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2020 (12) TMI 717 - AT - Income TaxAssessment u/s 153A - Addition based on seized documents in search - Unexplained investment - HELD THAT - It is an admitted fact that on the date of search no assessment was pending in the case of assessee for the assessment year under appeal. It is also not in dispute that during the course of search list of transfer of shares since 01.04.2010 till 31.03.2011 was found and recovered from Jalalabad Road, Shahjahanpur which is not the address of the assessee. Thus, no material was found during the course of search in the case of assessee. Further, such list could not be considered as incriminating material in nature. The seized paper merely reflect the date, name of transferor and transferee and number of shares. The document does not speak of any unexplained investment made by any of the assessees. No material was found during the course of search so as to indicate any unaccounted investment made by assessee. No evidence of any unaccounted investment have been found during the course of search. The A.O. made addition merely on presumption. Thus, it is clear that when no assessment was pending in the case of assessee for the assessment year under appeal on the date of search and no incriminating material was found during the course of search so as to make the impugned addition, therefore, the issue is covered in favour of the assessee by the Judgments of Hon ble Delhi High Court in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Whether the documents seized during the search were incriminating in nature. 2. Validity of the assessment order under section 153A without incriminating material. 3. Validity of the approval obtained under section 153D. Detailed Analysis: 1. Whether the documents seized during the search were incriminating in nature: The Department argued that the seized documents clearly established the orchestrated and contrived nature of transactions and were, therefore, incriminating. However, the CIT(A) and ITAT found that the documents merely listed the transfer of shares and did not indicate any tax evasion. The documents did not relate to the allotment of share capital by the assessee and were not considered incriminating. The ITAT upheld the CIT(A)'s finding that the documents were plain details without any adverse findings against the appellant. 2. Validity of the assessment order under section 153A without incriminating material: The ITAT relied on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, which held that no addition can be made in the case of completed assessments if no incriminating evidence is found during the search proceedings. The ITAT noted that the assessment for the year under appeal was completed, and no incriminating material was found during the search. The ITAT also referred to the case of Pr. CIT vs. Meeta Gutgutia, which reiterated that if no incriminating material is found, the assessment under section 153A is invalid. The ITAT confirmed that the addition made by the AO was not sustainable as it was not based on any incriminating material found during the search. 3. Validity of the approval obtained under section 153D: The assessee challenged the validity of the assessment order, arguing that the approval obtained under section 153D was not in accordance with the law. However, since the ITAT found that the addition itself was invalid due to the lack of incriminating material, this issue became academic and was not adjudicated. Conclusion: The ITAT dismissed the Department's appeals, confirming that no incriminating material was found during the search and that the addition made by the AO was invalid. The cross-objections by the assessee were also dismissed as they became infructuous. The ITAT upheld the CIT(A)'s order deleting the addition and confirmed that the assessment under section 153A was not justified without incriminating material. The ITAT also dismissed the appeal of Shri Gopal Agarwal for the addition under section 50C, as no arguments were made during the hearing.
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