2019 (9) TMI 1036 - AT - Income Tax

Assessment 153C - proof of incriminating material found in search - HELD THAT - Additions made by the Assessing Officer are not based on any incriminating material found during the course of search from the premises of the search party. The document which was found during the search from the premises of Sh. Krishan Kumar Modi being the copy of the sale deed executed on 18.12.2007 by Sh. Sanjeev Lal in favour of M/s. Beena Fashions N Foods Private Limited is already recorded in the books of the assessee and said document per se is not incriminating in nature. Assessment was completed on the date when the satisfaction note was recorded by the Assessing Officer and the additions are not based on any incriminating material found but on the basis of the books of account regularly maintained or unearthed, during the course of search therefore, the various additions made by the Assessing Officer are not sustainable. We, therefore, uphold the order of the CIT(A) deleting the additions made by the Assessing Officer on this ground itself. The grounds raised by the revenue are accordingly dismissed.

Summary

Issues Involved:
- Assessment based on additions made by the Assessing Officer without incriminating material found during search
- Validity of additions related to foreign travel expenses, purchase of jewelry, unexplained cash credit, and depreciation on land
- Compliance with the provisions of section 153C of the IT Act
- Applicability of legal precedents in determining the sustainability of the additions made by the Assessing Officer

Analysis:

Issue 1: Assessment based on additions without incriminating material found during search

The case involved an appeal by the revenue against the order of the CIT(A) relating to the assessment year 2008-09. The Assessing Officer had made several additions to the total income of the assessee, but the CIT(A) deleted these additions. The main contention was that the additions were not based on any incriminating material found during the search conducted. The Tribunal concurred with the CIT(A) that since the additions were not supported by incriminating material discovered during the search, they were not sustainable.

Issue 2: Validity of additions

The Assessing Officer had made additions to the total income of the assessee on various grounds, including foreign travel expenses, purchase of jewelry, unexplained cash credit, and depreciation on land. However, the CIT(A) found these additions unjustified and deleted them. The Tribunal upheld the CIT(A)'s decision, emphasizing that the additions lacked support from incriminating material found during the search, as required by law.

Issue 3: Compliance with section 153C provisions

The revenue argued that the CIT(A) erred in holding that due process for recording satisfaction under section 153C was not followed. However, the Tribunal noted that the additions were not based on incriminating material from the search, and therefore, the CIT(A)'s decision to delete the additions was justified.

Issue 4: Applicability of legal precedents

The Tribunal referred to legal precedents, including the decisions of the Hon'ble Delhi High Court and the Hon'ble Supreme Court, to support its conclusion. It highlighted that incriminating material must pertain to the assessment year in question and have a document-wise correlation. Since the additions were not supported by such material, the Tribunal upheld the CIT(A)'s order to delete the additions.

In conclusion, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the additions made by the Assessing Officer due to the lack of incriminating material found during the search. The Tribunal's decision was based on legal precedents and the requirement for incriminating material to support additions to the total income.