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2023 (6) TMI 1030 - AT - Income TaxAssessment proceedings u/s 153C - unexplained share capital - addition made on protective basis - Settlement Commission has not admitted the application of the assessee on the grounds that the assessee does not qualify as a related person to the specified person - HELD THAT - Addition was confirmed in the hands of other Assessees and not on the assessee here in by the settlement Commission, the protective assessment made in the hands of the assessee does not survive. Addition on substantive basis , as incriminating material found during the search is pertaining to Assessment Year 2010-1 and not pertaining to Assessment Year 2009-10, further, even before us the Revenue has not refuted the finding of the Ld. CIT(A). As relying on of Sinhgad Technical Education Society case 2017 (8) TMI 1298 - SUPREME COURT , we find no error or infirmity in the order of the CIT(A) in deleting the addition and find no merit in the grounds of Appeal of the Revenue.
Issues Involved:
1. Deletion of addition on account of unexplained share capital. 2. Reliance on Delhi High Court's decision in M/s RRJ Securities. 3. Jurisdiction under Section 153C of the Income Tax Act. 4. Validity of additions made on protective and substantive basis. Summary: Issue 1: Deletion of Addition on Account of Unexplained Share Capital The Revenue challenged the CIT(A)'s decision to delete the addition of Rs. 54,59,00,000/- on account of unexplained share capital. The CIT(A) held that additions other than those based on seized documents cannot be made in assessment proceedings under Section 153C. The A.O. had made this addition based on documents found during a search on the Rockland Group, alleging that the share capital was unexplained cash credit under Section 68. However, the CIT(A) noted that the seized document did not pertain to the assessment year 2009-10, and thus, the addition was deleted. Issue 2: Reliance on Delhi High Court's Decision in M/s RRJ Securities The CIT(A) relied on the Delhi High Court's decision in M/s RRJ Securities, which held that Section 153C does not restrict the assessment to incriminating documents. The CIT(A) found that the purported incriminating material pertained to Assessment Year 2010-11, not 2009-10. Therefore, the substantive addition based on this material could not be the basis for addition in Assessment Year 2009-10. Issue 3: Jurisdiction under Section 153C of the Income Tax Act The CIT(A) observed that the incriminating material found during the search pertained to Assessment Year 2010-11 and not 2009-10. The CIT(A) cited the Supreme Court's decision in CIT III Pune Vs. Singhad Technical Education Society, which held that incriminating material must pertain to the relevant assessment year for a valid assessment under Section 153C. The CIT(A) concluded that the A.O. did not have jurisdiction to make the reassessment for Assessment Year 2009-10 based on the material from 2010-11. Issue 4: Validity of Additions Made on Protective and Substantive Basis The A.O. made additions of Rs. 29.73 crores on a protective basis and Rs. 24.27 crores on a substantive basis. The CIT(A) found that the protective addition did not survive as the Settlement Commission had confirmed the addition in the hands of other assessees. Regarding the substantive addition, the CIT(A) held that it was not based on any incriminating material found during the search for the relevant assessment year. The CIT(A) followed the Delhi High Court's ruling that completed assessments can only be interfered with based on incriminating material unearthed during the search. Conclusion: The Tribunal upheld the CIT(A)'s order, finding no error or infirmity in deleting the addition. The Revenue's appeal was dismissed, and the Tribunal pronounced the order in open court on 21/06/2023.
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