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2023 (6) TMI 721 - AT - Income TaxAssessment u/s 153A - search action not undertaken on the appellant but was undertaken on his employer - HELD THAT - As decided in case of JM trading Corporation 2007 (9) TMI 447 - ITAT MUMBAI wherein it has been held that is a condition precedent to be satisfied before start of any proceedings against the assessee the search only should not have been merely initiated but conducted. Tribunal is required to verify whether the jurisdictional facts exist before notice can be issued u/s 158BC. In the present case, we find that search warrant is issued in the name of the assessee while opening the locker. The keys of the locker were found from the residential premises of the assessee during the course of search on employers residence of the assessee. Search was initiated as well as conducted on the assessee and therefore it is mandatory to issue notice u/s 153A of the act on the assessee. We find no infirmity in the order of the learned CIT A in upholding the same. Bogus long-term capital gain - addition in hands of employer v/s employee - No details of the exit providers to the assessee as well as accommodation entry providers with respect to purchase of shares is available in the assessment order. We found that the CIT A has made an addition u/s 69C as well as u/s 68 of the act in the hands of emploer Mr Kishan Khaderia therefore, even if the above long-term capital gain is held to be bogus based on the material available in the mobile phone of the assessee, this addition also cannot be made in the hands of the assessee but has to be made if at all to be made in the hence of Mr Kishen Khaderia. This is the finding of the CIT A. Therefore, even otherwise, if this addition is required to be made it should be made in the hands of the employer of the assessee and not this assessee. Decided in favour of assessee.
Issues Involved:
1. Validity of notice issued under section 153A of the Income Tax Act. 2. Addition of Rs. 23,95,024/- as non-genuine long-term capital gain. 3. Addition of Rs. 1,43,701/- as unexplained expenditure. 4. Deletion of addition of Rs. 10,71,00,000/- for AY 2015-16. Summary: 1. Validity of Notice Issued Under Section 153A: The assessee challenged the validity of the notice issued under section 153A of the Income Tax Act, arguing that the search warrant was not in his name but in the name of his employer. The Tribunal found that the search was initiated and conducted on the assessee as the locker key found at his premises led to a search warrant issued in his name. Thus, the notice under section 153A was deemed valid. 2. Addition of Rs. 23,95,024/- as Non-Genuine Long-Term Capital Gain: The assessee declared long-term capital gains from the sale of shares in Luminaire Technologies Ltd. The AO treated these gains as non-genuine based on an investigation report, alleging the company was involved in providing bogus long-term capital gains. The Tribunal noted that the assessee provided adequate evidence to prove the genuineness of the transactions. The Tribunal also observed that any addition should be made in the hands of the employer, Mr. Kishan Khaderia, not the assessee, as per the CIT(A)'s findings. Consequently, the addition was deleted. 3. Addition of Rs. 1,43,701/- as Unexplained Expenditure: The AO added Rs. 1,43,701/- as commission paid for availing alleged bogus long-term capital gains. The Tribunal found no evidence supporting this addition and ruled that it should also be made in the hands of Mr. Kishan Khaderia, not the assessee. Thus, this addition was also deleted. 4. Deletion of Addition of Rs. 10,71,00,000/- for AY 2015-16: The AO appealed against the CIT(A)'s deletion of Rs. 10,71,00,000/- added based on unaccounted cash transactions found in the assessee's mobile messages. The CIT(A) held that the addition should be made in the hands of Mr. Kishan Khaderia, the employer, not the assessee. The Tribunal upheld this decision, noting that the revenue had accepted this position for the previous assessment year. Therefore, the AO's appeal was dismissed. Conclusion: The Tribunal dismissed the grounds challenging the validity of the notice under section 153A and upheld the deletion of additions relating to long-term capital gains and unexplained expenditure in the assessee's hands. The appeal by the AO for AY 2015-16 was also dismissed, confirming the addition should be made in the hands of Mr. Kishan Khaderia.
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