2024 (11) TMI 153 - AT - Income Tax

Assessment u/s 153A - addition u/s. 69C of the Act towards commission paid on alleged accommodation entries on sales and purchases @ 3% of the said transaction - Whether any new incriminating material found or seized during the search? - CIT(A) deleted addition - HELD THAT - CIT(A) held that the ld. A.O. has merely made the addition based on the incriminating material that was already relied upon by the ld. A.O. in section 153A proceeding and in the absence of any new incriminating material deleted the impugned addition - A.O. has made the addition to rectify the mistake apparent from the record in the assessment order passed u/s.153A r.w.s. 144 which has erroneously not made the addition on the actual sales and purchase figures while computing the commission income. CIT(A) further has directed the ld. A.O. to rectify the mistake apparent from the record in the assessment order passed u/s. 153A r.w.s. 144 of the Act in the case of the assessee dated 26.02.2021 and to determine the commission income according to the actual amount of bogus sales and purchases. We find no infirmity in the order of the ld. CIT(A) in deleting the addition made u/s. 69C of the Act and in directing the ld. A.O. to rectify the mistake apparent from record in the assessment order passed u/s. 153A r.w.s. 144 of the Act. We, therefore, dismiss the ground of appeal raised by the Revenue.

Summary

Issues:
Challenge to deletion of addition under section 69C of the Income Tax Act, 1961 by the ld. CIT(A) based on lack of new incriminating material found during search proceedings.

Analysis:
The appeal was filed by the Revenue challenging the order of the Commissioner of Income Tax (Appeals) regarding the Assessment Year 2017-18. The assessee had raised grounds of appeal against the deletion of an addition under section 69C of the Income Tax Act, 1961, related to alleged commission income. The Revenue contended that the addition was necessary as it was already made under section 153A of the Act, and the subsequent addition under section 153C was a rectification of a mistake apparent from the record.

The case involved a public limited company engaged in manufacturing yarn, which had filed its return of income showing a total loss. Following a search and seizure action at certain business premises, the Assessing Officer issued notices under various sections of the Act. The Assessing Officer made additions, including under section 69C towards commission paid on alleged accommodation entries. The impugned assessment order was passed under section 153C of the Act, determining the total income after making the addition on the balanced figure missed out in a previous assessment order.

The Commissioner of Income Tax (Appeals) deleted the impugned addition, stating that the materials considered during the search had already been taken into account in a previous assessment under section 153A. The Revenue appealed this decision, arguing that the addition was based on existing incriminating material. The Tribunal noted that the Assessing Officer had made the addition to rectify a mistake in the earlier assessment order. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in deleting the addition under section 69C and directing the Assessing Officer to rectify the mistake in the assessment order.

In conclusion, the Tribunal dismissed the Revenue's appeal, finding no infirmity in the Commissioner's decision to delete the addition and direct the rectification of the mistake in the assessment order. The appeal filed by the Revenue was consequently dismissed.