2023 (3) TMI 474 - AT - Income Tax

Assessment u/s 153A - Unexplained cash credit u/s 68 - incriminating material found in search or not? - HELD THAT - No infirmity in the finding of CIT(A) who has rightly deleted the alleged addition observing that no incriminating material or document related to the addition of share capital and share premium as made by AO were found during the course of search and the assessment year in question is a completed and unabated year. Thus, all the grounds raised by the Revenue for AY 2011-12 are dismissed.

Summary

Issues Involved:

1. Deletion of addition u/s 68 for AY 2011-12 and AY 2013-14.
2. Validity of additions in completed assessments without incriminating material found during search.

Summary:

Issue 1: Deletion of addition u/s 68 for AY 2011-12 and AY 2013-14

The Revenue challenged the deletion of additions of Rs. 2.04 Cr for AY 2011-12 and Rs. 3.06 Cr for AY 2013-14 made by the Assessing Officer (AO) u/s 68 of the Income Tax Act, 1961. The additions were based on the lack of evidence to prove the creditworthiness and genuineness of the transactions with M/s. Seema Holding Pvt. Ltd. and M/s. Excellence Commerce Pvt. Ltd. respectively. The AO relied on a statement given by Mr. Madan Lal Mittal during a search operation on 31.08.2016, which was later retracted by an affidavit dated 01.09.2016. The Commissioner of Income-tax (Appeals) [CIT(A)] deleted the additions, observing that no incriminating material was found during the search to support the AO's claims.

Issue 2: Validity of additions in completed assessments without incriminating material found during search

The Tribunal examined whether additions could be made in completed assessments without incriminating material found during the search. It was noted that the assessee had filed regular income tax returns, and no notices u/s 143(2) were issued within the statutory time limit. The Tribunal referred to various judicial pronouncements, including the case of Aditya Himatsingka vs. DCIT, which held that additions in completed assessments can only be made if incriminating material is found during the search. The Tribunal concluded that the AO was not justified in making the additions based solely on the retracted statement without any supporting incriminating material.

Conclusion:

The Tribunal upheld the CIT(A)'s decision to delete the additions for both AY 2011-12 and AY 2013-14, emphasizing that no incriminating material was found during the search to justify the additions. The appeals filed by the Revenue were dismissed.