of Additions Made under Section 68 of the Act:
For the assessment year 2008-09, the Revenue challenged the CIT(A)'s deletion of an addition under section 68 amounting to ?22,25,265/-. The Tribunal found that no incriminating material was discovered during the search to justify the addition and noted that the transactions were recorded in the regular books of accounts. The Tribunal upheld the CIT(A)'s order, rejecting the Revenue's appeal.

3. Deletion of Addition on Account of Unexplained Receipt from the Sale of Shares:
The Revenue contested the deletion of an addition related to unexplained receipts from the sale of shares of ARSS Infrastructures Projects Ltd. The Tribunal observed that similar additions based on the same material were deleted in the cases of Jyoti Bright Bar Pvt. Ltd. and Deven J Mehta. The Tribunal found no new evidence presented by the Revenue and upheld the CIT(A)'s order, dismissing the Revenue's appeal.

4. Deletion of Addition on Account of Unexplained Investment for Receiving Shares:
For the assessment year 2009-10, the Revenue appealed against the CIT(A)'s deletion of an addition related to unexplained investments in shares of ARSS Infrastructures Projects Ltd. The Tribunal noted that the facts and circumstances were similar to those in the previous assessment year (2008-09) and upheld the CIT(A)'s order, rejecting the Revenue's appeal.

5. Deletion of Addition on Account of Loans Claimed to Have Been Accepted from Specific Parties:
For the assessment year 2011-12, the Revenue challenged the CIT(A)'s deletion of an addition of ?3,04,00,000/- under section 68, related to loans from Neelam Shah and Bhuta Investment Pvt. Ltd. The Assessing Officer had made the addition due to incomplete information provided by the assessee. The CIT(A), after considering the assessee's submissions and the seized material, found no justification for the addition. The Tribunal reviewed the CIT(A)'s detailed findings and found no reason to interfere, upholding the CIT(A)'s order and rejecting the Revenue's appeal.

Conclusion:
The Tribunal dismissed all the appeals of the Revenue, sustaining the CIT(A)'s orders for all the assessment years in question. The Tribunal emphasized the necessity of incriminating material found during the search to justify additions in assessments under section 153A, particularly for non-abated years.