2024 (4) TMI 735 - AT - Income Tax

Assessment u/s 153A - Addition u/s 68 - bogus unsecured loan - unexplained cash credit received from shell/paper companies under the garb of unsecured loan - CIT(A) deleted addition - HELD THAT - As on the date of search i.e. 29/01/2021 Assessment Years 2014-15 and 2015-16 fall under the category of completed/unabated assessment years and addition for such assessment years could have been made only if any incriminating material has been found by the search team indicating that the assessee had any unaccounted income/investment/unaccounted money. Perusal of the assessment order shows that the ld. Assessing Officer has not referred to any incriminating material. He has merely acted upon the informations available in the audited balance sheet relating to unsecured loans taken and based on the post search enquiry/information from third parties have made the alleged additions We find that the ratio laid down by the Hon ble Apex Court in Abhisar Buildwell ( 2023 (4) TMI 1056 - SUPREME COURT is squarely applicable on the facts of the instant case and therefore since the AY 2014-15 2015-16 are completed and unabated Assessment Years and no incriminating material was found for the alleged Assessment Years during the course of search and the ld. Assessing Officer has made the addition without referring to any incriminating material the addition has been rightly deleted by the ld. CIT(A). We thus fail to find any infirmity in the finding of the ld. CIT(A). Accordingly the grounds of appeal raised by the revenue for both the Assessment Years are dismissed.

Summary

Issues involved:
The issues involved in this case are related to additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961 for unexplained cash credits received from shell/paper companies as unsecured loans and interest expenses claimed on bogus unsecured loans for Assessment Years 2014-15 and 2015-16.

Assessment Year 2014-15:
The Revenue appealed against the deletion of additions made under section 68 for unexplained cash credits and interest expenses claimed on bogus unsecured loans. The Assessee argued that the additions were not based on any incriminating material found during a search, and therefore, the additions were rightly deleted by the CIT(A). The Tribunal agreed with the Assessee, citing the Supreme Court's judgment in a similar case, emphasizing that additions for completed/unabated assessment years can only be made based on incriminating material found during a search. Since no such material was found, the Tribunal upheld the CIT(A)'s decision to delete the additions.

Assessment Year 2015-16:
Similar to the previous assessment year, the Revenue challenged the deletion of additions made under section 68 for unexplained cash credits and interest expenses on bogus unsecured loans. The Assessee contended that the additions were not supported by any incriminating material found during the search. The Tribunal, following the principles established by the Supreme Court, ruled in favor of the Assessee, stating that additions for completed/unabated assessment years must be based on incriminating material. As no such material was found, the Tribunal upheld the CIT(A)'s decision to delete the additions.

Conclusion:
In both Assessment Years 2014-15 and 2015-16, the Tribunal dismissed the Revenue's appeals and upheld the CIT(A)'s decision to delete the additions made by the Assessing Officer. The Tribunal emphasized the necessity of incriminating material to support additions for completed/unabated assessment years, as per the provisions of the Income Tax Act. Therefore, the appeals for both assessment years were dismissed by the Tribunal on 7th March, 2024.