2023 (8) TMI 880 - AT - Income Tax

Assessment u/s 153C - denial of deduction of interest income u/s 80IC and Addition towards share application money as unexplained cash credit - HELD THAT - We find that the original assessment for AY 2010-11 was completed in the hands of the assessee u/s 143(3) of the Act on 12/06/2012. It is not in dispute that the date of handing over of seized documents by the AO of Raghuveer Singh Yadav (Section 153A assessee) to the AO of the assessee herein (Section 153C) was on 11/02/2014. Hence the date of search in the hands of the assessee would have to be reckoned as 11/02/2014. Accordingly as on 11/02/2014 there was no pending assessment proceeding for AY 2010-11 for the assessee. Hence assessment year 2010-11 becomes an unabated/concluded assessment in the hands of the assessee as on 11/02/2014. There is absolutely no incriminating material found during the course of search regarding the denial of deduction u/s 80IC of the Act for interest income and share capital received. Hence in the absence of any incriminating material relatable to AY 2010-11 qua the additions made in the hands of the assessee in respect of concluded assessment the earlier assessment so framed cannot be disturbed by the Ld. AO. This issue is no longer res-integra in view of the recent decision of the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd 2023 (4) TMI 1056 - SUPREME COURT Also no assessment at all could be made u/s 153C of the Act for AY 2010-11 since the seized documents representing the seized cash did not pertain to AY 2010-11. See Singhad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT - Thus assessment framed in the hands of the assessee u/s 153C for AY 2010-11 is hereby quashed. Decided in favour of assessee.

Summary

Issues Involved:
The issues involved in the judgment are the jurisdiction under section 153C of the Income Tax Act, denial of deduction under section 80IC, addition towards share application money as unexplained cash credit, and the validity of the assessment for the Assessment Year 2010-11.

Challenge to Jurisdiction under Section 153C:
The appellant challenged the assumption of jurisdiction under section 153C of the Act, pertaining to the denial of deduction of interest income under section 80IC and the addition of Rs. 40,00,000 as unexplained cash credit towards share application money.

The police seized cash from an individual during the General Assembly Elections in Uttar Pradesh, leading to the initiation of proceedings under section 153A in the individual's hands. It was established that the seized cash belonged to the appellant's company. Consequently, proceedings under section 153C were initiated against the appellant, resulting in the denial of deduction under section 80IC and the addition of Rs. 40,00,000 as unexplained cash credit.

Validity of Assessment for AY 2010-11:
The appellant contended that there was no incriminating material for the Assessment Year 2010-11 regarding the additions made in the assessment. It was argued that the date of search in the appellant's hands should be considered as the date the seized documents were received, i.e., 11/02/2014. As the original assessment for AY 2010-11 was completed earlier, and no incriminating material was found during the search, the assessment for AY 2010-11 could not be disturbed. The Tribunal referred to relevant case law and concluded that the assessment framed under section 153C for AY 2010-11 was quashed, as the seized documents did not pertain to that assessment year.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the appellant, quashing the assessment framed under section 153C of the Act for the Assessment Year 2010-11. The grounds raised by the appellant were allowed, and the appeal was granted in favor of the appellant.

This summary provides a detailed overview of the issues involved in the judgment, the arguments presented by the appellant, and the Tribunal's decision on each issue, maintaining the legal terminology and key aspects of the original text.