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2024 (1) TMI 416 - AT - Income TaxAssessment u/s 153C - incriminating documents seized or any material was found indicating any undisclosed income of assessee or not? - addition u/s 68 - HELD THAT - We note that additions made by the Assessing Officer, while passing the assessment order u/s 153C of the Act, were without mentioning of any incriminating material found during the course of search, therefore addition made by the assessing officer is not justified. The assessee filed regular return of income on 31.03.2014 and on the date of search, no proceedings were pending. Once completed assessments cannot be interfered, if no incriminating material was found, during the course of search. The assessee cited several case laws before ld CIT(A). The assessee also submitted the judgment of jurisdictional High Court of Gujarat in the case of PCIT Vs. Saumya Construction P. Ltd 2016 (7) TMI 911 - GUJARAT HIGH COURT During the year consideration, AO has made additions considering loan as non-genuine by applying section 68 of the Act, however, these loans were examined by the assessing officer during regular assessment proceedings, hence these loans were not incriminating material, therefore, ld CIT(A) deleted the addition. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the ground raised by the revenue. Addition considering the agricultural income as bogus - CIT(A) held that keeping in view of facts that additions made by the Assessing Officer were not based on any incriminating material found during the course of search, even at the third party premises, and the binding judgement of Hon'ble High Court of Gujarat, as mentioned above, the additions made by the Assessing Officer were not found justified, hence, ld CIT(A) deleted the addition. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Addition of unsecured loans - HELD THAT - We note that partial additions made by the assessing officer (AO) considering loan taken from the following creditors as non-genuine, were deleted by ld CIT(A), as the assessee has discharged onus to prove identify of the creditors, genuineness of the transactions and creditworthiness of the creditors For part therof since, additional evidences filed before the Tribunal first time and these have not been examined by the Assessing Officer, hence we are of the view that these evidences should be remitted back to the file of Assessing Officer for his examination. Therefore, out of total addition of Rs. 3,34,40,000/- sustained by ld CIT(A), we remit the various creditors mentioned in para (xxxi) of ld CIT(A) order, at Rs. 1,86,65,000/- to the file of the assessing officer for his examination and to adjudicate the issue in accordance with law and balance addition of Rs. 1,47,75,000/- (Rs.3,34,40,000- Rs. 1,86,65,000) is hereby deleted. Thus, ground no.1 raised by the assessee is partly allowed in above terms. Bogus agricultural income - CIT(A) deleted addition - HELD THAT - CIT(A) noted that assessee was subjected to search on 27.12.2012 and assessment of 6 years was made u/s 153A - During the course of search, no evidence was found which shows that the assessee is inflating the agricultural income, reopening in view the above documents, the addition made by the AO was not found justified by ld CIT(A), hence, ld CIT(A) deleted the addition. We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Exemption u/s 54B - assessee submitted the sale deed of the property sold and purchased, however, no details in relation to agricultural activity being carried out on that land sold, are submitted by the assessee and assessee simply submitted the computation of income showing the agricultural income - HELD THAT - We note that CIT(A) has himself admitted that assessee is owning agricultural land which was used for agricultural purpose during past two years before the date of transfer. Ongoing through the facts of the case, the assessee's contentions have been found factually correct that assessee is owning agricultural land which was used for agricultural purpose during past 2 years before the date of transfer, as seen from 7/12 and 8A form, return of income filed by the assessee and assessment made by the AO for various assessment years u/s 153A of the Act, after search was conducted upon the assessee, on 27.12.2012. Thus, the assessee has satisfied the conditions prescribed about the land sold, despite this fact ld CIT(A) denied exemption under section 54B of the Act. We note that assessee is regularly showing agricultural income for several years in the income tax returns filed and the same was accepted by the department even in the assessment under passed u/s 153A of the Act after search was conducted upon assessee on 27.12.2012. Therefore, we note that assessee has satisfied the condition prescribed u/s 54B of the Act, therefore exemption should be granted to the assessee u/s 54B of the Act, hence, we allow exemption under section 54B.
Issues Involved:
1. Validity of additions based on incriminating material under section 153C. 2. Deletion of additions under section 68 for unexplained credit and agricultural income. 3. Issuance and validity of notice under section 153C. 4. Admission of additional evidence under Rule 46A. 5. Deletion of additions for unexplained cash credit. 6. Deletion of additions for unexplained agricultural income. 7. Disallowance of exemption under section 54B. Summary: Issue 1: Validity of Additions Based on Incriminating Material under Section 153C The Tribunal upheld the CIT(A)'s decision that additions made by the Assessing Officer (AO) under section 153C were not justified as they were not based on any incriminating material found during the search. The Tribunal noted that the AO made additions of Rs. 4,36,02,522/- and Rs. 31,55,500/- without any incriminating material, and thus, the completed assessments could not be interfered with. The Tribunal cited several case laws, including PCIT Vs. Saumya Construction P. Ltd., to support its decision. Issue 2: Deletion of Additions under Section 68 for Unexplained Credit and Agricultural Income The Tribunal confirmed the CIT(A)'s deletion of additions of Rs. 4,36,02,522/- for unexplained credit and Rs. 31,55,500/- for agricultural income, as these additions were not based on any incriminating material found during the search. The Tribunal noted that the AO failed to prove the genuineness and creditworthiness of the transactions and creditors, and the CIT(A) rightly deleted the additions. Issue 3: Issuance and Validity of Notice under Section 153C The Tribunal quashed the assessment order framed under section 153C r.w.s. 143(3) for AY 2014-15, noting that the satisfaction note recorded for initiating proceedings under section 153C was defective and based on incorrect information. The Tribunal observed that the AO's belief that M/s Gokul Developers did not have a PAN number was incorrect, as the PAN card and assessment order for M/s Gokul Developers were provided. Issue 4: Admission of Additional Evidence under Rule 46A The Tribunal dismissed the Revenue's ground against the CIT(A)'s admission of additional evidence under Rule 46A, noting that the assessee was not given sufficient time to submit relevant details during the assessment proceedings. The Tribunal agreed with the CIT(A)'s decision to admit the additional evidence. Issue 5: Deletion of Additions for Unexplained Cash Credit The Tribunal confirmed the CIT(A)'s deletion of additions of Rs. 13,67,52,800/- for unexplained cash credit, noting that the assessee had provided sufficient evidence to prove the identity, genuineness, and creditworthiness of the creditors. The Tribunal found the CIT(A)'s order to be reasoned and supported by binding judgments of the Hon'ble Jurisdictional High Court of Gujarat. Issue 6: Deletion of Additions for Unexplained Agricultural Income The Tribunal upheld the CIT(A)'s deletion of the addition of Rs. 24,27,140/- for unexplained agricultural income, noting that the assessee had provided sufficient evidence, including land holding documents and contracts for agricultural activities. The Tribunal found no infirmity in the CIT(A)'s order. Issue 7: Disallowance of Exemption under Section 54B The Tribunal allowed the assessee's appeal for exemption under section 54B, noting that the assessee had satisfied the conditions prescribed under section 54B. The Tribunal observed that the assessee had provided evidence of agricultural activities on the land sold and had regularly shown agricultural income in past returns, which were accepted by the department. Conclusion: - Appeals by the Revenue in IT(SS)A Nos. 23 & 24/SRT/2021 for AY. 2012-13 & 2013-14 were dismissed. - Appeal by the Assessee in IT(SS)A No. 90/SRT/2022 for AY.2014-15 was allowed. - Appeals by the Assessee in ITA Nos.118 & Revenue in 121/SRT/2021 were partly allowed.
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