2021 (8) TMI 808 - AT - Income Tax

Assessment u/s 153A - search Conducted under section 132(A) - Addition u/s 68 - CIT-A holding that there cannot be any addition on the reasoning that there was no document of incriminating nature found during the search - HELD THAT - We find that an excel sheet was found as a result of search containing the details of cash receipt and payment for the period from 2 April 2010 to 26 August 2010. The dates mention in the excel sheet in itself suggest pertaining to the financial 2010-11 corresponding to assessment year 2011-12. In other words, these documents, without going into the fact whether these represent incriminating materials or not, do not pertain to the year under consideration. Therefore, no inference can be drawn that the assessee has deposited unaccounted cash in its bank accounts without their being any adverse material on record pertaining to the year under consideration. There was no document found of incriminating nature with respect to the unsecured loan received by the assessee in the year under consideration indicating that the same represents as unexplained cash credit under section 68 of the Act. Accordingly in the absence of, any adverse material on record pertaining to the year under consideration, there cannot be any addition under section 68. We do not find any reason to interfere in the order of the CIT (A). Hence the ground of appeal of the Revenue is dismissed. As we have decided the issue in favour of the assessee on technical count, we do not find any reason to go into the merit of the case.

Summary

Issues Involved:
1. Whether the learned CIT(A) erred in holding that there cannot be any addition in the absence of incriminating material found during the search.
2. Whether the deletion of additions on account of unexplained cash credits under Section 68 and unexplained money under Section 69 was justified.

Issue-wise Detailed Analysis:

1. Absence of Incriminating Material:
The Revenue contended that the CIT(A) erred in law and on facts by not appreciating the provisions of Section 153A of the Income Tax Act, which requires the total income to be brought under tax without any restrictions. The CIT(A) held that the assessment or reassessment under Section 153A should be restricted to incriminating material found during the search. The case involved a partnership firm engaged in real estate development, where a search and seizure operation under Section 132 revealed an excel sheet detailing cash receipts and payments for a period falling in the assessment year 2011-12. The Assessing Officer (AO) initiated proceedings under Section 153C, questioning the source of cash deposits amounting to ?1,18,34,000/- and treating them as unexplained money under Section 69. The AO also treated unsecured loans of ?44,95,000/- as unexplained cash credits under Section 68. The CIT(A) deleted these additions on the basis that no incriminating material was found for the year under consideration, supported by judicial pronouncements including Pr. CIT vs. Saumya Construction Pvt. Ltd. and others. The Tribunal upheld the CIT(A)'s decision, emphasizing that the excel sheet pertained to a different assessment year and did not constitute incriminating material for the year under consideration.

2. Deletion of Additions:
The Revenue challenged the deletion of additions made by the AO on account of unexplained cash credits and unexplained money. The CIT(A) found that no incriminating material was found during the search regarding the cash deposits and unsecured loans for the year under consideration. The Tribunal supported this view, stating that the documents found during the search did not pertain to the year under consideration and thus could not justify the additions made by the AO. The Tribunal drew support from the judgment of the Hon'ble Gujarat High Court in Principal Commissioner of Income Tax vs. M/s. Saumya Construction Pvt. Ltd., which held that additions can only be made based on material collected during the search. Consequently, the Tribunal dismissed the Revenue's appeal, affirming that no additions were warranted in the absence of incriminating documents.

Conclusion:
The Tribunal dismissed the Revenue's appeal and the assessee's cross-objection, concluding that no additions could be made under Sections 68 and 69 in the absence of incriminating material found during the search. The Tribunal's decision was based on established judicial precedents, emphasizing the necessity of incriminating evidence for making additions in assessments under Section 153C.