2023 (7) TMI 1261 - AT - Income Tax

Assessment u/s 153A - unexplained credit into bank accounts - scope of unabated assessment - existence of incriminating material to initiate assessment - HELD THAT - During the course of hearing here DR was specifically asked to refer and the produce the incriminating material qua this addition of unexplained credit into bank accounts. DR despite providing sufficient time of more than one month, he failed to produce or link the addition with the any incriminating material. Neither the AO nor the ld. CIT(A) has specifically linked this addition with any incriminating material found and seized during the course of search, therefore, in absence of any incriminating material qua this addition, same cannot be sustained. The ground No. 2 of the appeal is accordingly allowed. Unexplained cash credit on the basis of the revised balance sheet furnished by the assessee - HELD THAT - This addition is not based on incriminating material found during the course of the search and accordingly same cannot be sustained relying on ratio in the case of Continental Warehousing Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT - additions cannot be sustained on the legal ground of no incriminating material. Unexplained cash credit - As submitted that additions which are in respect of same party for same deposit, but made once under credit in bank account and secondly under unexplained cash credit in books of account, same might be eliminated - HELD THAT - We are of the opinion that addition could not be made twice for the same entry of the deposit, once, appearing in the bank statement and secondly appearing in the books of accounts of the assessee and similar is the situation in respect of cash deposit in bank account. The Assessing Officer shall verify the contention of the assessee and accordingly take appropriate action in accordance with law.

Summary

Issues Involved:
1. Condonation of Delay
2. Validity of Proceedings under Section 153A
3. Additions Based on Incriminating Material
4. Double Additions
5. Enhancement of Income by CIT(A)

Summary:

1. Condonation of Delay:
The appeals were filed with a delay of 58 days. The assessee provided medical reasons for the delay, including mental depression and anxiety, supported by medical prescriptions. The Tribunal found sufficient and bona fide cause for the delay and condoned it, admitting the appeals for adjudication.

2. Validity of Proceedings under Section 153A:
The assessee challenged the validity of proceedings under Section 153A on the grounds that no warrant was issued and no incriminating material was found. The CIT(A) rejected these contentions, citing the warrant and panchnamas prepared in the name of the assessee and the incriminating material found during the search of group cases. The Tribunal noted that for unabated assessments, additions could only be made based on incriminating material found during the search, as per the Hon'ble Bombay High Court's decision in CIT vs Continental Warehousing Corporation.

3. Additions Based on Incriminating Material:
For AY 2008-09 to 2011-12, which were unabated assessments, the Tribunal found that the CIT(A) and AO did not specifically link the additions with any incriminating material found during the search. The Tribunal held that the additions could not be sustained in the absence of such material and allowed the appeals on this ground.

4. Double Additions:
The assessee argued that some additions were made twice for the same entry, once under credit in the bank account and secondly under unexplained cash credit in the books of accounts. The Tribunal agreed that additions could not be made twice for the same entry and directed the AO to verify and take appropriate action.

5. Enhancement of Income by CIT(A):
For AY 2009-10, the CIT(A) enhanced the income by Rs. 39,800 based on credits in the HDFC Bank account. The Tribunal found no reference to any incriminating material for this enhancement and allowed the appeal, relying on the decision in Continental Warehousing Corporation.

Assessment Years 2012-13 to 2014-15:
For these years, the assessments were abated, and the AO was authorized to make additions even without incriminating material. The Tribunal restored the grounds to the AO for fresh adjudication, admitting additional evidence submitted by the assessee and directing the AO to avoid double additions.

Conclusion:
The appeals for AY 2008-09 to 2011-12 were partly allowed, and the appeals for AY 2012-13 to 2014-15 were partly allowed for statistical purposes. The Tribunal directed the AO to verify and eliminate any double additions and to consider additional evidence submitted by the assessee.