2019 (9) TMI 723 - AT - Income Tax

Addition made in the order u/s 143(3)/153A - proof of incriminating material unearthed during search - HELD THAT - AO has not found any incriminating material during search on 30.08.2012 qua this assessment year against the assessee of ₹ 4,54,44,692/-. Therefore, since no assessment was pending on the date of search for AY 2009-10 on 30.08.2012 (date of search), the AO could not have made any addition without the aid of incriminating material unearthed during search qua the assessment year. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) who has deleted the addition. See KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of additions made by the AO without incriminating material during search proceedings under Section 153A for AY 2009-10.
2. Validity of additions made by the AO without incriminating material during search proceedings under Section 153A for AY 2010-11.

Detailed Analysis:

1. Validity of Additions for AY 2009-10:
The Revenue appealed against the order of the Ld. CIT(A), which allowed the assessee's appeal. The AO had conducted a search on 30.08.2012 and noted that the assessee had taken a loan from M/s. Metmin Techno Pvt. Ltd., proposing to add it as deemed dividend under Section 2(22)(e) of the Act. The AO made several other additions and disallowances, assessing the total income at ?4,54,44,692/-. The Ld. CIT(A) allowed the appeal, leading the Revenue to appeal.

The Revenue argued that the AO had the right to assess the assessee's income even without incriminating materials. However, the assessee contended that no incriminating materials were found during the search for this assessment year. The Tribunal noted that the assessment year 2009-10 was an unabated assessment, with no pending assessment on the date of the search. The Tribunal referenced the legal position established in CIT Vs. Kabul Chawla and CIT vs Veerprabhu Marketing Ltd., which stated that no additions could be made without incriminating material for completed assessments.

The AO had not referred to any incriminating material for making the additions and the transactions with M/s. Metmin Techno Pvt. Ltd. were commercial in nature, reflected in the regular books of accounts. Therefore, no addition could be made on this count. Consequently, the Tribunal upheld the order of the Ld. CIT(A) and dismissed the Revenue's appeal for AY 2009-10.

2. Validity of Additions for AY 2010-11:
For AY 2010-11, the Revenue appealed against the Ld. CIT(A)'s order, which observed that the additions made by the AO were not based on any incriminating documents seized during the search. The assessee had filed the original return on 30.09.2010, and the assessment was framed on 29.12.2011. The search occurred on 30.08.2012, making it an unabated assessment.

The AO made an addition under Section 68 of the Act for ?1 crore in respect of share application money received during this assessment year. However, this share application money was already part of the regular books of accounts scrutinized earlier. The AO did not refer to any incriminating material for making this addition.

The Tribunal upheld the Ld. CIT(A)'s order, referencing the decisions in Kabul Chawla, Veeraprabhu Marketing Ltd., and the Apex Court's decision in Pr. CIT Vs. Korley Paper Mills Pvt. Ltd., which emphasized the necessity of incriminating material for making additions in unabated assessments.

Conclusion:
In both appeals, the Tribunal upheld the Ld. CIT(A)'s orders, dismissing the Revenue's appeals for AY 2009-10 and AY 2010-11. The Tribunal emphasized that no additions could be made without incriminating material in unabated assessments, aligning with established judicial precedents.