2021 (9) TMI 892 - AT - Income Tax

Assessment u/s 153C - Addition u/s 68 - reopening of assessment u/s 147 - HELD THAT - The decision of the coordinate bench in the case of Naval Oil and Containers Pvt. Ltd 2020 (3) TMI 1367 - ITAT DELHI squarely applies on the facts of the case in hand, in as much as, in that case also, information was received out of the search operation carried out in S.K. Jain group of cases - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment order under section 147 r.w.s 143(3) of the Income tax Act, 1961.
2. Merits of the addition of ?10 lakhs made by the Assessing Officer under section 68 of the Act.

Validity of Assessment Order:
The appeal before the ITAT Delhi challenged the order of the Commissioner of Income Tax [Appeals] regarding the assessment year 2010-11. The assessee contended that the assessment order framed under section 147 r.w.s 143(3) of the Income tax Act, 1961 was bad in law. The Assessing Officer made an addition of ?10 lakhs under section 68 of the Act based on information received after a search and seizure operation at the premises of S.K. Jain Group. The assessee argued that proceedings under section 153C of the Act should have been initiated instead of section 148. The ITAT analyzed previous judgments and held that the provisions of section 153C should have been applied, excluding the operations of section 147 of the Act. Citing similar cases, the ITAT directed the Assessing Officer to delete the addition, ruling in favor of the assessee.

Merits of the Addition:
The Assessing Officer concluded that the assessee failed to prove the identity, creditworthiness, and genuineness of the transaction involving ?10 lakhs with Euro Asia Mercantile Private Limited. The ld. CIT(A) confirmed this addition on merits. However, the ITAT, after considering various judgments and the facts of the case, found that the initiation of proceedings under section 147 was not appropriate. The ITAT referred to specific cases where reassessment based on incriminating material found in the search of a third party required the application of section 153C, excluding sections 147 and 148. Consequently, the ITAT directed the deletion of the addition of ?10 lakhs, ruling in favor of the assessee.

In conclusion, the ITAT Delhi allowed the appeal filed by the assessee, directing the Assessing Officer to delete the addition of ?10 lakhs. The judgment emphasized the importance of correctly applying the relevant provisions of the Income Tax Act, 1961, in cases involving incriminating material found during search operations.