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2018 (3) TMI 1311 - AT - Income TaxUnexplained cash credit u/s 68 - identity, genuineness and creditworthiness of subscribers - assessment u/s 153A - Held that - The documents gave the complete details of the subscribers and it is pertinent to note that the AO has not at all made any effort to make enquiries and verify the authenticity of the same. Merely rejecting the documents does not amount that assessee has not prove the identity, genuineness and creditworthiness of subscribers. In fact, the assessee has given all the details as per the requirement of the identity, genuineness and creditworthiness of subscribers. The CIT(A) has given a detailed findings and there is no need to interfere with the same. As no incriminating material found and besides that there additional evidence has prove the case of the assessee which was not verified by the Assessing Officer in Remand Report and therefore, the CIT(A) has rightly taken cognizance of these evidences and passed a just and proper order - As on the date of search, assessment or reassessment for both the years was not pending on the date of search, as such, nothing was abated on the date of search, and hence in the absence of any incriminating material found from the premises of the assessee, additions made in both the years were outside the scope of Section 153A - Decided against revenue
Issues Involved:
1. Deletion of addition made on account of unexplained cash credit under Section 68 of the Income Tax Act, 1961. 2. Non-invocation of powers under Section 250(4) by the Commissioner of Income Tax (Appeals) [CIT(A)]. 3. Validity of additions made under Section 153A of the Income Tax Act, 1961, in the absence of incriminating material found during the search. Detailed Analysis: 1. Deletion of Addition Made on Account of Unexplained Cash Credit under Section 68: The Revenue appealed against the CIT(A)'s decision to delete the additions of ?3,08,00,000/- and ?2,44,70,000/- made by the Assessing Officer (AO) under Section 68 for the assessment years (A.Y.) 2004-05 and 2006-07, respectively. The AO had added these amounts as unexplained cash credits. The CIT(A) accepted additional evidence under Rule 46A, which included details of subscribers, their PAN, income tax returns, bank statements, and share application forms. The CIT(A) concluded that the identity, creditworthiness of the subscribers, and genuineness of the transactions were established, and thus, the additions by the AO were unsustainable. The Tribunal upheld the CIT(A)'s decision, noting that the AO failed to verify the additional evidence during the remand proceedings and merely reiterated the assessment order's contents. 2. Non-Invocation of Powers under Section 250(4) by CIT(A): The Revenue contended that the CIT(A) erred by not invoking powers under Section 250(4) to cause an enquiry and bring on record all material facts. However, the Tribunal observed that the CIT(A) had indeed called for a remand report from the AO, who did not provide any adverse comments on the additional evidence. The Tribunal found that the CIT(A) acted within the scope of their powers and provided a detailed rationale for accepting the additional evidence, thereby dismissing the Revenue's contention. 3. Validity of Additions Made under Section 153A in Absence of Incriminating Material: The assessee filed cross objections arguing that the additions made under Section 153A were outside the scope of the Act since no incriminating material was found during the search. The Tribunal referenced the Delhi High Court's decision in CIT vs. Kabul Chawla, which held that in the absence of incriminating material, completed assessments could not be interfered with under Section 153A. The Tribunal noted that no incriminating material was found during the search on 26.03.2010, and the assessments for both years were not pending on the date of the search. Thus, the additions were beyond the scope of Section 153A, and the cross objections of the assessee were allowed. Conclusion: The Tribunal dismissed the Revenue's appeals and allowed the assessee's cross objections. The Tribunal upheld the CIT(A)'s decision to delete the additions under Section 68, finding that the assessee had discharged its burden of proof regarding the identity, creditworthiness, and genuineness of the transactions. The Tribunal also affirmed that the additions made under Section 153A were invalid in the absence of incriminating material found during the search. The order was pronounced in the Open Court on 23rd March 2018.
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