2022 (1) TMI 122 - AT - Income Tax

Assessment u/s 153A - Transaction towards share capital and share application money by the assessee company from several entities are bogus - HELD THAT - Since in the instant case, the addition is based on post-search investigations and not based on any incriminating materials found during the course of search in the case of the assessee and since the facts of the instant case are identical to the facts of the case decided by the coordinate Bench of the Tribunal in the case of Moon Beverages Ltd. 2020 (12) TMI 256 - ITAT DELHI therefore, respectfully following the same, we hold that the notice issued for initiation of proceedings u/s. 153A and the assessment framed subsequently are without jurisdiction and deserves to be quashed. - Decided against revenue.

Issues Involved:
1. Validity of assessment proceedings under Section 153A in the absence of incriminating material.
2. Addition of ?1,65,00,000/- under Section 68 on account of unexplained share capital and share premium.
3. Whether the approval obtained under Section 153D was mechanical and invalid.

Detailed Analysis:

1. Validity of Assessment Proceedings under Section 153A in the Absence of Incriminating Material:
The assessee challenged the validity of assessment proceedings under Section 153A, arguing that no incriminating materials were found during the search. The original return was filed on 08.09.2010, and the assessment was processed under Section 143(1). The time for issuing a notice under Section 143(2) had expired, making it a non-abated assessment. The Tribunal noted that the addition made by the AO was not based on any incriminating material found during the search but on post-search inquiries and statements recorded under Section 132(4). The Tribunal referred to several precedents, including the Hon'ble Delhi High Court decisions in CIT vs. Kabul Chawla and CIT vs. Meeta Gutgutia, which held that no addition could be made under Section 153A in the absence of incriminating material. Consequently, the Tribunal quashed the assessment proceedings under Section 153A as being without jurisdiction.

2. Addition of ?1,65,00,000/- under Section 68 on Account of Unexplained Share Capital and Share Premium:
The AO added ?1,65,00,000/- to the assessee's income under Section 68, citing unexplained share capital and share premium received from five companies. The AO argued that the assessee failed to substantiate the identity, creditworthiness of the investor companies, and the genuineness of the transactions. The CIT(A) deleted the addition, noting that the assessee had provided sufficient evidence, including confirmations from the investor companies, bank statements, share application forms, and other relevant documents. The CIT(A) concluded that the AO had not adequately considered these documents and had merely relied on the appraisal report from the Investigation Wing. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee had discharged its burden under Section 68 by proving the identity, creditworthiness, and genuineness of the transactions.

3. Whether the Approval Obtained under Section 153D was Mechanical and Invalid:
The assessee argued that the approval obtained under Section 153D was mechanical and invalid, as it was granted without due application of mind. However, since the Tribunal quashed the assessment proceedings under Section 153A on the ground of absence of incriminating material, this issue was rendered academic and did not require separate adjudication.

Conclusion:
The Tribunal allowed the assessee's cross-objection, quashing the assessment proceedings under Section 153A due to the absence of incriminating material. Consequently, the addition of ?1,65,00,000/- under Section 68 was also rendered academic and did not require further adjudication. The appeal filed by the Revenue was dismissed.

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