2019 (12) TMI 1416 - AT - Income Tax

Assessment u/s 153A - Deemed dividend u/s.2(22)(e) - Whether completed assessment can be interfered with by the AO u/s.153A of the Act only on the basis of some incriminating material found during the search action? - HELD THAT - It is an undisputed position in this case that no incriminating material was found during the course of search and it is a settled law that no addition can be made while framing the assessment u/s.153A of the I.T.Act in the absence of any incriminating material found during the search. Keeping in view of the above, we find no reason to interfere into or deviate from the lawful findings so recorded by the ld.CIT(A), accordingly we upheld the same by dismissing this ground of appeal raised by the Revenue.

Summary

Issues:
Cross Appeals against common order of Ld. Commissioner of Income Tax(Appeals) for assessment years 2008-09 and 2009-10.

Analysis:
Issue 1: Deletion of deemed dividend addition under section 2(22)(e)
The Revenue challenged the deletion of the addition of ?3,91,36,700 made on account of deemed dividend under section 2(22)(e) by the ld.CIT(A). The Revenue contended that incriminating material is not a prerequisite for framing an assessment under section 153A. The AR argued that completed assessments can only be interfered with based on incriminating material found during the search. The ld.CIT(A) noted that no incriminating material was found during the search, following established law that no addition can be made under section 153A without such material. Citing relevant case laws, the Tribunal upheld the ld.CIT(A)'s decision, dismissing the Revenue's appeal.

Issue 2: Identical circumstances in another appeal
In a separate appeal by the Revenue for the same assessee and assessment year, the Tribunal applied the findings and directions from the previous appeal, leading to the dismissal of the Revenue's appeal.

Issue 3: Cross Objections by the Assessee
As the additions were deleted in the main appeals of the Revenue, the Cross Objections filed by the assessee were rendered infructuous. Consequently, the Tribunal dismissed the Cross Objections as infructuous.

In conclusion, the Tribunal dismissed both appeals filed by the Revenue and the Cross Objections filed by the assessee as infructuous. The judgment emphasized the requirement of incriminating material for making additions under section 153A and upheld the decision of the ld.CIT(A) in deleting the deemed dividend addition. The Tribunal maintained consistency in its approach across related appeals, ensuring uniformity in the application of legal principles.