2019 (9) TMI 604 - AT - Income Tax

Assessment passed u/s 153A - receipt of share application money/share capital - proof of incriminating material relating to these assessment years - HELD THAT - We find that it is an admitted fact that the original assessment completed u/s 143(3) vide order dated 31.12.2008 which had attained finality at the time of search. It is also undisputed that additions made by the AO is not based on incriminating material found during the course of search, albeit is based on perusal of balance sheet which was part of the assessment record and duly scrutinise during the course of original assessment proceedings. In such a situation, additions made are beyond the scope of 153A proceedings. This proposition of law has been well settled and reiterated by the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and has been reiterated in the case of Pr. CIT vs. Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT Hence there is no incriminating material qua each of the assessment year roped in under section 153A, then, no addition can be made while framing the assessment under section 153A. As admittedly no incriminating material relating to these assessment years or as a matter of fact for any of the assessment years were found during the course of search and accordingly, the originally assessed income. Accordingly the addition is directed to be deleted being beyond the scope of assessment u/s 153A - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of addition under Section 153A without incriminating material.
2. Examination of share application money received by the assessee.

Issue-wise Detailed Analysis:

1. Legality of Addition under Section 153A without Incriminating Material:

The primary issue revolves around whether the addition of ?1.01 crores can be made under Section 153A without any incriminating material found during the search. The assessee argued that since no incriminating material was found during the search, the addition was beyond the scope of Section 153A. The Tribunal agreed with the assessee, stating that the original assessment had attained finality, and the addition was based solely on the balance sheet, which was already scrutinized during the original assessment proceedings. The Tribunal cited several judgments, including CIT vs. Kabul Chawla, which established that in the absence of incriminating material, no addition can be made under Section 153A. The Tribunal concluded that the addition made by the AO was beyond the scope of Section 153A and directed its deletion.

2. Examination of Share Application Money Received by the Assessee:

The assessee received fresh share application money amounting to ?1.01 crores, which was disclosed in the balance sheet. The AO questioned the identity, creditworthiness, and genuineness of the transactions related to the share application money. The assessee furnished all necessary evidence, including documents submitted during the original assessment proceedings. Despite this, the AO made the addition based on the balance sheet. The Tribunal noted that the entire balance sheet and profit and loss account were scrutinized during the original assessment, and no new material was found during the search to justify the addition. The Tribunal reiterated that additions under Section 153A should be based on seized material and not arbitrary assessments. Consequently, the Tribunal directed the deletion of the addition of ?1.01 crores.

Conclusion:

The Tribunal allowed the appeal of the assessee, holding that the addition of ?1.01 crores was beyond the scope of Section 153A as it was not based on any incriminating material found during the search. The Tribunal emphasized that completed assessments can only be interfered with based on incriminating material unearthed during the search, and not on previously scrutinized documents. The order pronounced on 29th March 2019 directed the deletion of the addition, thereby allowing the appeal in favor of the assessee.