2021 (1) TMI 94 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - HELD THAT - Addition in the present case has been made under section 153A on the basis of statements of various parties obtained under survey and search. The addition of unsecured loan has been made on the basis of entries in the regular books of accounts duly reflected in the assessee s financial accounts. There is no reference to material found in search with reference to the addition made. It is also undisputed that these assessments are unabated. The law for assessment under section 153A in case of unabated assessment has been duly laid down by the Hon ble Bombay High Court in the case of continental warehousing 2015 (5) TMI 656 - BOMBAY HIGH COURT . The jurisprudence regarding jurisdictional defect in assessment under section 153A /153C without reference to incriminating seized material has also been expounded by Hon'ble Supreme Court in the case of CIT v/s Singhad technical education Society 2017 (8) TMI 1298 - SUPREME COURT . The addition made in these assessment orders passed by the assessing officer under section 153A without reference to any incriminating material found search is not sustainable. Hence we set aside the orders of authorities below and direct that the additions made are not sustainable due to the jurisdictional defect. Since we have already held that addition of loan itself is not sustainable the addition of commission is also directed to be deleted as the same is also without reference to any material foundering search. These additions are not sustainable due to jurisdictional defect in as much as they are without reference to any incriminating material found upon search - Decided in favour of assessee.

Issues Involved:
1. Addition under Section 68 of the Income Tax Act for unexplained cash credits.
2. Non-provision of statements under Section 132(4) and opportunity to cross-examine.
3. Levy of interest under Section 234B.
4. Jurisdiction of assessment under Section 153A without reference to search material.

Detailed Analysis:

1. Addition under Section 68 of the Income Tax Act for Unexplained Cash Credits:
The assessee contested the addition of ?25,00,000 as an unexplained cash credit under Section 68, arguing that the loan from Simran Gems was reflected in the balance sheet and no incriminating material was found during the search. The Tribunal noted that the assessing officer's decision was based on statements from various parties obtained during survey and search actions, which were later retracted. The Tribunal emphasized that the addition was made solely on the basis of entries in the regular books of accounts without any reference to material found during the search.

2. Non-provision of Statements under Section 132(4) and Opportunity to Cross-examine:
The assessee argued that the assessing officer and CIT(A) failed to provide the statement of Gyanchand B. Jain, proprietor of Simran Gems, and did not allow the assessee to cross-examine the party, violating the principles of natural justice. The Tribunal acknowledged these procedural lapses but focused more on the jurisdictional aspect of the assessment under Section 153A.

3. Levy of Interest under Section 234B:
The assessee challenged the levy of interest under Section 234B amounting to ?9,59,757, citing the judgment in Datamatics Ltd v/s Assistant Commissioner of Income. However, the Tribunal's decision did not specifically address this issue, as the primary focus was on the jurisdictional defect in the assessment.

4. Jurisdiction of Assessment under Section 153A without Reference to Search Material:
The Tribunal found that the addition under Section 153A was not sustainable as it was made without reference to any incriminating material found during the search. The Tribunal cited the Bombay High Court's decision in Continental Warehousing Corporation and All Cargo Global Logistic Ltd., which held that in cases of unabated assessments, no addition under Section 153A can be made without seized incriminating material. The Tribunal further referenced the Supreme Court's decision in CIT v/s Singhad Technical Education Society, which emphasized the necessity of incriminating material for assessments under Section 153C.

The Tribunal concluded that the assessments were unabated and the additions made without reference to incriminating material found during the search were not sustainable. Consequently, the Tribunal set aside the orders of the authorities below and directed the deletion of the additions due to the jurisdictional defect.

Conclusion:
The Tribunal allowed the appeals partly, primarily on the grounds of jurisdictional defects in the assessment under Section 153A, emphasizing that additions without reference to incriminating material found during the search are not sustainable. The decision applies mutatis mutandis to all the appeals under adjudication.

← Previous Next →