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2019 (4) TMI 764 - AT - Income TaxAssessment u/s 153A - addition u/s 68 - assessment for the impugned year had not abated - HELD THAT - The Ld.DR has not substantiated his contention that the Investment was from undisclosed cash credit, with any cogent evidence. No nexus has been shown to us by the DR between the unexplained cash deposited in bank and the investment made for purchase of land, documents pertaining to which were found during search. In the absence of any link having been established by the DR between the unexplained cash deposits and the investments found to have been by the assessee during search, we see no reason to view the two documents together to hold that the documents pertaining to the cash credits were incriminating documents found during search for the purpose of making addition u/s 153A of the Act, as argued by the DR. We therefore dismiss the contention of the Ld.DR. We hold that the addition u/s 68 on account of unexplained cash deposit in Bank & unexplained loan taken of was not based on any incriminating material found during search and could not be made u/s 153A. The addition so made is therefore directed to be deleted. - Decided in favour of assessee.
Issues:
Challenge to additions made under section 68 of the Income Tax Act without incriminating material found during search. Analysis: 1. The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding additions made under section 68 of the Income Tax Act. The search operation under section 132(1) was carried out on the Mittal group, including the assessee, leading to additions in the income of the assessee. The Commissioner upheld the additions made under section 68 of the Act, which the assessee contested. 2. The assessee raised multiple grounds of appeal challenging the additions under section 68. The main argument was that no incriminating material related to the additions was found during the search. The assessee contended that the additions were based on documents obtained post-search, particularly bank statements, which did not constitute incriminating material. The assessee highlighted that the assessment year in question had no pending assessment proceedings at the time of the search, questioning the validity of the additions under section 153A of the Act. 3. The assessee further raised an additional ground challenging the additions made under section 68 without incriminating material found during the search. The assessee argued that the additions were not supported by any material discovered during the search and were solely based on post-search information. The Tribunal admitted the additional ground for adjudication, considering it a legal issue without requiring new facts. 4. The Department argued that the additions were justified as part of a complex audit process involving the group cases and seized documents. The Department contended that the additions were linked to investments made by the assessee from earlier undisclosed cash credits, despite the lack of incriminating material directly found during the search. 5. The Tribunal analyzed the legal principles regarding additions under section 68 based on incriminating material found during a search. Citing relevant case law, the Tribunal emphasized the necessity of incriminating material for such additions. After examining the facts and contentions, the Tribunal concluded that the additions made under section 68 were not supported by incriminating material found during the search. Therefore, the Tribunal directed the deletion of the additions made on account of unexplained cash deposits and loans under section 68. 6. The Tribunal allowed the appeal on the grounds that the additions were not substantiated by incriminating material found during the search. Consequently, the Tribunal held that the additions made under section 68 were invalid and directed their deletion. As a result, the appeal of the assessee was allowed. 7. The Tribunal's decision highlighted the importance of incriminating material for additions under section 68 of the Income Tax Act and emphasized the need for a direct link between the material found during search and the additions made in assessments following the search.
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