2023 (5) TMI 1107 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - assessee neither furnished any explanation nor the party to the agreement responded to the summons issued by the AO - CIT (A) deleted the addition on the ground that the transaction of forfeited amount was accounted for by the assessee in the books of accounts and the agreement referred to by AO is not incriminating material found during search operation - HELD THAT - Since the assessment year under consideration is a completed assessment year, any addition/disallowance ought to have been made by AO on the basis of /evidence as such incriminating material/evidence as found during the search proceedings including CIT Vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - additions made by AO is not sustainable and deserve to be deleted as the addition had been made during the regular course of assessment proceedings and not on the basis of incriminating material/evidence found during the search proceedings. No infirmity in the order passed by the ld. CIT (Appeals). Decided against revenue.

Summary

Issues:
The appeal filed by the Revenue against the deletion of addition made under section 68 of the Income Tax Act, 1961 for assessment year 2013-14.

Summary:

Issue 1: Addition under section 68 of the Income Tax Act

The Revenue challenged the deletion of the addition of Rs.2,50,00,000/- made under section 68 of the Income Tax Act, 1961. The ld. DR argued that the Assessing Officer treated the forfeited sum as unexplained income of the assessee due to lack of verification of the agreement authenticity and non-response from the party Mahagauri Estates Pvt. Ltd. The ld. Counsel for the assessee relied on the decision in the case of CIT Vs. Kabul Chawla to support the deletion of the addition.

Issue 2: Legal Position on Assessments without Incriminating Material

The Assessing Officer treated the forfeited amount as unexplained income under section 68 of the Act, while the ld. CIT (Appeals) deleted the addition stating that the transaction was accounted for in the books of accounts and was not incriminating material found during the search operation. The ld. CIT (Appeals) referred to the legal position established in various court decisions, including CIT vs. Kabul Chawla, emphasizing that assessments without incriminating material are invalid.

Decision:

After careful perusal, the Tribunal found no infirmity in the order passed by the ld. CIT (Appeals) and sustained the decision to delete the addition made under section 68 of the Income Tax Act. The Tribunal rejected the grounds raised by the Revenue and dismissed the appeal.

Order pronounced in the open court on: 25/05/2023.