2022 (1) TMI 426 - AT - Income Tax

Assessment u/s 153A - Incriminating material found in search or not? - documents of relevant assessment year - CIT-A deleted the addition - HELD THAT - List of transfer of shares, which according to the ld. DR. is an incriminating material and which is exhibited at page 9 of the paper book title of which reads as List of Transfer of Shares since 10.04.2010 till 31.03.2011 . This nomenclature itself shows that the so-called incriminating material relates to F.Y. 2010-11 relevant to Assessment Year 2011-12 whereas the appeal before us is for Assessment Year 2010-11. Therefore, we do not find any merit in the submissions of the ld. DR. Coming to the facts of the case, we find that there is no reference of any incriminating evidence found at the time of search which makes the ratio laid down in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT squarely apply. Since the addition made by the Assessing Officer is not based on any incriminating material found as a result of search on the assessee we do not find any error or infirmity in the findings of the ld. CIT(A). - Decided in favour of assessee.

Summary

Issues Involved:

1. Validity of assessment under Section 153A of the Income-tax Act, 1961.
2. Determination of whether the seized documents constituted incriminating material for the Assessment Year 2010-11.
3. Justification for the addition of ?8.95 crores as unexplained cash credit under Section 68 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of assessment under Section 153A of the Income-tax Act, 1961:

The appeals and cross objections pertain to the orders of the Commissioner of Income Tax (Appeals) for Assessment Year 2010-11. The Revenue conducted search and seizure operations on 08.07.2015. The assessee argued that an assessment under Section 153A can only be framed if incriminating material is found for the relevant year. The CIT(A) found that the assessment order under Section 153A lacked any incriminating evidence and directed the deletion of the addition, relying on the Delhi High Court’s decision in Kabul Chawla (380 ITR 573).

2. Determination of whether the seized documents constituted incriminating material for the Assessment Year 2010-11:

The Revenue argued that entries in the books of account, if unsubstantiated during search, are incriminating. The list of transfer of shares, which could not be explained, was considered incriminating by the Revenue. However, the Tribunal noted that the list titled "List of Transfer of Shares since 10.04.2010 till 31.03.2011" pertained to the Financial Year 2010-11, relevant to Assessment Year 2011-12, not the year under consideration (Assessment Year 2010-11). Therefore, the Tribunal found no merit in the Revenue’s submission.

3. Justification for the addition of ?8.95 crores as unexplained cash credit under Section 68 of the Income-tax Act, 1961:

The Assessing Officer concluded that the assessee received ?8.95 crores as unexplained cash credit in the guise of share capital and premium from shell companies, based on statements from individuals involved. The CIT(A) found no incriminating evidence for the year under consideration and directed deletion of the addition. The Tribunal upheld this decision, referencing the Delhi High Court’s rulings in Kabul Chawla and Meeta Gutgutia (395 ITR 526), and a similar case (Madho Gopal Agarwal ITA No. 6180/DEL/2018).

Conclusion:

The Tribunal dismissed the Revenue's appeals and the assessee's cross objections, finding no error in the CIT(A)'s decision to delete the addition of ?8.95 crores due to the absence of incriminating material for Assessment Year 2010-11. The judgment was pronounced on 11.01.2022 in the presence of both representatives.