2024 (12) TMI 382 - AT - Income Tax

Assessment u/s 153A - absence of any incriminating material during the course of search - HELD THAT - We find not a single seized material has been referred to by the AO in respect of any of the addition made by him in the assessment. Hence, it could be safely concluded that there is absolutely no incriminating material found during the course of assessment for making the aforesaid 4 additions. Hence, in the absence of any incriminating material during the course of search, no addition could be made in a completed assessment as per the decision of the Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. 2023 (4) TMI 1056 - SUPREME COURT Accordingly, ground No. 1 of Rule 27 petition is hereby allowed. Addition of bogus purchase - Admittedly, purchases made by the assessee from the aforesaid 3 parties have already been accounted by the assessee in its regular books of account. This books of account were not rejected by the ld AO or by the ld CIT(A). Payments for this purchase have already been made by the assessee out of the monies available in the disclosed bank account. Hence, the source of incurrence of such expenditure together with the payments made thereon are duly explained from the books of account of the assessee itself. It is not the case of the revenue that the purchase made from aforesaid 3 parties were made out of books and for which assessee is not able to explain the source of making payment. Hence, the provisions of section 69C of the Act per se cannot be applied to the facts of the instant case. When the provisions of section 69C are sought to be invoked, the revenue does not doubt the genuineness of incurrence of such expenditure. Only the source of such expenditure is being doubted by the revenue. Here the source is drawn from the regular books of accounts of the assessee which were not rejected by the lower authorities. Hence on this ground itself, the addition deserves to be deleted. Addition u/s 69A - HELD THAT - As submitted that the admission of undisclosed income offered by the assessee in the return of income is backed by credible evidence. Reliance was placed on the presumption provided in section 132(4A) of the Act and section 292C of the Act wherein, the contents of the seized documents are to be considered as true. Since, the seized documents itself contains the actual undisclosed income figure, as against the estimated figure, the actual figure retracted thereon should be considered as true, when more so, this actual figure stood specifically deposited in the bank account by all the assessees. We find that the ld. CIT(A) had duly appreciated the aforesaid contentions and deleted the addition made in the sum of Rs 1.80 crores on which we do not find any infirmity. Accordingly, the grounds raised by the revenue are dismissed.

Summary

Issues Involved:

1. Validity of assessment under section 153A without incriminating material.
2. Application of section 69C for additions based on bogus purchases.
3. Retraction of statements made during search under section 132(4).

Detailed Analysis:

1. Validity of Assessment under Section 153A Without Incriminating Material:

The primary issue across multiple appeals was whether the Assessing Officer (AO) could make additions under section 153A of the Income Tax Act in the absence of incriminating material found during a search. The Tribunal noted that for the assessment year (AY) 2014-15, the assessment was completed without any incriminating material, as per the Supreme Court's decision in PCIT v. Abhisar Buildwell (P.) Ltd., which mandates the presence of incriminating material for additions in unabated assessments. Consequently, the Tribunal quashed the assessments for AYs 2013-14 and 2014-15, as no incriminating material was found during the search, rendering the additions invalid.

2. Application of Section 69C for Additions Based on Bogus Purchases:

In the case of County Infrastructure Pvt. Ltd for AY 2016-17, the AO made additions under section 69C for alleged bogus purchases. The Tribunal examined whether these additions were justified under section 69C, which pertains to unexplained expenditure. It was noted that the purchases were recorded in the books of accounts, and payments were made through disclosed bank accounts, indicating that the source of expenditure was explained. The Tribunal relied on the Bombay High Court's decision in PCIT Vs. Sanjay Dhokad, which held that section 69C cannot be applied when the expenditure is recorded in the books and the source is explained. Thus, the Tribunal deleted the addition made under section 69C.

3. Retraction of Statements Made During Search under Section 132(4):

For AY 2017-18, the issue was whether the retraction of statements made under section 132(4) of the Act, which were later used to make additions, was valid. The AO had made additions based on a statement given during the search, which was later retracted by the assessee. The Tribunal considered the assessee's argument that the initial statement was made under duress and that the retraction was supported by evidence. The Tribunal also noted the CBDT Circular requiring corroborative evidence for confessions of additional income. The Tribunal found that the retraction was justified and that the actual undisclosed income was correctly offered in the return of income, leading to the deletion of the addition by the CIT(A).

Conclusion:

The Tribunal dismissed the revenue's appeals where the additions were made without incriminating material or where the retraction of statements was justified. It allowed the assessee's appeals where the assessments were quashed due to lack of incriminating material or where section 69C was inapplicable. The Tribunal's decisions were primarily guided by established judicial precedents and the requirement of incriminating material for additions in unabated assessments.