2017 (11) TMI 1719 - AT - Income Tax

Assessment u/s 153A - Unexplained credits u/s 68 - Held that - A notice was sent through registered post but the same has been returned with the remarks assessee left . No other address/correct address of the assessee has been filed by the Department . However, when the ground of appeal and the impugned order was perused, it was found that the CIT(A) has deleted the impugned addition made by the Assessing officer observing that no incriminating material was found during the search action carried out in the case of the assessee. That the income tax returns and the assessment proceedings there upon also stood concluded on the date of search action carried on 4.10.2012 and no assessment / re-assessment was pending on the said date. Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT wherein have been unanimous to hold that in the absence of any incriminating material found during the search act ion, when there was no pending assessment which can be said to have abated on the date of search, the additions cannot be made. - Decided in favour of assessee.

Summary

Issues: Department's appeal against CIT(A)'s order deleting addition on unexplained credits with respect to share application money under section 68 of the Income-tax Act, 1961.

Analysis:
1. Identical Issues: The present appeals by the Department challenge the CIT(A)'s decision to delete the addition made by the Assessing Officer concerning unexplained credits related to share application money. Both appeals were heard together and disposed of by a common order due to the identical issue involved.

2. Absence of Assessee: Despite no representation from the assessee and a returned notice stating 'assessee left,' the CIT(A) had deleted the impugned addition. The CIT(A) based this decision on the lack of incriminating material found during a search action, with completed income tax returns and assessment proceedings. Reference was made to various judicial precedents supporting the view that additions cannot be made without incriminating material during a search action.

3. Judicial Precedents: The CIT(A) relied on decisions by the Tribunal and High Courts, such as the Hon'ble Bombay High Court and Delhi High Court, to support the deletion of the addition. The Department's contention regarding a specific case was dismissed, with the Tribunal finding no merit in the argument. Further, the Tribunal referenced subsequent decisions by the Delhi High Court to reinforce the position that the absence of incriminating material during a search action justifies the deletion of additions.

4. Decision and Dismissal: The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal of the Revenue. The decision in the other appeal of Revenue was also based on the same reasoning and was consequently dismissed. Both appeals by the Revenue were ultimately dismissed, upholding the deletion of the addition on unexplained credits related to share application money.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition made by the Assessing Officer, emphasizing the importance of incriminating material in justifying additions during a search action. The reliance on judicial precedents and subsequent decisions by higher courts further supported the dismissal of the Revenue's appeals.