2023 (10) TMI 373 - AT - Income Tax

Assessment u/s 153A - Addition of unsecured loan receipts u/s 68 - as per assessee genuine loan is received where Identity, Genuineness and Creditworthiness had been proved - HELD THAT - As per Meeta Gutgutia case 2017 (5) TMI 1224 - DELHI HIGH COURT no assessment was pending on the date of search and the addition has been made merely on the basis of the book entries already disclosed to the department. Further, reliance is also placed on the decision of the Hon ble Jurisdictional High Court in the case of PCIT Vs. Subhash Khattar 2017 (7) TMI 1091 - DELHI HIGH COURT The entire issue stands settled by the judgment of Hon ble Apex Court in the case of M/s. Abhisar Buildwell P. Ltd. 2023 (4) TMI 1056 - SUPREME COURT wherein the held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Hence, we hold that no addition can be made in the case of the assessee sans seized material. Appeal of the assessee is allowed.

Summary

Issues:
The issues involved in the judgment are:
1. Confirmation of addition to income in respect of unsecured loan received.
2. Confirmation of addition under section 68 of the Act for loans received.
3. Legality of penalty notice under section 271(1)(c) and interest charged under section 234A/B/C/D.

Confirmation of Addition to Income:
The present appeal was filed against the order confirming the addition of Rs 50,00,000 to the income of the appellant in respect of an unsecured loan received from M/s Amsoft Global Private Limited. The appellant argued that the addition was unjustified and bad in law as the loan was genuine and the identity, genuineness, and creditworthiness had been proved. The Tribunal noted that no notice under section 143(2) was issued, indicating a completed and unabated assessment. The assessment was made without any material found during the search, and the additions lacked a connection with the seized material. The Tribunal relied on established judgments and held that no addition can be made without seized material, ultimately allowing the appeal.

Confirmation of Addition under Section 68:
Another issue raised was the confirmation of an addition of Rs. 50,00,000 under section 68 of the Act for loans received. The appellant contended that the loans were genuine and supported by evidence of identity and creditworthiness. The Tribunal observed that the assessment was completed and unabated, and the additions were made without any incriminating material. Relying on case laws and the judgment of the Hon'ble Apex Court, the Tribunal concluded that no addition could be made without seized material. Consequently, the appeal of the assessee was allowed.

Legality of Penalty Notice and Interest Charged:
The third issue pertained to the legality of the penalty notice under section 271(1)(c) and the interest charged under section 234A/B/C/D. The appellant argued that these actions were illegal and bad in law. However, the Tribunal's decision on the previous issues rendered this issue moot as the appeal was allowed based on the lack of additions without seized material. Therefore, the penalty notice and interest charged were not upheld, and the appeal of the assessee was allowed in its entirety.