2015 (7) TMI 240 - AT - Income Tax

Validity of ssessment u/s 153 - Addition u/s 68 - Held that - No addition can be made for this assessment year u/s 153A since no incriminating material was unearthed during the course of search and admittedly original assessment has not abated as on date of search. So we are inclined to follow the view of the Coordinate Bench in the assessee s group company M/s Aggarwal Plaza Pvt. Ltd Vs. DCIT. 2014 (7) TMI 1133 - ITAT DELHI As we have upheld the ground of the assessee in CO that de-hors any incriminating material no addition can be made while computing Total income under section 153A of the Act we are not inclined to adjudicate the appeal of the Revenue as it would be an academic exercise only so we dismiss it. - Decided in favour of asseessee.

Issues Involved:

1. Deletion of addition under Section 68 of the Income Tax Act, 1961.
2. Validity of proceedings initiated under Section 153A of the Income Tax Act.
3. Confirmation of assessment order under Section 153A without incriminating material.
4. Charging of interest under Section 234B(3) of the Income Tax Act.

Detailed Analysis:

1. Deletion of Addition under Section 68 of the Income Tax Act, 1961:

The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 20,00,000 made by the Assessing Officer (AO) under Section 68 of the Income Tax Act. The AO had observed that the assessee received share capital/share application money from various entities, some of which were related to the Unity Group. Despite verifying the sources of funds for these entities, the AO concluded that the assessee failed to prove the creditworthiness of the creditors and treated the amount as income from undisclosed sources. The CIT(A) deleted this addition, leading to the Revenue's appeal.

2. Validity of Proceedings Initiated under Section 153A of the Income Tax Act:

The assessee challenged the validity of the proceedings initiated under Section 153A, arguing that no incriminating material was found during the search. The original assessment had been completed under Section 143(3), and the reassessment was based on existing records without any new evidence. The Tribunal examined whether the AO could make additions without incriminating material during Section 153A proceedings.

3. Confirmation of Assessment Order under Section 153A without Incriminating Material:

The Tribunal noted that the AO could not arbitrarily make additions based on surmises and conjectures, even during best judgment assessments. The scope of assessment under Section 153A includes evidence unearthed during the search, existing records not previously considered, and any new evidence brought to the AO's notice. The Tribunal emphasized that additions must be based on evidence. The CIT(A) found no incriminating material during the search to justify the addition, and the Tribunal upheld this finding, referencing the Special Bench decision in All Cargo and the Bombay High Court's concurrence.

4. Charging of Interest under Section 234B(3) of the Income Tax Act:

The assessee contended that the interest under Section 234B(3) should be charged from 10.04.2008, the date of the original assessment, rather than from 25.10.2007. The Tribunal did not specifically address this issue in detail, as the primary focus was on the validity of the additions under Section 153A.

Conclusion:

The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's cross-objection. It upheld the CIT(A)'s deletion of the addition under Section 68, citing the absence of incriminating material during the search. The Tribunal emphasized that additions under Section 153A must be based on evidence, and in this case, no new incriminating material was found. Consequently, the reassessment was deemed invalid, and the original assessment under Section 143(3) remained undisturbed. The Tribunal's decision was consistent with the Special Bench ruling in All Cargo and the Bombay High Court's affirmation.

← Previous Next →