2023 (11) TMI 805 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - incriminating material found in search or not? - HELD THAT - We do not find any substance in the contention of the Revenue that the Ld. CIT(A) has erred in law by holding that addition under section 153A cannot be made without incriminating material gathered during course of search. There has to be incriminating material recovered during search qua the assessee in each of years for purpose of framing an assessment under section 153A. There are umpteen number of decisions in support of the above proposition - See Kabul Chawla 2014 (7) TMI 714 - ITAT DELHI affirmed by HC 2015 (9) TMI 80 - DELHI HIGH COURT , MS. LATA JAIN 2016 (5) TMI 1273 - DELHI HIGH COURT ,MEETA GUTGUTIA 2018 (7) TMI 569 - SC ORDER , M/S JAYPEE FINANCIAL SERVICES LTD 2021 (8) TMI 200 - DELHI HIGH COURT - Appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Legality of the CIT(A)'s order.
2. Quashing of the order under section 153A.
3. Addition under section 153A without incriminating material.
4. Deletion of addition on account of unexplained cash credit under section 68.
5. Deletion of addition on account of unexplained commission expenses.

Summary:

1. Legality of the CIT(A)'s Order:
The Revenue contested that the CIT(A)'s order was incorrect in law and on facts.

2. Quashing of the Order under Section 153A:
The CIT(A) quashed the assessment order under section 153A, which was challenged by the Revenue.

3. Addition under Section 153A Without Incriminating Material:
The CIT(A) held that additions under section 153A cannot be made without incriminating material gathered during the search. The CIT(A) noted that the assessment was not based on any incriminating document found during the search, and the assessment orders were quashed accordingly.

4. Deletion of Addition on Account of Unexplained Cash Credit under Section 68:
The CIT(A) deleted the addition of Rs. 1,50,00,000/- made by the AO on account of unexplained cash credit shown as share application money under section 68. The CIT(A) observed that no incriminating documents were found related to the assessee companies, and no addition could be made without providing an opportunity for cross-examination of the persons whose statements were relied upon by the AO.

5. Deletion of Addition on Account of Unexplained Commission Expenses:
The CIT(A) also deleted the addition of Rs. 1,12,500/- made by the AO on account of unexplained commission expenses under section 69C. The CIT(A) found that the facts were similar to those in another group case where similar additions were deleted.

Conclusion:
The ITAT upheld the CIT(A)'s findings, noting that the Revenue did not provide any material to counter the CIT(A)'s decision. The ITAT referenced multiple judicial precedents supporting the requirement of incriminating material for additions under section 153A. Consequently, the appeal of the Revenue was dismissed.

Order pronounced in the open court on 17th November, 2023.