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2018 (3) TMI 1672 - AT - Income TaxValidity of assessment made u/s. 153A - no incriminating documents whatsoever was found/seized during search operation u/s 132 - addition u/s 68 - Held that - It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed. For this, we derive support from the decision of Hon ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT . Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made. In the instant case, we find that the addition was made by the Assessing Officer on the sole ground that amount received on sale of investment of ₹ 9,94,50,000/- for the assessment year 2011-12 and ₹ 15,00,000/- for the assessment year 2012-13 were unexplained cash credit of the assessee. Thus, there is not reference to any search material by the Assessing Officer based on which such additions were made in the hands of the assessee. Therefore, we set aside the orders of lower authorities and delete the addition of ₹ 9,94,50,000/- for the assessment year 2011-12 and ₹ 15,00,000/- for the assessment year 2012-13, respectively and allow the grounds of appeal of the assessee.
Issues Involved:
1. Validity of assessment under Section 153A without incriminating documents. 2. Addition of ?9,94,50,000 (AY 2011-12) and ?15,00,000 (AY 2012-13) under Section 68. 3. Reliance on unsustainable evidence/statements without cross-examination. 4. Reliance on third-party statements without providing copies and cross-examination opportunities. Detailed Analysis: 1. Validity of Assessment Under Section 153A Without Incriminating Documents: The assessee argued that the assessments under Section 153A were invalid as no incriminating documents were found during the search operation. The Tribunal observed that the original returns filed by the assessee for AY 2011-12 and AY 2012-13 had become final as no notices under Section 143(2) were issued within the stipulated time. The Tribunal relied on various judicial precedents, including the Delhi High Court's decision in *CIT vs. Kabul Chawla*, which held that in cases of completed assessments, additions under Section 153A can only be made based on incriminating material found during the search. The Tribunal concluded that since no incriminating material was found, the assessments for the relevant years could not be disturbed. 2. Addition of ?9,94,50,000 (AY 2011-12) and ?15,00,000 (AY 2012-13) Under Section 68: The Assessing Officer (AO) added ?9,94,50,000 and ?15,00,000 to the assessee's income under Section 68, claiming these amounts were unexplained cash credits. The AO relied on statements from alleged entry operators and other third parties. The Tribunal noted that the AO did not reference any search material to justify these additions. It emphasized that in the absence of incriminating material found during the search, such additions could not be sustained. Consequently, the Tribunal deleted the additions made by the AO. 3. Reliance on Unsustainable Evidence/Statements Without Cross-Examination: The assessee contended that the AO relied on statements from third parties (Raj Kumar Tharad and Pradeep Garg) without providing an opportunity for cross-examination, violating principles of natural justice. The Tribunal referred to the Supreme Court's decision in *Andaman Timber Industries vs. CCE*, which held that not allowing cross-examination of witnesses whose statements are relied upon amounts to a violation of natural justice. The Tribunal found that the AO did not provide the full statements or the opportunity for cross-examination, rendering the reliance on these statements unsustainable. 4. Reliance on Third-Party Statements Without Providing Copies and Cross-Examination Opportunities: The AO relied on statements from third parties without providing copies to the assessee or opportunities for cross-examination. The Tribunal highlighted that such reliance without due process is against the principles of natural justice. It reiterated that the assessee must be given a fair chance to counter the evidence against them, and failure to do so invalidates the reliance on such statements. Conclusion: The Tribunal allowed the appeals of the assessee, holding that the assessments under Section 153A were invalid in the absence of incriminating material found during the search. It also deleted the additions made under Section 68, citing the lack of incriminating evidence and the denial of natural justice in not providing opportunities for cross-examination. The stay petitions filed by the assessee were dismissed as infructuous following the decision on the appeals.
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