2021 (12) TMI 1134 - AT - Income Tax

Assessment u/s 153A - Proof of incriminating material found during the course of search - addition in the hands of the assessee which has been received by the assessee from employer - HELD THAT - In the instant case, assessment was framed u/s 153A and it is an unabated assessment and no assessments were pending on the date of search initiated upon the assessee. While perusing the assessment order, we find that nowhere the AO has referred any incriminating material found during the course of search relating to the receipt of ₹ 10 lakhs by the assessee and, therefore, it clearly shows that no incriminating material found during the course of search conducted u/s 132 of the Act on 09/11/2017 in respect of receipt from employer. As held by the Hon ble High Court of Delhi in the case of Kabul Chawla, 2015 (9) TMI 80 - DELHI HIGH COURT that if no incriminating material found during the course of search for making addition in the unabated assessment, addition cannot be made. We, therefore, following the above judgment, set aside the order of the CIT(A) and direct the AO to delete the addition of ₹ 10 lakhs received by the assessee from his employer - Decided in favour of assessee.

Summary

Issues:
1. Appeal against CIT(A) order for AY 2012-13 under IT Act, 1961.
2. Addition of ?10 lakhs as other income in the hands of the assessee.
3. Validity of addition without incriminating material found during search operation.
4. Assessment u/s 153A and implications on unabated assessment.

Analysis:
1. The appeal was filed against the CIT(A) order for AY 2012-13 under the Income Tax Act, 1961. The assessee raised multiple grounds of appeal, including general, technical, and merits-related grounds regarding the addition of ?10 lakhs as other income.

2. The case involved a search and seizure operation under section 132 of the IT Act, where the assessee received ?10 lakhs from the employer. The AO treated this amount as other income due to the lack of evidence regarding its return by the assessee. The CIT(A) upheld the AO's action without any incriminating material found during the search operation.

3. During the appeal before the ITAT, the assessee presented evidence of receiving the money from the employer, emphasizing the lack of incriminating material to support the addition. The AR argued for the genuineness of the transaction and the creditworthiness of the employer, citing various judgments in support.

4. The ITAT, after considering the submissions and orders of the revenue authorities, noted the absence of incriminating material related to the ?10 lakhs received by the assessee during the search operation. Referring to the principle established in the case of Kabul Chawla, the ITAT ruled in favor of the assessee, directing the AO to delete the addition of ?10 lakhs. The decision was based on the lack of incriminating material for making additions in unabated assessments, leading to the allowance of the assessee's appeal.

5. In conclusion, the ITAT allowed the appeal of the assessee, setting aside the CIT(A) order and directing the deletion of the addition of ?10 lakhs received from the employer, emphasizing the importance of incriminating material in assessment proceedings under section 153A of the IT Act.