2024 (6) TMI 799 - AT - Income Tax

Assessment u/s 153A - addition towards share capital raised by the assessee during the year by treating it as unexplained credit u/s. 68 - HELD THAT - Perusal of the order of Ld. AO evidently demonstrate that there is no reference to any incriminating material found and seized during the course of search in respect of the addition towards share capital amounting to Rs. 2 Cr. The observations made by the Ld. AO are routine in nature which have been found from the accounts of the assessee and submissions made thereon. It is also undisputed that the year under consideration is an unabated year considering the date of conduct of search within the meaning of section 153A of the Act. Admittedly no incriminating material has been referred to which has been found in the course of search of the assessee for the impugned assessment year. Accordingly as relied on by the Ld. Counsel for the assessee the decision of Abhisar Buildwell Pvt. Ltd.. 2023 (4) TMI 1056 - SUPREME COURT applies squarely to the facts of the present case. Thus as no incriminating material has been unearthed during the course of search for the relevant assessment years no addition can be made by the AO in the assessments. Consequently the assessment orders passed for the impugned assessment years stand quashed. Assessee appeal allowed.

Summary

Issues involved:
The appeal concerns the deletion of additions under the head of bogus share capital received from various entities, challenging the orders of Ld. CIT(A) for AYs 2013-14 and 2016-17 u/s. 153A of the Income-tax Act, 1961.

AY 2013-14:
The revenue raised grounds against the deletion of Rs. 2,00,00,000/- addition for bogus share capital received from M/s Shri Sai Megha Alloys Ltd. The Ld. CIT(A) was criticized for not considering incriminating documents and retraction statements of the assessee. The revenue's contentions were based on judicial precedents, which the Ld. CIT(A) did not find valid.

AY 2016-17:
Similar to AY 2013-14, the revenue contested the deletion of additions totaling Rs. 3,20,00,000/- for bogus share capital received from Karzel Kholie & Nabam Yani. The Ld. CIT(A) was accused of not considering incriminating documents and retraction statements. The revenue relied on judicial precedents, but the Ld. CIT(A) ruled in favor of the assessee.

Common Issues:
Both appeals shared common issues, disposed of by a consolidated order. The case involved a search and seizure operation u/s. 132(1) at the assessee's establishments related to the "Niraj Sharma Group." The Ld. AO made additions towards share capital as unexplained credit u/s. 68 of the Act. The Ld. CIT(A) deleted the additions, emphasizing the absence of incriminating material found during the search.

Decision and Analysis:
The Tribunal dismissed the revenue's appeals, citing the Hon'ble Supreme Court's decision in the case of Abhisar Buildwell Pvt. Ltd. The Court emphasized that additions without reference to incriminating material found during a search u/s. 153A are liable to be quashed. As no incriminating material was unearthed, the AO's additions were deemed unwarranted. The Court upheld the Ld. CIT(A)'s decision, leading to the quashing of assessment orders for the impugned years.

Conclusion:
Based on the lack of incriminating material found during the search, the Tribunal dismissed the revenue's appeals for both AYs 2013-14 and 2016-17. The assessment orders were quashed in line with the decision of the Hon'ble Supreme Court, resulting in the deletion of the disputed additions.