2019 (9) TMI 1309 - AT - Income Tax

Assessment proceedings u/s 153A - no incriminating material found or seized during the course of search - HELD THAT - Various binding precedents that in absence of any incriminating material found or seized during the course of search, the addition cannot be made by the A.O. in the proceedings U/s 153A of the Act when the assessment for the year under consideration was not pending as on the date of search. Thus, following the earlier decision of this Tribunal as well as judgment of the Hon ble Jurisdictional High Court and the other judgments relied upon by the ld AR, hold that the addition made by the A.O. on account of agricultural income treating the same as income from other sources in absence of any incriminating material is not sustainable and the same is deleted. Addition on account of FDR interest - suppression of income - interest as per the bank account credit was calculated at higher amount having a difference of ₹ 3,839/- which as submitted that this difference is due to some mistake in computation while preparing statement of affairs as well as the excess interest was offered in the other years from A.Y. 2010-11 to 2016-17- HELD THAT - From perusal of the record, it is noted that the assessee has explained the difference of ₹ 3,839/- on FDR interest being the excess amount was offered to tax in the other years and there is no suppression of any income. From perusal of the details, find that this is only a calculation mistake while preparing the statement of affairs and overall interest income was offered by the assessee which is more than the actual interest on FDR. As regards the addition made on account of opening balance, it is clear from the cash book that there was no opening balance as on 01/4/2009. Thus, this addition is contrary to the facts and records, hence, even on merits, these additions are not sustainable and the same are deleted.

Summary

Issues Involved:
1. Validity of additions made by the A.O. in the assessment framed U/s 153A without incriminating material.
2. Addition of ?3,839/- on account of difference between FDR interest disclosed and declared.
3. Addition of ?98,000/- on account of alleged unexplained opening cash balance.

Issue-wise Detailed Analysis:

1. Validity of Additions U/s 153A Without Incriminating Material:
The primary issue was the validity of additions made by the Assessing Officer (A.O.) under Section 153A of the Income Tax Act, 1961, without any incriminating material found during the search. The Tribunal noted that the original assessment for the year under consideration was not pending as on the date of the search and thus was not abated. The Tribunal emphasized that under Section 153A, the A.O. is required to reassess the income of the assessee. However, in the absence of any incriminating material found or seized during the search, no additions could be made regarding income already declared by the assessee in the original return. The Tribunal relied on precedents including the judgment of the Hon’ble Jurisdictional High Court in the case of Jai Steel (India) Vs ACIT, the Delhi High Court decision in PCIT Vs Meeta Gutgutia, and the ITAT Jaipur Bench decision in Shri Banna Lal Jat Vs ACIT. It was concluded that since no incriminating material was found during the search, the addition made by the A.O. was not sustainable and was deleted.

2. Addition of ?3,839/- on Account of Difference in FDR Interest:
The Tribunal examined the addition of ?3,839/- made by the A.O. due to a difference between the FDR interest disclosed in the statement of affairs and the amount declared in the return filed under Section 153A. The assessee explained that the interest was declared as per Form No. 16A issued by the bank and that the difference arose due to a calculation mistake while preparing the statement of affairs. The Tribunal found that the overall interest income offered by the assessee was more than the actual interest on FDR, indicating no suppression of income. Consequently, the Tribunal deleted the addition, noting it was due to a mere calculation error.

3. Addition of ?98,000/- on Account of Unexplained Opening Cash Balance:
Regarding the addition of ?98,000/- for an alleged unexplained opening cash balance, the Tribunal referred to the cash book submitted by the assessee, which showed no opening cash balance as on 01/04/2009. The Tribunal found the A.O.'s addition to be contrary to the facts and records. Therefore, the Tribunal deleted this addition as well.

Conclusion:
The Tribunal allowed the appeal of the assessee, deleting all the additions made by the A.O. The Tribunal reiterated that in the absence of any incriminating material found during the search, no additions could be made under Section 153A for the completed assessments. The order was pronounced in the open court on 27th September 2019.