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2020 (1) TMI 1054 - AT - Income TaxAssessment u/s 153A - Bogus purchases - proof of incriminating material has been found during the course of search - HELD THAT - Admittedly and from the bare perusal of the assessment order, it is seen that addition on account of bogus purchases is not based on any evidence or incriminating material found during the course of search and seizure action albeit same has been made on the basis of information already on record in the form of audited balance sheet and books of account. It is also an admitted position that at the time of search, i.e., on 30.10.2013, the assessment for the Assessment Year 2012-13 has attained finality and was not pending assessment. Therefore, in terms of second proviso to Section 153A it cannot be reckoned as abated assessment. Now it is a well settled principle under the jurisdiction of Hon ble Delhi High Court that in the case of unabated assessment, addition over and above the earlier assessment can only be made if any incriminating material or document is found during the course of search. This principle has been upheld and reiterated in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT . Accordingly, additions made by the Assessing Officer are held to be beyond the scope of Section 153A and same are deleted - Decided in favour of assessee
Issues Involved:
1. Tax effect below the prescribed monetary limit for Assessment Years 2012-13 and 2014-15. 2. Deletion of addition on account of bogus purchases for Assessment Year 2012-13. Detailed Analysis: 1. Tax Effect Below the Prescribed Monetary Limit: At the outset, the counsel for the assessee submitted that the tax effect for the Assessment Years 2012-13 and 2014-15 is below the prescribed monetary limit of ?50 lakhs as per CBDT Circular No.17/2019 dated 08.08.2019. The tax on the disputed amount for Assessment Year 2012-13 is ?24,12,788/- and for Assessment Year 2014-15 is ?32,91,299/-. The Departmental Representative (DR) admitted that the tax effect on the disputed issue is below ?50 lakhs. Consequently, the appeals for these years were dismissed as not maintainable in view of the CBDT Circular. 2. Deletion of Addition on Account of Bogus Purchases: The Revenue was aggrieved by the deletion of an addition of ?1,83,96,122/- made by the Assessing Officer (AO) on account of bogus purchases for Assessment Year 2012-13. The original return of income was filed on 30.09.2012 declaring a total income of ?47,40,63,460/-. A search was conducted in the Jakson Group of cases on 30.10.2013, and a notice under Section 153A was issued. During the assessment proceedings, the AO required the assessee to provide details of various parties along with confirmations for purchases above ?10 lakhs. The AO issued notices to 39 parties, and in respect of one party, M/s. New Jain Spares, no reply was received, leading the AO to treat the purchases from this party as bogus. Before the CIT(A), the assessee argued that the addition was beyond the scope of Section 153A as no incriminating material was found during the search. The CIT(A) observed that the issue was not pressed and dismissed it. However, on merits, the CIT(A) deleted the addition, noting that the required details were eventually provided, including confirmation of account, income tax return, VAT return, and bank statement. The CIT(A) found that the purchases were genuine and supported by documentary evidence, and there was no adverse material brought on record by the AO. Before the Tribunal, the assessee reiterated that the assessment for Assessment Year 2012-13 had attained finality as no notice under Section 143(2) was issued within the prescribed time. The assessee relied on judgments from the Delhi High Court, which held that in the absence of incriminating material, additions beyond the original assessment scope were not permissible under Section 153A. The DR argued that the issue was not pressed before the CIT(A) and suggested remanding the matter to the AO. The Tribunal held that the assessee could raise a legal issue even if it was not pressed before the CIT(A), as it did not require further investigation of facts. The Tribunal found that the addition was not based on any incriminating material found during the search but on existing records. Since the assessment for Assessment Year 2012-13 was not pending at the time of the search, it could not be considered an abated assessment. The Tribunal, following the principles laid down by the Delhi High Court, concluded that the addition was beyond the scope of Section 153A and deleted it. Consequently, the appeal of the Revenue was dismissed. Conclusion: All three appeals of the Revenue were dismissed. The appeals for Assessment Years 2012-13 and 2014-15 were dismissed as not maintainable due to the tax effect being below the prescribed limit. The addition on account of bogus purchases for Assessment Year 2012-13 was deleted as it was beyond the scope of Section 153A, with no incriminating material found during the search.
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