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2019 (6) TMI 912 - AT - Income TaxAssessment u/s 153A - No incriminating material unearthed for undisclosed income seized during the search and seizure - HELD THAT - The case of the assessee was covered u/s 132 on the basis of search and seizure operation conducted on 14.03.2012 and in view of the fact that assessment of the assessee for AY 2009-10 was completed assessment as on 14.032012 and no incriminating material to unearth any undisclosed income was seized during the search and seizure operation, the present addition made on account of credit cards expenses qua AY 2009-10 is not sustainable in the eyes of law in view of the law laid down in Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT . The case of the assessee is also covered by the order passed by the co-ordinate Bench of the Tribunal in the case of Satinder Singh Madhok, husband of the assessee . 2018 (7) TMI 1996 - ITAT DELHI - Decided in favour of assessee.
Issues:
1. Validity of assessment under section 153A in absence of incriminating material. 2. Taxability of credit card expenses as perquisite in hands of the appellant. 3. Whether credit card expenses were incurred wholly and exclusively for business purposes. Issue 1: Validity of assessment under section 153A in absence of incriminating material: The appellant challenged the assessment under section 153A of the Income-tax Act, 1961, contending that no incriminating material was found during the search. The appellant relied on the case of CIT vs. Kabul Chawla. The Revenue, however, relied on the orders of the Assessing Officer and CIT (A) to counter the appellant's arguments. The Tribunal considered the statement of Shri Sandeep Singh Madhok, where he explained that the credit card expenses were related to the business of the company. The Tribunal noted that the case of the appellant was covered under section 132 of the Act based on the search conducted, and as no incriminating material was found during the search, the addition made on account of credit card expenses for the assessment year 2009-10 was deemed unsustainable. The Tribunal also referred to a similar decision in the case of Satinder Singh Madhok, the husband of the appellant, where it was held that documents seized could not be considered incriminating. Issue 2: Taxability of credit card expenses as perquisite in hands of the appellant: The Assessing Officer disallowed business expenses amounting to ?10,27,552 incurred through credit cards, alleging that they were for personal lifestyles and not wholly and exclusively for business purposes. The appellant contended that the expenses were related to the business of the company, Jay Polychem India Limited, and were paid by the company. The Tribunal, after considering the facts and the statement of Shri Sandeep Singh Madhok, held that the addition made by the Assessing Officer and confirmed by CIT (A) was not sustainable. The Tribunal ordered the deletion of the addition, thereby allowing the appeal filed by the appellant. Issue 3: Whether credit card expenses were incurred wholly and exclusively for business purposes: The appellant argued that the credit card expenses were incurred solely for the business of Jay Polychem India Limited, where the appellant was a director. The Assessing Officer, however, concluded that the expenses were for personal lifestyles. The Tribunal, based on the explanations provided by Shri Sandeep Singh Madhok and the absence of incriminating material during the search, held that the addition made on account of credit card expenses for the assessment year 2009-10 was not sustainable. The Tribunal referred to the legal precedent set by the Hon'ble jurisdictional High Court in the case of Kabul Chawla and a previous decision involving Satinder Singh Madhok, upholding the deletion of the addition. This judgment addressed the issues of the validity of assessment under section 153A, the taxability of credit card expenses as a perquisite, and whether the expenses were incurred wholly and exclusively for business purposes. The Tribunal ruled in favor of the appellant, highlighting the absence of incriminating material during the search and the business-related nature of the credit card expenses, ultimately leading to the deletion of the addition made by the Assessing Officer.
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