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2017 (4) TMI 347 - AT - Income TaxInitiation of the proceedings u/s 153A - Held that - In the present case, it is an admitted fact no incriminating material was found during the course of search and the time limit to frame the assessment u/s 143(3) of the Act lapsed much before the search which took place on 07.01.2010 while the time period to issue the notice u/s 143(2) of the Act was only upto 30.09.2009. In the instance case, it is an admitted fact that the AO while framing the assessment u/s 153A of the Act made the addition without any incriminating material found during the course of search. - Decided in favour of assessee
Issues Involved:
1. Condonation of delay in filing Cross Objections by the assessee. 2. Validity of proceedings under Section 153A of the Income Tax Act, 1961. 3. Deletion of additions on account of share capital and unexplained unsecured loans. Issue-wise Detailed Analysis: 1. Condonation of Delay: The assessee filed Cross Objections delayed by 3 days, attributing it to inadvertence and bona fide reasons. The department opposed the condonation. The Tribunal, after considering both parties' submissions, condoned the delay, admitting the Cross Objections. 2. Validity of Proceedings under Section 153A: The assessee contended that the initiation of proceedings under Section 153A was invalid as no incriminating material was found during the search. The Tribunal noted that the search and seizure operation occurred on 07.01.2010, and the notice under Section 153A was issued on 16.12.2010. The original assessment for the year 2006-07 was completed under Section 143(3) on 28.11.2008, with no pending assessments at the time of the search. The Tribunal referred to the judgment in CIT Vs Kabul Chawla, which held that in the absence of incriminating material, completed assessments could not be interfered with under Section 153A. Consequently, the Tribunal held that the additions made by the AO under Section 153A were not valid. 3. Deletion of Additions: The department appealed against the deletion of additions by the CIT(A) on account of share capital (?1,96,85,400) and unexplained unsecured loans (?35,70,740). - Share Capital Addition: The AO added ?1,96,85,400 received as share capital, alleging it was unaccounted income. The CIT(A) observed that the assessee had provided all necessary documents, including confirmations, PAN details, bank statements, and ITRs, proving the identity, creditworthiness, and genuineness of the transactions. The AO's claim of non-submission of documents was found baseless. The Tribunal upheld the CIT(A)'s finding that the AO failed to conduct meaningful inquiries and wrongly concluded the transactions were not genuine. Thus, the addition was deleted. - Unexplained Unsecured Loans: The AO made a protective addition of ?35,70,740, suspecting the source of loans from Shri Sanjay Bansal. The CIT(A) found that the assessee had submitted all necessary confirmations and documents. The AO's suspicion did not justify a protective addition without substantial evidence. The Tribunal agreed with the CIT(A) that the addition was unwarranted and deleted it. Conclusion: The Tribunal dismissed the department's appeals and allowed the assessee's Cross Objections, concluding that the additions made under Section 153A were invalid in the absence of incriminating material. The Tribunal's findings were consistent for both assessment years 2006-07 and 2008-09, leading to similar conclusions for both periods. Order Pronounced in the Court on 23/03/2017.
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