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2022 (9) TMI 572 - AT - Income TaxAssessment u/s 153A - Unrecorded sales lower G.P ratio - Addition based on loose papers seized during search indicated unrecorded cash sales - main argument taken up by the assessee before the ld. CIT(A) was that there was no seized incriminating material found based on which the assessment was completed and also that during the regular assessment, the receipt of the share capital has been duly examined and accepted - CIT-A deleted the addition - HELD THAT - As in the absence of any incriminating material relating to AY 2010-11 and following the ratio of judgement of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT the action of the AO in assuming jurisdiction u/s 153A and thereafter framing assessment u/s 153A/143(3) of the Act is not justified. The AO failed to appreciate that the assessment for AY 2010-11 had already attained finality and the proceedings for AY 2010-11 were not abated and therefore fresh assessment proceedings u/s 153A were not justified when no incriminating material relating to AY 2010-11 was found during the search action. We decline to interfere with the order of the ld. CIT(A). Addition made on account of extra profit - CIT(A) after obtaining the remand report dated 10.12.2018 categorically held that the AO has failed to point out any incriminating material found during the search on the basis of which addition on account of extra profit was made. AO has stated in the remand report that goods sold in cash were not recorded in the books of accounts and this was extrapolated for all the Assessment Years falling in the block period. Thus, it is clear that there was no incriminating material found in course of search action relating to Assessment Year in question. Hence, we decline to interfere with the order of the ld. CIT(A). Decided against revenue.
Issues involved:
1. Addition of unrecorded sales and lower GP ratio. 2. Addition of bogus share capital. 3. Assessment under section 153A of the Income Tax Act. 4. Incriminating material found during search action. 5. Addition on account of extra profit. Issue 1: Addition of unrecorded sales and lower GP ratio The revenue challenged the deletion of an addition made by the assessing officer on account of unrecorded sales and lower GP ratio. The revenue contended that loose papers seized during the search indicated unrecorded cash sales, with no cash memos maintained, and the supervisor admitted that not all cash sales were recorded. The revenue argued that a consistent modus operandi regarding unrecorded cash sales was followed, and the evidentiary value of statements recorded under different sections of the Act was the same. The CIT(A) deleted the addition, leading to the revenue's appeal. Issue 2: Addition of bogus share capital The assessing officer made an addition on account of bogus share capital, supported by documents seized during search proceedings and post-search verification. The revenue challenged the deletion of this addition by the CIT(A), highlighting discrepancies in the verification process and the inability of the assessee to substantiate claims under section 68 of the Act. The revenue also raised concerns about expenses related to share capital not being recorded in the books of accounts. The CIT(A) relied on relevant case laws and differentiated them from the current case, ultimately upholding the deletion of the addition. Issue 3: Assessment under section 153A of the Income Tax Act A search and seizure action under section 132 was conducted, leading to assessment under section 153A. The assessing officer relied on retrieved data from a hard disk and statements to make additions related to share capital. The assessee argued that the share capital issue had been examined during a regular assessment, and no incriminating material was found during the search. The CIT(A) considered the lack of incriminating material for the relevant assessment year and the finality of previous assessments, leading to the dismissal of the revenue's appeal. Issue 4: Incriminating material found during search action The assessing officer failed to establish the presence of incriminating material during the search action for the assessment year in question. The CIT(A) noted the absence of such material and declined to interfere with the order, citing relevant case laws and the lack of justification for fresh assessment proceedings under section 153A without incriminating evidence. Issue 5: Addition on account of extra profit The assessing officer made additions on account of extra profit, alleging unrecorded cash sales extrapolated for multiple assessment years. However, no incriminating material was found during the search related to the assessment year in question. The CIT(A) upheld the deletion of these additions, emphasizing the absence of incriminating material and declining the revenue's appeals. Overall, the ITAT Delhi dismissed the revenue's appeals, finding no justification for the additions made without incriminating material and upholding the CIT(A)'s decisions based on relevant legal principles and case laws.
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