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2022 (3) TMI 708 - AT - Income TaxAssessment u/s 153A - Unexplained investment made in the a penny stock company - primary contention of the Assessee before the CIT(A) was that the assessment year under consideration was not an abated assessment year and the AO has been erred in making additions without there being any incriminating documents/materials - HELD THAT - CIT(A) has returned factual finding that the additions made by the AO are not based on any incriminating material found during the course of search and the same remains uncontroverted. The Ld. Departmental Representative could not dispute the proposition that additions in the present case cases have not been made on the basis of any incriminating material found during search. CIT(A) has granted relief by following the decision of the jurisdictional High Court in the case of Continental Warehousing Corporation 2015 (5) TMI 656 - BOMBAY HIGH COURT wherein it has been held that no addition can be made in respect of unabated assessments which have become final in absence of any incriminating material found during search. This view has also been upheld in the case of CIT vs. Sinhgad Technical Education Society and Others 2017 (8) TMI 1298 - SUPREME COURT . We do not find any merit in the present appeal.
Issues:
1. Challenge to the order passed by CIT(A) under Section 250 of the Income Tax Act, 1961 for the Assessment Year 2012-13. 2. Deletion of addition made by AO regarding unexplained investment in a penny stock company. 3. Dispute over the sale consideration derived from the sales of shares of the company. 4. Deletion of addition made on account of commission paid to entry operator. 5. Interpretation of the scope of assessment under section 153A of the Income Tax Act, 1961. Analysis: 1. The appeal challenged the order passed by the Commissioner of Income Tax (Appeals) under Section 250 of the Income Tax Act, 1961 for the Assessment Year 2012-13. The Revenue raised grounds of appeal related to the deletion of additions made by the Assessing Officer (AO) regarding unexplained investment in a penny stock company, dispute over the sale consideration derived from the sales of shares of the company, and deletion of addition made on account of commission paid to entry operator. 2. The Assessee had sold shares of a company at a significant profit, which the AO deemed to be a penny-stock transaction aimed at tax evasion. The AO made additions to the Assessee's income based on this transaction. However, the Assessee contended before the CIT(A) that the assessment year was not abated, and the AO erred in making additions without any incriminating documents. The CIT(A) agreed with the Assessee, citing legal precedents, and deleted the additions made by the AO, emphasizing that in cases without incriminating material found during a search, no additions should be made under section 153A of the Act. 3. The CIT(A) based the decision on the principle that assessments in non-abated cases under section 153A should rely on incriminating material found during a search. The CIT(A) held that since the additions were not based on incriminating material but on the AO's observations, they should be deleted. The Revenue appealed to the Tribunal, but the Tribunal upheld the CIT(A)'s decision, emphasizing that no additions should be made without incriminating material, as per legal precedents and Supreme Court judgments. 4. The Tribunal dismissed the Revenue's appeal, emphasizing that the additions made by the AO were not supported by incriminating material found during the search. The Tribunal upheld the CIT(A)'s decision based on legal principles and Supreme Court rulings, ultimately ruling in favor of the Assessee and against the Revenue's appeal. Judgment Summary: The Appellate Tribunal upheld the CIT(A)'s decision to delete additions made by the AO regarding unexplained investment in a penny stock company, sale consideration of shares, and commission paid to an entry operator. The Tribunal emphasized the importance of incriminating material in assessments under section 153A of the Income Tax Act, 1961, ruling against the Revenue's appeal and in favor of the Assessee.
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