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2014 (12) TMI 1386 - AT - Income TaxAssessment u/s 153A - Unexplained gift u/s 69A - HELD THAT - Where AO had not referred to any incriminating material found during the course of search based on which addition was made, then the AO had no jurisdiction to make addition in the assessment framed under s. 153A of the Act. In the case of Jai Steel (India) v. CIT 2013 (6) TMI 161 - RAJASTHAN HIGH COURT held that the requirement of assessment or reassessment under s. 153A has to be read in the context of s. 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is to be reassessed. In number of cases, the Tribunal Benches have consistently taken the view that when no assessment is abated, question of making any addition or making disallowance which are not based on material found during search is bad in law - we hold that the addition made by the AO and confirmed by the learned CIT(A) is bad in law. We, therefore, allow original ground as well as additional ground of the appeal. Addition u/s 68 on gift received treated as unexplained - HELD THAT - Both the authorities below have categorically held that the assessee failed to prove the genuineness of transaction and creditworthiness of the donor. No confirmation of gift was filed along with the return of income of the assessee. It is claimed that the alleged gift was made in cash but the donor was not produced before the AO for examination. At this stage also, the assessee could not prove the genuineness of the transaction and creditworthiness of the donor. No additional evidence, whatsoever, was filed before us. in the absence of any supporting evidence, we are of the view that the addition is fully justified. Disallowance on account of forfeiture of EMD made beyond the scope of s. 153A - HELD THAT - Assessee did not bring any material on record to prove that the EMD amount as been forfeited by BPCL. In the absence of any documentary, evidence regarding forfeiture of EMD, the claim of the assessee cannot be accepted. At this stage also, the assessee has not brought any evidence to demonstrate that the claim made by it was justifiable. It is settled law that where an assessee claims deduction, the onus lies on him to bring all material facts on record to substantiate his claim. In view of the above, we do not find any merit in the appeal filed by the assessee.
Issues Involved:
1. Legality of reassessment proceedings under Section 153A of the IT Act, 1961. 2. Justification of additions made under Section 69A and Section 68 of the IT Act, 1961. 3. Requirement of incriminating material found during the search for making additions. 4. Proving genuineness and creditworthiness of gifts received. 5. Disallowance of claims due to lack of supporting evidence. Detailed Analysis: 1. Legality of Reassessment Proceedings under Section 153A: The appeals centered on whether reassessment proceedings under Section 153A should be confined to the material found during the search. The Tribunal admitted the additional ground of appeal, which was a legal issue, and noted that the relevant facts were already on record. The Tribunal referenced the Supreme Court decision in National Thermal Power Ltd. v. CIT to justify the admission of this ground. 2. Justification of Additions under Section 69A and Section 68: The primary issue was the addition of Rs. 1,80,000 under Section 69A as unexplained gifts. The AO made this addition due to the assessee's failure to provide confirmation and prove the creditworthiness of the donors. The CIT(A) confirmed this addition. However, the Tribunal found that the AO had no jurisdiction to make such additions in the absence of incriminating material found during the search. 3. Requirement of Incriminating Material Found During Search: The Tribunal emphasized that additions under Section 153A should be based on incriminating material found during the search. Since the original assessments had attained finality before the search and no incriminating material was found, the AO had no jurisdiction to make the additions. The Tribunal cited several precedents, including CIT v. Murli Agro Products Ltd. and Jai Steel (India) v. Asstt CIT, to support this position. 4. Proving Genuineness and Creditworthiness of Gifts Received: The assessee failed to provide evidence of the genuineness and creditworthiness of the donors. The Tribunal noted that no confirmations were filed, and the donors were not produced for examination. The Tribunal held that without such evidence, the addition was justified. This position was upheld in ITA No. 91/Blpr/2009, where the assessee could not prove the genuineness of a Rs. 1,00,000 gift. 5. Disallowance of Claims Due to Lack of Supporting Evidence: In ITA No. 88/Blpr/2009, the issue was the disallowance of Rs. 2,50,000 claimed as forfeiture of EMD by BPCL. The AO disallowed the claim due to a lack of supporting evidence, and the CIT(A) confirmed this disallowance. The Tribunal upheld this decision, emphasizing that the onus was on the assessee to provide material evidence to substantiate the claim. Conclusion: The Tribunal allowed the appeals related to the addition of unexplained gifts under Section 69A and Section 68 due to the lack of incriminating material found during the search. However, it dismissed the appeals where the assessee failed to provide supporting evidence for their claims. The judgments highlighted the importance of incriminating material in reassessment proceedings under Section 153A and the necessity for the assessee to prove the genuineness and creditworthiness of transactions.
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