2017 (11) TMI 1219 - AT - Income Tax

Proceedings under section 153A - addition u/s 68 - as per assessee no incriminating material was found during the course of search about the cash credits of which additions have been made - Held that - As during the course of search, no incriminating material was found in respect of assessment years under appeals so as to make additions of unexplained cash credits under section 153A of the I.T. Act. The A.O. made additions of unexplained cash credits in all the assessment years under appeals without there being recovery of any incriminating material found during the course of search. All the original returns had already been filed prior to the search and the last date of issue of notice under section 143(2) had already expired on the date of search. Therefore, on the date of search on 22nd March, 2010, no assessments were pending for assessment years under appeals. In the facts and circumstances of the case, it is clear that A.O. was not justified in invoking the provisions of Section 153A of the Act against the assessee. Direction under section 150(1) should be issued for taxing this amount under section 148 as submitted by DR? - Held that - We are afraid to accept this contention of the Ld. D.R. because it is the sole prerogative of the A.O. to initiate re-assessment proceedings after satisfying the conditions of Section 148 and recording the reasons for the same. The jurisdiction of the A.O. cannot be ushered-up in the present proceedings. Since the appeals have already been allowed in favour of the assessee, therefore, what remedy is available to the Revenue for proceeding further against the assessee cannot be raised in the present proceedings. The scope of the proceeding cannot be enlarged to give a different colour to proceed against the assessee. Once assessment orders have been set aside under section 153A of the I.T. Act and additions have been deleted, Revenue is at liberty to take any action as per Law, if so, advised in accordance with Law. Therefore, no direction is required under section 150(1) of the I.T. Act. - Decided against revenue

Summary

Issues:
1. Condonation of delay in filing appeals.
2. Addition of unexplained cash credits under section 68 of the I.T. Act.
3. Validity of additions made under section 153A without incriminating material.

Issue 1: Condonation of delay in filing appeals
The assessee's appeals were time-barred by 3 days. The delay was explained due to administrative reasons, and the Tribunal, after considering the explanation, condoned the delay. It was deemed that the delay was nominal and the assessee had sufficient cause for the delay. Therefore, the delay in filing the appeals was condoned.

Issue 2: Addition of unexplained cash credits under section 68 of the I.T. Act
The Assessing Officer (A.O.) had made additions against the assessee under section 68 of the I.T. Act for unexplained cash credits in various assessment years. The assessee challenged these additions before the Ld. CIT(A) on merits. However, the Ld. CIT(A) upheld the additions made by the A.O. The assessee contended that no incriminating material was found during the search related to the cash credits, and therefore, no additions could be made under section 153A of the I.T. Act. Citing the judgment of the Hon'ble Delhi High Court in CIT vs. Kabul Chawla, the Tribunal held that the A.O. was not justified in making the additions under section 153A as no incriminating material was found during the search. Consequently, the Tribunal set aside all the additions under section 68 of the I.T. Act in the proceedings under section 153A.

Issue 3: Validity of additions made under section 153A without incriminating material
The Tribunal ruled that since no incriminating material was found during the search in relation to the assessment years under appeal, the A.O. was not justified in invoking the provisions of Section 153A against the assessee. The Tribunal referred to the judgment in CIT vs. Kabul Chawla and CIT vs. Meeta Gutgutia to support its decision. The Tribunal emphasized that once the assessment orders were set aside and additions were deleted, the Revenue could take further action as per the law, but no direction was required under section 150(1) of the I.T. Act. Therefore, all the appeals of the assessee were allowed, and the orders of the authorities below were set aside.

In conclusion, the Tribunal's judgment addressed the issues of condonation of delay, additions of unexplained cash credits under section 68, and the validity of additions made under section 153A without incriminating material. The Tribunal ruled in favor of the assessee, setting aside the additions and allowing all the appeals.