2018 (6) TMI 1677 - AT - Income Tax

Assessment u/s 153C - Addition made u/s 68 - unexplained cash credit - HELD THAT - When all the documents have already been brought on record by the assessee during assessment proceedings in the completed assessment, the addition made by the AO u/s 153C is outside the scope of proceedings. So, the ld. CIT (A) has rightly deleted the addition on legal ground. Even, on merits, when the assessee has brought on record complete identity with PAN, confirmation, bank statements, memorandum of article and audited financials of BJ Buildwell Pvt. Ltd. to substantiate the genuineness of the transactions, the AO cannot make addition on the basis of surmises that funds received by the assessee from BJ Buildwell Pvt. Ltd. were in fact has been received from Jain Brothers. AO was not satisfied with the transactions explained by the assessee, the said amount is required to be assessed in the hands of BJ Buildwell Pvt. Ltd.. Even otherwise, for arguments sake, even if it is assumed that addition is to be made on the basis of satisfaction note, which is not recorded on the basis of any incriminating material nor it pertains to the year under assessment, qua amount received by virtue of the Agreement to Sell dated 05.05.2006, the addition on the basis of which can only be made in the relevant assessment year and not in the year under assessment. - Decided against revenue

Summary

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act on account of unexplained cash credit.
2. Validity of proceedings initiated under Section 153C of the Income Tax Act based on seized documents.

Detailed Analysis:

1. Deletion of Addition under Section 68:
The Revenue challenged the deletion of an addition amounting to ?4,66,00,000/- made under Section 68 of the Income Tax Act, which pertains to unexplained cash credit. The Assessing Officer (AO) made this addition after determining that the amount was credited in the assessee's books from M/s. BJ Buildwell Pvt. Ltd., which was later shown to be sourced from different entities, specifically Jain Brothers. The AO concluded that the assessee failed to prove the genuineness of these transactions. However, the CIT (A) deleted this addition, and the Tribunal upheld this decision. The Tribunal noted that the assessee had provided sufficient documentation, including PAN, confirmation, bank statements, and audited financials of BJ Buildwell Pvt. Ltd., to substantiate the genuineness of the transactions. The AO's addition was deemed to be based on surmises and not on concrete evidence.

2. Validity of Proceedings under Section 153C:
The proceedings under Section 153C were initiated based on documents seized during a search operation on 26.11.2009. The AO relied on an "Agreement to Sell" dated 05.05.2006 between UTI and Nahind Finlease Pvt. Ltd., which was considered as incriminating material. However, the Tribunal found that this document did not pertain to the assessment year in question and had already been disclosed by the assessee in the regular books of accounts. The Tribunal referred to the Supreme Court’s decision in CIT vs. Sinhgad Technical Education Society, which held that the incriminating material must pertain to the assessment years in question for proceedings under Section 153C to be valid. The Tribunal concluded that the addition made by the AO was outside the scope of Section 153C proceedings as no incriminating material pertaining to the relevant assessment year was found.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT (A)'s decision to delete the addition under Section 68 and ruling that the proceedings under Section 153C were not valid as they were not based on relevant incriminating material. The Tribunal emphasized that the AO should have assessed the amount in the hands of BJ Buildwell Pvt. Ltd. if not satisfied with the transactions explained by the assessee. The Tribunal also noted that the satisfaction note did not pertain to the assessment year in question, making the addition unsustainable.