2019 (7) TMI 1981 - AT - Income Tax

Assessment u/s 153C - Unexplained deposit u/s. 68 - HELD THAT - While dealing with the addition the Assessing Officer has mentioned that addition u/s. 68 was done on examination of balance-sheet. Similar is the position of addition of commission income. There is no whisper in the assessment order that any incriminating material was seized in respect of addition which has been done. It is clear that search was conducted and assessment year involved A.Y. 2010-11 was not abated assessment. Hence on the touchstone in the case of Continental Warehousing Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT no addition was permissible dehorse incriminating material found. Since no incriminating material has been mentioned with respect to addition made, we set aside the orders of the authorities below and delete the addition. Decided in favour of assessee.

Summary

Issues:
1. A.Y. 2009-10: No addition by Assessing Officer, appeal dismissed as infructuous.
2. A.Y. 2010-11: Addition of cash credit and commission income disputed.
3. A.Y. 2011-12: Addition of commission income and unexplained deposit challenged.

A.Y. 2009-10:
For the assessment year 2009-10, the Assessing Officer did not make any additions in the assessment order under section 143(3) read with section 153C of the Act. The income returned was Rs. 3,92,662, and no addition was made. The CIT(A) acknowledged this and deemed the assessee's grievance as infructuous since no addition was done. The ITAT concurred, dismissing the appeal as infructuous due to the absence of any additions by the Assessing Officer.

A.Y. 2010-11:
In the assessment year 2010-11, the dispute revolved around the addition of Rs. 8,00,000 as cash credit under section 68 and Rs. 1,00,275 as commission income. The assessee contended that since the original assessment was completed before the search initiation date, the additions should not stand. The Assessing Officer made these additions based on the examination of the balance sheet without mentioning any incriminating material seized. As per the High Court decision in Continental Warehousing Corporation, without incriminating material, no additions were permissible. Consequently, the ITAT set aside the lower authorities' orders and deleted the additions.

A.Y. 2011-12:
For the assessment year 2011-12, the additions challenged were Rs. 30,743 as commission income and Rs. 12,36,000 as an unexplained deposit under section 68. The Assessing Officer taxed the commission income as undisclosed income since it was not disclosed in the return. However, no incriminating material was found regarding these additions. The ITAT noted that the additions were not supported by any incriminating material, and as the search was not related to the assessment year, following the precedent set by the High Court, the additions were deemed unsustainable. Consequently, the ITAT set aside the lower authorities' orders and deleted the additions for this assessment year. The appeal for the assessment year 2009-10 was dismissed as infructuous, while the appeals for the assessment years 2010-11 and 2011-12 were allowed.