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2024 (5) TMI 848 - AT - Income TaxAssessment u/s 153A - Unexplained money u/s 69A - HELD THAT - As decided in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT that in case where the assessment of an assessment year stood concluded at the time of search and remains unabated, the additions and disallowances are permissible in Section 153A proceedings only qua incriminating material found in the course of search. In the instant case, no incriminating material was found during the search and referred in the assessment order and hence the AO is not entitled to make additions in such completed/unabated assessments. We declined to interfere with the findings of the CIT(A). The appeal by the Revenue is dismissed
Issues Involved:
1. Deletion of addition of Rs. 2,67,32,350/- made by AO on account of unexplained money u/s 69A of the IT Act. 2. Validity of invoking provisions of Sec. 153A(1)(a) of the Act. 3. Reliance on the Valuation Report obtained u/s 142A of the Act. Summary of Judgment: Issue 1: Deletion of Addition u/s 69A - The Revenue contended that the Ld. CIT(A) erred in deleting the addition of Rs. 2,67,32,350/- made by AO on account of unexplained money u/s 69A of the IT Act. The AO had based the addition on a Valuation Report obtained u/s 142A, which indicated that the value of the property was higher than what was shown by the assessee. The Ld. CIT(A) deleted the addition, stating that it was not sustainable as it was made during regular assessment proceedings and not based on incriminating material found during search proceedings. Issue 2: Validity of Invoking Sec. 153A(1)(a) - The assessee argued that the AO erred in invoking provisions of Sec. 153A(1)(a) despite no incriminating material being found during the search. The Ld. CIT(A) agreed, relying on the judgment in CIT vs. Kabul Chawla (2016) 380 ITR 573, which held that additions in such cases could only be made based on incriminating material found during the search. The Ld. CIT(A) observed that the addition was based on a Valuation Report obtained post-search and not on any incriminating material. Issue 3: Reliance on Valuation Report u/s 142A - The assessee contended that the Valuation Report obtained u/s 142A was erroneous and void-ab-initio as it was based on estimations without reliable comparables. The AO had apportioned 1/3rd of the unexplained amount of Rs. 8,72,47,050/- to the assessee based on this report. The Ld. CIT(A) did not consider this report as valid evidence for making additions, as it was not based on any incriminating material found during the search. Conclusion: - The ITAT upheld the Ld. CIT(A)'s decision, dismissing the Revenue's appeals and allowing the assessee's Cross Objections. The ITAT noted that the issue was already settled by the Hon'ble Supreme Court in Abhisar Buildwell Pvt. Ltd. 454 ITR 212, which endorsed the interpretation that additions in Section 153A proceedings are permissible only qua incriminating material found during the search. Since no such material was found, the AO was not entitled to make the additions. The appeals filed by the Revenue were dismissed, and the Cross Objections filed by the assessee were allowed. Order Pronounced: - The order was pronounced in open Court on 26th April, 2024.
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