2018 (2) TMI 1779 - AT - Income Tax

Assessment u/s 153A - proof of incriminating material - Held that - No such incriminating material or evidence found/seized during search to conclude the generation of undisclosed income of the appellant the decision of Hon ble Delhi High Court relied upon by the appellant in the case of Kabul Chawla vs. CIT 2015 (9) TMI 80 - DELHI HIGH COURT is applicable in this case. Accordingly respectfully following the decision of the jurisdictional high court where it has been held that in an unabated assessment under section 153A of the Act the addition can be made only on the basis of incriminating material found and seized during the course of search whereas the addition made in the present case is without having any incriminating material/seized document is not sustainable. - Decided in favour of assessee.

Summary

Issues:
1. Addition of unexplained share application money under section 68.
2. Validity of assessment under section 153A.
3. Applicability of case laws regarding assessment proceedings.

Issue 1: Addition of unexplained share application money under section 68:
The case involved the Revenue appealing against the deletion of additions made by the Assessing Officer regarding unexplained share application money received by the assessee. The Assessing Officer observed discrepancies in the amounts received and issued show cause notices. The ld. CIT(A) deleted the additions after considering submissions and case laws. The Revenue contended that the additions were valid, but the Tribunal found that no incriminating material was found during the search, rendering the additions unsustainable. The Tribunal upheld the ld. CIT(A)'s decision based on legal grounds and lack of evidence supporting the additions.

Issue 2: Validity of assessment under section 153A:
The Revenue argued that the assessment under section 153A was valid as the case was processed under section 143(1)(a) and no assessment order was passed earlier. However, the Tribunal noted that the assessment proceedings were completed and unabated at the time of search, as confirmed by the Assessing Officer. The Tribunal relied on case laws and held that the assessment proceedings were in order, dismissing the Revenue's appeal.

Issue 3: Applicability of case laws regarding assessment proceedings:
The appellant raised legal and merit-based arguments against the additions made under section 68. The Tribunal analyzed the submissions and found that no incriminating material was found during the search to support the additions. The Tribunal emphasized that additions under section 153A should be based on incriminating material, which was lacking in this case. Relying on jurisdictional High Court decisions, the Tribunal concluded that the additions were not sustainable and dismissed the appeal of the Revenue based on legal grounds.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the deletion of additions related to unexplained share application money and confirming the validity of assessment proceedings under section 153A based on the absence of incriminating material. The decision was in line with legal provisions and jurisdictional High Court rulings, emphasizing the importance of evidence in making additions under section 153A.