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2025 (3) TMI 208 - AT - Income TaxAssessment u/s 153A - Addition u/s 68 on account of the unexplained credits - search was conducted at the premises of Assessee husband - HELD THAT - Having regard to the subject transactions recorded in the books of accounts of the husband of the appellant and also in the bank statement pertaining to the account of the assessee-appellant it can safely be said that concerned transactions had already been recorded in the said record. It is not in dispute that after the husband of the assessee-appellant had furnished Income Tax Return in the concerned assessment year no such step was taken by the AO for scrutiny or reassessment. Previously the income disclosed by the husband of the assessee-appellant was not doubted including the said transactions which have subsequently been picked up after search and seizure action. There is no explanation from the Department as to why no scrutiny was made regarding the said assessments while processing the ITR furnished by the husband of the assessee-appellant at the relevant time or within the prescribed period of limitation. We find merit in the contention raised on behalf of the appellant above- said 3 entries pertain to transfer of amounts to the assessee by the proprietorship concern being run by her husband and since the ledger did not indicate any financial implication said entries could not be said to be unexplained cash credit attracting the provisions of Section 68 of the Act. Having record to the material placed on record by the assessee-appellant before the AO as well as CIT(A) and before this Appellate Tribunal we are of the considered opinion that the impugned assessment framed by the AO and the impugned order passed by CIT(A) deserves to be set aside accordingly same hereby set aside. Whether statement of the assessee was the only material available against the assessee? - In this regard suffice it to state that the Assessing Officer nowhere mentioned in the assessment order about any statement made by the assessee u/s 132 of the Act. As mentioned here that subsequently during pendency of the appeal on behalf of the appellant an application came to be presented with the prayer seeking permission to raise three grounds mentioned therein. First additional ground is that no DIN number having been generated as regards the impugned assessment order same is nullity being non-est. Second additional ground is that the impugned assessment order has not been digitally signed as per procedure prescribed by CBDT same is non-est. No prior approval as mandated by section 153D of the Act was obtained and as such the impugned assessment has been framed without any jurisdiction - As it may be mentioned that as noticed above the impugned order passed by CIT(A) and the impugned assessment framed by the AO deserve to be set aside for the abovesaid discussion and reasons the three additional grounds sought to be raised on behalf of the appellant for academic purposes are not being taken up. No other argument has been advanced before us.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are: 1. Whether the assessment proceedings under Section 153A of the Income Tax Act were validly initiated against the assessee, given that the search was conducted at the premises of her husband and not directly against her. 2. Whether the addition of Rs. 5,30,000/- as unexplained cash credit under Section 68 of the Income Tax Act was justified, considering the transactions were recorded in the books of accounts of the assessee's husband. 3. Whether the assessment proceedings were barred by limitation, as the assessments for the relevant years were completed prior to the search and seizure operation. 4. Whether the statement of the assessee could be considered incriminating material in the absence of any direct evidence or mention in the assessment order. ISSUE-WISE DETAILED ANALYSIS 1. Validity of Assessment Proceedings under Section 153A The legal framework for this issue involves Sections 153A and 153C of the Income Tax Act. Section 153A deals with the assessment in cases of search, while Section 153C pertains to assessments related to persons other than the searched person. The Tribunal considered precedents such as the cases of Tirupati Construction Company and Shyam Sunder Khandelwal, which emphasize that assessments based on search materials must adhere to the procedural safeguards of Section 153C when the search is not directly on the assessee. The Tribunal found that the search was conducted at the premises of the assessee's husband, and thus, the provisions of Section 153C should have been invoked rather than Section 153A. The Tribunal concluded that the initiation of proceedings under Section 153A was not justified in the absence of incriminating material directly found against the assessee. 2. Addition of Unexplained Cash Credit under Section 68 Section 68 of the Income Tax Act addresses unexplained cash credits. The Tribunal examined whether the transactions recorded in the books of the assessee's husband could be considered unexplained cash credits for the assessee. The Tribunal noted that the transactions were recorded in the books of M/s Mohan Broker Agency, a proprietorship concern of the assessee's husband. The assessee received amounts totaling Rs. 8,20,000/-, which included a repayment of Rs. 2,90,000/- from the financial year 2012-13. The Tribunal found that the transactions were duly recorded and disclosed in the bank statements and the books of accounts of the husband, and thus, they could not be considered unexplained cash credits under Section 68. The Tribunal held that the addition was not justified. 3. Limitation and Completed Assessments The Tribunal considered whether the assessment proceedings were barred by limitation, as the assessments for the relevant years were completed before the search. It was argued that the assessments for the years 2012-13 to 2015-16 were already completed, and the time limit for issuing notice under Section 143(2) had expired. The Tribunal referred to the case of Chintels India Ltd., which held that once the time limit for issuing a notice under Section 143(2) expires, the return becomes final. The Tribunal concluded that since the assessments were completed and no incriminating material was found during the search, the proceedings were barred by limitation. 4. Statement as Incriminating Material The Tribunal addressed whether the statement of the assessee could be considered incriminating material. It was contended that the statement made by the assessee during the search could not be used as incriminating material. The Tribunal noted that the assessment order did not mention any statement made by the assessee under Section 132 of the Act. Hence, the Tribunal found that the statement could not be treated as incriminating material in the absence of direct evidence. SIGNIFICANT HOLDINGS The Tribunal held that the assessment proceedings under Section 153A were not validly initiated against the assessee, as the search was conducted at her husband's premises, and no incriminating material was found directly against her. The Tribunal emphasized the procedural safeguards under Sections 153A and 153C, noting that assessments must adhere to these provisions when search materials are concerned. The Tribunal concluded that the addition of Rs. 5,30,000/- as unexplained cash credit under Section 68 was not justified, as the transactions were recorded in the books of the assessee's husband and were not unexplained. The Tribunal also determined that the assessment proceedings were barred by limitation, as the assessments for the relevant years were completed, and no incriminating material was found during the search. The Tribunal set aside the impugned order passed by the CIT(A) and the assessment framed by the Assessing Officer, allowing the appeal in favor of the assessee.
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