2024 (2) TMI 457 - AT - Income Tax

Validity of Assessment u/s 153A - share application money received by the assessee company - Whether any material found and seized during the search seizure operations? - HELD THAT - Decisions of Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT and KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT are squarely applicable to the facts and circumstances of the case as no assessment was pending on the date of search and the addition has been made merely on the basis of the book entries already disclosed to the department. Further, reliance is also placed on the decision of the Hon ble Jurisdictional High Court in the case of PCIT Vs. Subhash Khattar 2017 (7) TMI 1091 - DELHI HIGH COURT The entire issue stands settled by the judgment of Hon ble Apex Court in the case of M/s. Abhisar Buildwell P. Ltd. 2023 (4) TMI 1056 - SUPREME COURT wherein the Hon ble Apex Court held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Thus no addition can be made in the case of the assessee sans seized material. Decided in favour of assessee.

Summary

Issues:
The issues involved in this case pertain to the deletion of addition of share application money and commission expense made by the Assessing Officer, reliance on case laws, and the legality of the CIT(A)'s order.

Deletion of Addition of Share Application Money and Commission Expense:
The appeals were filed by the Revenue against the orders of the CIT(A) regarding the addition of share application money and commission expense. The CIT(A) had deleted the additions, leading to the present appeals. The issue was whether the additions were justified, and it was noted that the addition was not based on material found during search operations. The Tribunal found that the issue of addition in the absence of incriminating material had been settled.

Reliance on Case Laws:
The Tribunal relied on established judgments of the Hon'ble Jurisdictional High Court and cited various case laws, including CIT v. Kabul Chawla, All Cargo Global Logistics Limited Vs. DCIT, and others. The Tribunal specifically referred to the case of CIT Vs Kabul Chawla, where it was held that assessments can be interfered with only based on incriminating material unearthed during search operations.

Legality of CIT(A)'s Order:
The Tribunal considered the legality of the CIT(A)'s order and found that the decisions of the Hon'ble Jurisdictional High Court were applicable to the case. It was emphasized that no assessment was pending at the time of the search, and the additions were made based on book entries already disclosed to the department. The Tribunal also mentioned the judgment of the Hon'ble Apex Court in the case of M/s. Abhisar Buildwell P. Ltd., where it was held that in the absence of incriminating material, no addition can be made.

In conclusion, the Tribunal dismissed the appeals of the Revenue based on the settled legal principles and judgments cited in the case. The order was pronounced in the open court on 06/02/2024.