2019 (8) TMI 1790 - AT - Income Tax

Assessment u/s 153A - proof of incriminating material found during the course of search - Unexplained share application money under section 68 and disallowance of expenses relatable to exempt income under section 14A read with Rule 8D - HELD THAT - As according to CIT(A) the original assessment has not abated and there is no incriminating material found during the course of search. Hence the assessment on this addition was correctly deleted in view of the decision of Continental Warehousing Corporation (Nhava Sheva) Ltd 2015 (5) TMI 656 - BOMBAY HIGH COURT - Decided in favour of assessee.

Issues:
1. Deletion of addition made by AO on account of unexplained share application money under section 68 of the Act.
2. Disallowance of expenses relatable to exempt income under section 14A read with Rule 8D of the Rules.

Analysis:
1. The only issue in this appeal was against the CIT(A) deleting the addition made by the AO on account of unexplained share application money under section 68 of the Act. The CIT(A) held that the original assessment had not abated and no incriminating material was found during the search. The Revenue contended that the addition should not have been deleted as per the decisions in certain cases. The Tribunal noted that there was no incriminating material found during the search regarding these additions, as confirmed by the CIT(A). The Tribunal upheld the deletion of the additions by the CIT(A) based on the legal precedents and confirmed by the decision of the Hon’ble Bombay High Court.

2. The second issue involved the disallowance of expenses relatable to exempt income under section 14A read with Rule 8D of the Rules. The CIT(A) had also deleted this addition made by the AO. The Tribunal found that the CIT(A) had correctly concluded that there was no incriminating material found during the search regarding this issue as well. The Tribunal upheld the deletion of this addition by the CIT(A) based on the absence of any incriminating material found during the search and the legal principles established by the Hon’ble Bombay High Court.

3. The Tribunal thoroughly examined the facts and circumstances of the case, noting the chronology of events related to the assessment and search proceedings. The CIT(A) had carefully analyzed the records and remand reports, concluding that no incriminating material was found during the search pertaining to the additions made by the AO. The Tribunal concurred with the CIT(A) that the additions were rightly deleted due to the absence of any incriminating material found during the search.

4. The Tribunal referenced specific findings of the CIT(A) regarding the lack of incriminating material related to the additions made by the AO. The Tribunal also referred to legal precedents and decisions of the Hon’ble Bombay High Court and the ITAT Mumbai to support the deletion of the additions by the CIT(A). The Tribunal emphasized that the Revenue failed to identify any incriminating material found during the search, leading to the confirmation of the CIT(A)'s decision to delete the additions.

5. In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the CIT(A) to delete the additions made by the AO. The Tribunal found no infirmity in the CIT(A)'s order, as there was no incriminating material found during the search regarding the disputed additions. The decision was in line with legal precedents and established principles, as confirmed by the Hon’ble Bombay High Court.

6. The Tribunal confirmed that the additions made by the AO were rightly deleted by the CIT(A) due to the absence of any incriminating material found during the search. The Tribunal's decision was based on a thorough analysis of the facts, legal precedents, and the lack of evidence provided by the Revenue regarding any incriminating material. The appeal of the Revenue was ultimately dismissed, affirming the decision of the CIT(A) in favor of the assessee.

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